Q1 2024 Koninklijke Philips NV Earnings Call
Okay.
Yeah.
Speaker Change: Welcome to the Royal Philips first quarter 'twenty once full resort conference call on Monday April 29, 2024 during the call hosted by Mr. Avoid Jacobs CEO and Mr. Abhijit Bhattacharya CFO, all participants will be in a listen only mode. After the instruction there'll be an opportunity to ask.
Speaker Change: Questions. Please note that this call will be recorded and replay will be available on the Investor Relations website of oil Philips I will now hand, the conference over to Mr. Leandro <unk> head of Investor Relations. Please go ahead Sir.
Leandro: Hi, everyone welcome to Philips first quarter 2024 results webcast.
Leandro: Here with our CEO, Raul Jacobi and our CFO abhijit.
Leandro: Yeah.
Speaker Change: The press release Investor deck, and the frequently asked questions on the risk for one execute action.
Speaker Change: Published on our Investor Relations website. This morning.
The replay and a full transcript of this webcast will be made available on the website after the call.
Speaker Change: Before we start I want to draw your attention to our safe Harbor statement on screen.
Speaker Change: You will also find the statement in the presentation published on the website right.
Speaker Change: <unk> over to you.
Speaker Change: Good morning, everyone and warm welcome.
Speaker Change: Great to be with you today.
Speaker Change: I want to start with the key highlights of this morning's release.
Speaker Change: We delivered results in line with our performance improvement plan.
Speaker Change: Two 4% comparable sales growth and strong margin improvement in the quarter.
Speaker Change: Order intake growth turning positive outside of China, especially in North America.
Speaker Change: This was the result of continued strong focus and progress on our three execution priorities.
Speaker Change: Secondly, we have taken several very important steps in resolving the consequences of the restaurant owners equal.
Speaker Change: The consent decree was signed and approved in court.
Speaker Change: We received final court approval for the previously announced economic loss settlements.
Speaker Change: We reached an agreement to resolve the personal injury and medical monitoring litigation in the U S.
Speaker Change: And we also concluded an agreement with insurers to cover restaurants recall related product liability claims.
Speaker Change: Following the remediation of sleep therapy devices, and reassuring test results to date this.
Speaker Change: Very important milestones to provide further clarity on the way forward for Philips.
Speaker Change: Supported by key innovation launches and our ongoing actions to enhance execution. We are confident in our performance improvement plan for 2024.
Speaker Change: Onto the key financial highlights.
Comparable sales growth was two 4% in the quarter driven by 3% growth in the diagnosis and treatment and personal health segments.
Partly offset by a 1% decline in connected care against very tough comps and monitoring.
Speaker Change: Group sales grew 2% in mature geographies grew.
Speaker Change: Growth geographies sales growth, 3%, despite a decline in China.
Speaker Change: The adjusted EBITDA margin improved significantly to nine 4% in the quarter.
Speaker Change: Free cash flow was an outflow of 336 million euros in line with normal quarterly phasing.
Speaker Change: Order intake in the quarter declined as anticipated due to the situation in China.
Speaker Change: This was driven by the impact of the industrywide anti corruption measures and a comparison against an exceptionally high order intake base from last year.
Speaker Change: Importantly order intake.
Speaker Change: So out of China with encouraging performance in North America.
Speaker Change: We remain focused on implementing the necessary actions to strengthen quality delivery.
Speaker Change: Lead times leverage our enhanced operating model and market, our AI driven innovations to improve order intake.
Speaker Change: Overall based on the gradually improving market environment in the U S as well as expected improvement of the situation in China, our exciting innovation launches and our ongoing actions. We continue to expect positive order intake growth in the full year 2024.
Speaker Change: In China, the government imposed anti corruption measures continue to impact short term decision, making by hospitals.
Speaker Change: But we do not expect it to impact the fundamental demand as China remains an attractive market.
Speaker Change: Our order funnel is very active in the country and we expect order growth to resume in China in the second half of 2024.
Speaker Change: Also supported by the newly launched government program for medical equipment upgrades.
Speaker Change: It is important to note that our order book, which accounts for around 40% of group sales remained strong.
Speaker Change: As further being built down to an expected normalized levels.
Speaker Change: I've met many of our customers and partners in the last few months and it's absolutely clear that we are at different strategic and innovation partner to provide imaging therapy and monitoring solutions supported by a strong enterprise informatics and AI suite.
This has been again amplified by how strongly our solutions resonated with customers at the recent Vive ECR and HIMSS global healthcare events, which I attended during this quarter.
Speaker Change: Let me now provide you with some of the recent customer innovation milestones during the quarter.
Speaker Change: We launched a new image guided therapy system, and advanced informatics as well as the new AI enabled CPE 5300 designed for more accurate and reliable imaging results, while enhancing productivity.
Speaker Change: Using up to 80% lower radiation dose.
Speaker Change: We were also recognized as a clarified top 100 global innovator for the 11th consecutive year and ranked as a top medical technology patent applicant at the European patent office in 2023.
