Phillip's annual order intake has increased for the first time in three years. Yes, we're focused now on the earning story. That's as the Dutch medical equipment maker mostly resolved issues related to its faulty sleep apnea machines, robust demand in markets including North America offsetting persistent headwinds in China. Very pleased to say join me now is the Phillips CEO Roy Jakobs. Roy, good morning, thank you for joining us
on a busy day for you and the team. So comparable order intake growing one percent last year, that is the first annual growth since twenty twenty one. What percentage growth are you targeting for this year?
So we were indeed very happy to see us returning to polsive orientic growth which as you called our was Wiislow China and a strong order intake of four percent in.
The rest of the world.
Now we have for this year an order positive arientic year ahead of us, so that's what we are targeting. Were also seeing the momentum continuing in the rest of world. We see still will China continue to be slow, but China frost is one story, so when it will be back there will be growth and there will be marching because it's an attractive market on the long term needs healthcare and also consumers will come back, but that's currently still not exactly clear when that's when that will happen.
But we are dialing down on delivering the innovations across the world, and there we have seen good markets like North America.
We were a close to double digit in the in the year.
So you see that there's really a two speed world currently that we are tracking on.
Okay, two speed growth. Let me push you roy on the order intake outlook for the rest of the year. You see that growing. What are we are we talking one percent two percent? You achieved that in the fourth quarter. How many percentages of order intake growth can you expect in twenty twenty five.
So we have not given an exact number. We say we will continue with positive order intake growth. We also expect it will be a similar combination of still a slower China and.
Positive growth outside of the world.
But we have ladded deer for now based on that, we also will deliver growth in sales and that then also helps us to expand further our margin by a not a thirty to eighty BIPs and deliver song cash, which also actually based on our casualization in twenty twenty four, has given us the ability now to get back into dividend and offer diffidant in cash to our shoholders.
Let me get to the tail of two markets, then double digit decline in China. To be clear, right, you do not see the Chinese market turning around for Phillips in twenty twenty five. This is not a twenty twenty five story.
So what we said is that for sure, for the first half, we see the momentum continuing that we had in the second part of twenty twenty four, and that was indeed slow consumer demand and we saw still slow procurement in the healthcare site. Now we also know that China is working its way back into economic growth as well as we know that they're working through the reforms in healthcare. So we expect it will come back. We
just don't know exactly when it's going to happen. So therefore we are not going or running ahead of that timing, but it will come back at a certain point in time.
Now.
In the meanwhile, we are dialing up the engine and indeed deliver the innovations to the rest.
Of the world.
As I mentioned, we're next to North America. Also there are good growth engines in Saudi and Indonesia. We also see pocuts of Europe where actually growth is coming back. So there are other areas we will go after the growth. And we have been really strengthening our fundamentals. So we've been launching exciting innovation AI fueled that will help us to deliver the growth and also deliver in China local for local products when the demand turns back.
How big is the China market for Phillips now.
Around ten percent of our total revenue, so it's still sizable and we also expect that to continue. But we have also the other ninety percent to play for, and that's a great combination of different markets. Latin America, for example, was a great positive story last year. They had a few challenging years before that they came back strongly. So we see the capex environments in general strengthening across the world.
We saw that in the US where they came out of a negative twenty two for the hospitals twenty three was already stronger, and now in twenty four we saw that really picking up and therefore they're investing more because the cues.
In healthcare are still big.
The need for healthcare is growing, and therefore we also expect that demand for our innovations that are really relevant for them will continue to be there.
So what assumptions roy are you making about the tariff impact when it comes to your outlook, particularly with that focus on the key North American market.
So we have.
Included the terriffs that currently are known and put into force, and those are the terrors between US and China, So those we have been catering for. We also, as part of the plan, have been really working through the last three years to really strengthen our supply chain, further regionalize it,
making it more robust, also adapted. We don't speculate of the rest of terrors, but what we do advocate for is that patients are really taken central when we talk about terras because it has an impact on supply chain and we have still a short lived memory from the COVID crisis where with the breakd and of supply chains, we had massive shortages in providing care to our patients.
So patients first when we think about terrors, but at the same time we take also that's in our own hands by really working the supply chain and going into more.
Local for local delivery, because that is the trend.
Healthcare is global, but delivery needs to be more localized than we're working that.
Does it mean you may have to put up prices or do you absorb the cost and you absorb the squeeze on the margin.
So this point in time, we are working very strongly on productivity. So for example, we have been delivering one point seven billion of productivity in the plant to date. We're expanding that for next year to two point five billion productivity, so that actually we can deal with costs and continue to invest behind the innovation. So we spend one point seven billion of innovation whilst we at the same time also saved one point seven billion of productivity in the same period.
So actually that is.
The way how we continue to innovate and deliver exciting innovation, especially now also where AI is really an important new technology to deliver a great value, like for example, some of the launches that we had that are fueled by AI. That's the way how you can deal with terriers and or cost increases.
Roy are you really looking at the portfolio of businesses right now. In January, you saw you've agreed to sell the emergency care unit to bridge Field Capital. Are you looking at further divestments?
So we continue to look at how we move Phillips forward and in that we actually scale the innovations that we believe are the ones that have the best potential for the future. That emergency care business was a smaller business, so didn't have that big skill potential. The portfolio that we have with imaging, monitoring, interventional and personal health, we believe are force very strong pillars and then actually all supported. We had a very strong informatics layer. So those are
exciting portfolio blocks. They're all delivering value to many customers in the world. We have leading positions in that. We also keep innovating in each of those pillars, and those are the ones we also take into the future.
All right, before we let you go, are you ready to re enter the US market when it comes to those sleep apnea devices? Where is that? DOJ investigation? Right now?
So on sleep and respiratory care.
Actually, we had a great year in twenteen twenty four outside of the US. We could we turn back into the markets and we saw that we re resulting in growth in sleep and respiratory care and also we had strong profit delivery in sleep and respiratory care, which was the first year.
Indeed, after the we call, we closed the litigation.
As you know, DOJ investigation is still going on, but we are actually excited about some of the new innovations and we just got two new approvals and two new masks that we're bringing into the market. So actually as our see is coming back as an engine and we are working behind that. Tips.
Yeah, ro Jakobs, thank you. On the back of those earnings, Audit intake for Phillips comparable audit intake growing for one percent last year for the first time since twenty twenty one.