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Philips announces Q3 2020 results and provides new financial targets for the 2021–2025 period

Press releases may be edited for formatting or style | October 19, 2020 Business Affairs
Philips delivers Q3 sales of EUR 5.0 billion, with 10% comparable sales growth; income from continuing operations increases to EUR 341 million, Adjusted EBITA margin improves 300 basis points to 15.4%, and operating cash flow increases to EUR 770 million

Philips provides new financial targets for the 2021–2025 period

Third-quarter highlights

• Sales amounted to EUR 5.0 billion, with 10% comparable sales growth

• Comparable order intake increased 3% excluding the partial termination of the ventilator contract with HHS*); reported comparable order intake declined 18%

• Income from continuing operations increased to EUR 341 million, compared to EUR 211 million in Q3 2019

• Adjusted EBITA margin increased to 15.4% of sales, compared to 12.4% of sales in Q3 2019

• Income from operations improved to EUR 476 million, compared to EUR 320 million in Q3 2019

• EPS from continuing operations (diluted) amounted to EUR 0.37; Adjusted EPS increased to EUR 0.60, compared to EUR 0.46 in Q3 2019

• Operating cash flow improved to EUR 770 million, compared to EUR 356 million in Q3 2019

Frans van Houten, CEO

"It is clear that the COVID-19 pandemic is far from over, and our teams remain fully focused on delivering against our triple duty of care: meeting critical customer needs, safeguarding the health and safety of our employees, and ensuring business continuity.

I am pleased that, under challenging circumstances, we have been able to execute our plans and return to growth and improved profitability for the Group in the third quarter. Driven by the successful conversion of the Connected Care order book for patient monitors and ventilators, and a robust rebound of demand for our Personal Health portfolio, Philips recorded a strong 10% comparable sales growth and delivered an Adjusted EBITA margin improvement of 300 basis points to 15.4%.

The Connected Care businesses delivered a very strong 42% comparable sales growth, and our Personal Health businesses delivered a healthy 6% comparable sales growth. I am encouraged by the performance improvement of our Diagnosis & Treatment businesses to a low-single-digit comparable sales decline from a high-single-digit decline in the previous quarter.

In August, we provided the update that Philips' April 2020 hospital ventilator contract with the Department of Health and Human Services (HHS) had been unexpectedly partially terminated. As a result, we recorded a comparable order intake decline for the Group of 18%. Excluding this partial termination, comparable order intake grew 3%, further building on the solid growth in the previous quarters.

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