We continue to see strong customer pull for our solutions and signed several long term agreements across the world in the quarter.
For example, we signed a 10 year agreement with the Nicklaus children's health system in the U S to provide AI enabled technologies, such as eating free EMR ultrasound and monitoring solutions for depot clinical insights and improved workflow and productivity.
Speaker Change: Now on Respironic.
Speaker Change: As I said, we have taken very important steps in resolving the consequences of the respiratory and FICO in the quarter.
Speaker Change: As said before we do regret that patients.
Speaker Change: The concern that patients may have experienced.
Let me call out the milestones reached.
First Philips and plaintiffs leadership supported by court appointed mediator after.
Reached an agreement that resolves to personal injury litigation at a medical monitoring class action in the U S.
This settlement and uncertainty associated with litigation in the U S. It.
Speaker Change: It should be noted that.
Speaker Change: Philips and Phil address Peronist do not admit any fault or liability or that any injuries were caused by restaurant ex devices.
Speaker Change: Finished vesper Onyx has agreed to pay total capped amount of $1 $1 billion.
Speaker Change: Related payments are expected in 2025 and.
To be fully funded from Philips cash flow generation.
Speaker Change: You will find more details of the agreement and the restaurant field action deck published on our Investor Relations website. This morning.
Speaker Change: This underscores the high degree of confidence from all parties and achieving closure and finality with the settlement.
Speaker Change: Also important earlier this month the finished respironic constant degree was approved by U S Corp.
Speaker Change: As communicated before the decrease primarily focuses on restaurants business operations in the U S.
Speaker Change: And we now have made a roadmap to demonstrate compliance with regulatory requirements in order to restore the business in the U S and grow outside of the U S.
Speaker Change: Moreover, <unk> obtained final court approval for the previously announced economic loss settlement in the U S for which a provision was recognized in Q1 2023.
Speaker Change: We continue to work on order of <unk> related legal proceedings, including the investigation by the U S Department of Justice.
Speaker Change: And we also concluded an agreement with insurers to pay Phillips in relation to Philips Respironics recall related product liability claims.
Speaker Change: Therefore.
Speaker Change: Following the remediation of sleep therapy devices, and reissuing test results to date.
Speaker Change: These important milestones or litigation consent decree and insurance.
Speaker Change: <unk> Phillips with a clear path forward for sustainable value creation.
Speaker Change: Looking ahead, we remain confident in our plan and financial outlook.
Speaker Change: 294, we expect to deliver 3% to 5% comparable sales growth building on a strong comparison base of last year and an adjusted EBITDA margin of 11% to 11, 5%.
Speaker Change: The free cash flow expectation is now increased two 9% to $1 1 billion in 2024.
Speaker Change: In fact rent received from insurers that I, just mentioned and the remaining payments related to the economic loss settlement.
Speaker Change: I will now hand, it over to <unk> to take us through the financials in more detail.
Speaker Change: After which I will come back on our execution priorities.
unknown: Thanks, Roy and good morning, everyone. Let me start with our performance by segment.
Speaker Change: In diagnosis <unk> treatment comparable sales increased by 3% driven by growth in precision diagnosis and image guided therapy.
Speaker Change: And this was against strong double digit growth in Q1 'twenty regulatory.
Speaker Change: The adjusted EBITA margin was nine 2%.
Speaker Change: Including an impact of 100 basis points from an accounts receivable provision.
Speaker Change: The adjusted EBITA margin was lower than last year, mainly due to the normalization of the product mix as anticipated.
Speaker Change: To remind you the increase in profitability in Q1 last year was around 600 basis points due to the easing of supply chain constraints.
Speaker Change: On our most profitable modalities of ultrasound and image guided therapy systems.
Speaker Change: Connected care comparable sales declined by 1%.
Speaker Change: Is high single digit growth.
Speaker Change: Interpreted informatics was offset by negative sales growth in monitoring on the back of around mid teams growth in Q1, 'twenty regulatory risk.
Speaker Change: We saw strong growth in sleep systems, and patient interface driven by performance outside of the U S. While ventilator sales were lower.
Speaker Change: Connected care adjusted EBITA margin improved significantly to six 4% driven by solid performance in monetary and then improvement in sleep and respiratory care.
Speaker Change: But we will have delivered 3% comparable sales increase driven by strength in the personal care business.
Speaker Change: EBITA margin.
Speaker Change: For the segment improved to 15, 2% this quarter, mainly due to operational leverage and productivity.
Speaker Change: Geographically sales in personal health was driven by mature geographies, while growth geographies were flat mainly due to China.
Speaker Change: Overall consumer sentiment remains tight.
Subdued but is expected to improve in the course of 2024.
Speaker Change: Segment other sales increased by $25 million in the first quarter, mainly from higher royalty income due to phasing.
Speaker Change: We have been very disciplined cost management.
