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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


Cost savings

In the third quarter, procurement savings amounted to EUR 62 million. Overhead and other productivity programs delivered savings of EUR 58 million. As a result, Philips is on track to deliver over EUR 400 million productivity savings for 2020 and exceed EUR 1.8 billion productivity savings for the Group for the 2017-2020 period.

Philips provides new financial targets for the 2021–2025 period

At the company's Capital Markets Day with investors and financial analysts on November 6, 2020, Philips will provide further details of its strategic plan and performance trajectory for the 2021–2025 period.

"We are excited to continue our journey to create further value by improving growth and profitability, while recognizing that we are in very uncertain times, and with the assumption that the world economy will return to growth next year," said Frans van Houten. "The new targets are underpinned by our strategic imperatives to further improve customer and operational excellence, boost growth in our core businesses through geographical expansion and more customer partnerships, and win with innovative solutions along the health continuum. Our strategy to transform care along the health continuum – from healthy living and prevention to diagnosis and treatment, telehealth and home care – strongly resonates with customers and has been further validated during the COVID-19 pandemic."

Philips' targets for accelerated growth, higher profitability and improved cash flow for the 2021–2025 period are [1]:

• An acceleration of the average annual comparable sales growth to 5-6%, with all business segments within this range. For 2021, Philips' current view is that Group comparable sales will deliver low-single-digit growth, driven by solid growth in Diagnosis & Treatment and Personal Health, partly offset by lower Connected Care sales;

• An Adjusted EBITA margin improvement of 60-80 basis points on average annually from 2021, reaching the high teens for the Group by 2025 [2];

• A free cash flow above EUR 2 billion by 2025;

• Organic Return on Invested Capital (ROIC) of mid-to-high teens by 2025.


*) On August 31, 2020 Philips announced that its April 2020 ventilator supply contract with the US Department of Health and Human Services (HHS) had been partially terminated.

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