Philips reported strong financial results for the second quarter of 2024, highlighting significant growth in order intake, improved margins, and increased sales, retaining its positive outlook for the full year despite ongoing macroeconomic challenges.

Roy Jakobs, CEO of Royal Philips, expressed optimism about the company’s return to order intake growth, primarily driven by North America. He noted that the margin improvement was supported by a productivity program and solid operational cash flow. Jakobs also emphasized the importance of enhancing execution, improving supply chain resilience, and maintaining patient safety and quality.

The reception on Wall Street was positive, as the company's stock value shot up 13% on the news, before ending the week up roughly 10%.

Here are some of the top takeaways.

Financial highlights
Philips' sales reached €4.5 billion, marking a 2% increase in comparable sales, and reported a 9% increase in order intake. Income from operations was €816 million, bolstered by €538 million from insurance. The adjusted EBITA margin improved to 11.1%, while operating cash inflow was €89 million, with a free cash outflow of €64 million due to a substantial settlement payment.

Segment performance breakdown
Diagnosis & Treatment: Sales increased by 4%, with a 12.2% adjusted EBITA margin, driven by improved sales and productivity.
Connected Care: Achieved 2% sales growth and an 8.8% adjusted EBITA margin, also benefiting from productivity measures.
Personal Health: Global sales grew by 2%, with a 16.9% adjusted EBITA margin due to operational improvements.

Philips reported total productivity savings of €195 million for the quarter, including €57 million from operating model savings and €71 million from procurement.

Capital allocation
Philips completed a €1.5 billion share repurchase program, canceling 4,437,164 shares, and distributed a dividend of €0.85 per share, resulting in the issuance of 30,860,582 new shares. The total number of issued shares now stands at 939,939,384.

Philips reiterated its confidence in achieving its 2025 plan. For 2024, the company expects 3-5% comparable sales growth, an adjusted EBITA margin of 11-11.5%, and free cash flow of €0.9-1.1 billion, (excluding potential impact from ongoing Philips Respironics-related legal proceedings).

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