Koninklijke Philips (PHIA) investor relations material

Executive summary

• Q1 2026 achieved 6% order intake growth and 4% comparable sales growth, with margin expansion across all business segments, led by Personal Health and strong performance in North America and Europe.

• Adjusted EBITA/EBITDA margin improved by 40 basis points to 9.0%, marking the sixth consecutive quarter of delivering on commitments despite a volatile macro environment.

• Productivity initiatives delivered EUR 126 million in savings in Q1, supporting margin expansion.

• Strategy remains anchored in focused value creation, innovation-driven growth, and disciplined execution, with continued investment in interventional monitoring and geographic expansion.

• Free cash flow reached EUR 28 million, with leverage ratio improving from 2.2x to 1.8x year-over-year.

Financial highlights

• Q1 2026 sales were EUR 3,905 million, up 4% on a comparable basis from Q1 2025, with growth across all segments and regions.

• Adjusted EBITA was EUR 353 million, margin at 9.0%, up 40 bps year-over-year, driven by sales growth, favorable mix, and productivity, partially offset by higher tariffs and cost inflation.

• Net income rose to EUR 146 million, primarily due to higher earnings and operational improvements.

• Free cash flow was an inflow of EUR 28 million; excluding prior year settlement payout, free cash flow improved by EUR 94 million year-over-year.

• Group working capital as a percentage of sales was 11.9% at Q1 2026.

Outlook and guidance

• Full-year 2026 guidance reiterated: comparable sales growth of 3%-4.5%, adjusted EBITA margin of 12.5%-13.0%, and free cash flow of EUR 1.3-1.5 billion.

• All business segments expected to grow within the range, with Diagnosis & Treatment at the lower end and Connected Care and Personal Health at the upper end.

• China sales expected to be stable, with Personal Health growth offsetting a slight decline in health systems.

• Near-term margin pressure expected due to tariffs, inflation, and FX, with mitigation actions back-end loaded.

• Guidance excludes potential tariff refunds and ongoing Respironics-related proceedings.