Julien Dormois

Julien Dormois asked about the strong Q4 performance in Personal Health, questioning if it included any stocking effects or was solely driven by robust demand, especially given tough comparisons. He also sought an update on Philips' stance regarding the Section 232 investigation by the US government.

Answer

CFO Charlotte Hanneman attributed Personal Health's strong 14% Q4 growth to market share gains, healthy sell-out trends across most geographies, resilient North America launches, and the combination of innovations and strong commercial execution. She clarified that China trade inventory was de-risked to 3 months, aligning with market averages, indicating no significant stocking effect. CEO Roy Jakobs stated that the Section 232 investigation is not concluded and could potentially replace existing tariffs, not worsen the situation, and Philips is actively engaged in discussions without speculating on outcomes.

Julien Dormois questioned the exceptional strength of Personal Health (PH) in Q4, which accelerated sequentially despite tough comparisons, asking if there was any stocking effect or if it was purely driven by strong demand. He also sought an update and Philips' stance on the ongoing Section 232 investigation by the US government.

Answer

Charlotte Hanneman (CFO) expressed satisfaction with PH's 14% growth in Q4, attributing it to market share gains, healthy sell-out trends across geographies, and a resilient North America launch, driven by innovation (Sonicare, OneBlade) and strong commercial execution. She clarified that the China trade inventory had been de-risked to 3 months, aligning with market averages, indicating no stocking effect. Roy Jakobs (CEO) stated that the Section 232 investigation is not concluded, viewing it as a potential measure to replace existing tariffs, possibly improving the situation rather than worsening it, and confirmed Philips' active engagement in discussions.

Julien Dormois sought clarification on the Q2 outlook, asking if organic sales would still be negative. He also asked for a breakdown of the Diagnosis & Treatment segment's performance, inferring a steep decline in Imaging given the growth in Image-Guided Therapy (IGT).

Answer

CFO Charlotte Hanneman confirmed that the expectation for a modest sequential improvement in Q2 versus Q1 was appropriate and in line with the company's back-end loaded full-year outlook. She explained the decline in Precision Diagnosis was expected, driven by challenges in China and a very high comparison base in MR from the prior year when supply chains unlocked, rather than a new market issue.

Julien Dormois questioned how the guided sales decline in China might differ between the consumer and equipment businesses, and asked about the validity of the long-term mid- to high-teens margin target and plans for a Capital Markets Day.

Answer

CEO Roy Jakobs clarified that the consumer-facing Personal Health business is experiencing the largest impact in China, representing the bigger part of the drag on performance. CFO Charlotte Hanneman confirmed that the company will provide an update on its long-term plan at a Capital Markets Day later in the year, expressing confidence in margin improvement potential beyond 2025, driven by portfolio mix and productivity.

Asked about the rollout timeline for CartiHeal, plans for a CORI-enabled AETOS shoulder system, and whether there is an internal KPI for the U.S. knee business to grow at or above the market rate in 2024.

Answer

CartiHeal is a mid-term growth driver and will not be material in 2024 as the sales force is currently being trained. A CORI application for the shoulder is in development and is about two years away, timed to launch with a more complete shoulder implant portfolio. While the ultimate goal is market share growth for the knee business, the company is focused on foundational KPIs like set turns and CORI utilization, and did not commit to a specific timeline for achieving above-market growth.