Speaker Change: <unk> initiatives delivered savings of $151 million in the quarter of which operating model savings were $55 million procurement savings were $40 million and other productivity programs delivered $56 million.
Speaker Change: Adjusted EBITDA margin for the group increased by 80 basis points to nine 4% in the quarter.
Speaker Change: Our productivity and pricing actions more than offset inflation.
Speaker Change: Free cash.
Speaker Change: It was an outflow of $336 million in the quarter due to the normalization of working capital phasing, partly offset by higher gasoline.
Speaker Change: On capital allocation in April we completed the $1 5 billion share buyback program for capital reduction purposes announced on July 26, 2021 in the second quarter, we intend to cancel the four 4 million shares.
Speaker Change: <unk> this year.
Speaker Change: Moving to orders it is important to note that the absolute order intake levels remain healthy although lower than the exceptionally high comparison base of the last two to three years.
Speaker Change: Order intake grew outside of China, we've been in.
Speaker Change: Encouraging performance in North America, and general improvement in market dynamics, which is expected to continue in the coming quarters.
Opportunities remain strong.
The order book is significantly higher than the period before the global supply chain crisis, as a reminder, orders and order book account for around 40% of our revenue.
Speaker Change: The remaining 60% comes mainly from recurring revenue streams, such as services and consumables from book to Bill business and from personal health.
Speaker Change: As mentioned in our previous earnings call, we anticipate sales growth to be backend loaded in 2024 due to the tougher comparison base in the first half of the year, resulting mainly from the strong China performance in the first half of 2023.
Speaker Change: And the anticorruption measures ongoing in the first half of this year.
Speaker Change: Our expectation for sales growth in the second quarter remains soft as a result of this difficult comparison base.
<unk> Q2, 2023 grew by nine 4% as.
As well as the impact of the phasing of royalty revenues.
Speaker Change: We expect sales in segment orders to be around 120 million euros in the second quarter 75 million lower than in the second quarter of 2023 due to a large royalty deal recorded last year and the impact of royalty revenue phasing between the first and second.
Quarter of 2024 that I just mentioned.
Speaker Change: This difference in royalty sales alone resulted in a negative impact of around 170 basis points.
Speaker Change: On the growth of the group in the second quarter.
Yes.
Speaker Change: Note that there is no change to full year outlook.
Speaker Change: Segment other provided in January both in terms of sales and adjusted EBITDA.
Speaker Change: Based on our order book, improving order intake and the ongoing actions to enhance it execution, we expect to deliver 3% to 5% comparable sales growth and then the adjusted EBITA margin between 11 and 11 five for the full year.
Speaker Change: As already mentioned under the settlement to resolve the personal injury and medical monitoring litigation in the U S. Philips litigation Philips Respironics has agreed to pay a total of $1 1 billion.
Speaker Change: The related payments are expected in 2025 and to be funded from Philips is cash flow generation.
Speaker Change: Moreover, we received the final court approval for the previously announced economic loss settlement in the U S.
Speaker Change: Time, we announced the settlement in Q1.
Recognized a provision of 575 million euros based on assumptions about the number of claimants that we expected to participate now.
Speaker Change: Now a year later based on the actual claims that we have seen these assumptions turned out to be accurate and we fully expect the settlement to stay within the amount provided port.
Speaker Change: This month, we also concluded an agreement with the insurers to pay US 540 million euros.
Speaker Change: Cover Respironic.
Recall related product liability claims.
Speaker Change: This income is expected to be recognized in Q2, 'twenty 'twenty four and payment is expected during 2024.
Speaker Change: As a result, we have increased our free cash flow outlook for this year, two 0.9 to $1 1 billion now, including the payments from insurers as well as the cash out of around 430 million euro related to the remaining payment of the economic loss settlement.
With that I'd like to hand, it back to Roy.
Thanks I appreciate it.
Roy: I would like to continue with the progress we have made on our execution priorities.
Roy: On patient safety and quality.
Roy: We saw substantial improvement in copper closures in the quarter.
Roy: Driven by stronger processes capabilities and governance around it.
Roy: We also continue to drive significant simplification of the way we work and we further reduced the number of quality management systems.
Roy: We are well on track to achieve our target of 65% reduction in 2024.
Roy: And we continue to invest in quality improvement across the portfolio.
Roy: Acting fast and post market sustain signals.
Roy: Yeah.
Roy: With respect to supply chain, we have now redesign more than 80% of the planned Pcbs and further reduce materials and component risks in the quarter.
Roy: We will continue leveraging and regionalized, our end to end supply chain to further reduce lead times and strengthen first time right deliveries.
Finally, our new operating model Prime accountability in the businesses has been lie for year now.
<unk> and significant productivity improvements.
Roy: We have reduced over 8500 roles to date.
At the same time, we continue to culture journey to drive impact with care and attracted over 300 talents with health Tech break ground this quarter alone.
Roy: Let me close out by repeating the key messages of today's announcements.
Roy: First we delivered results in line with our performance improvement plan as a result of continued strong focus and progress on our three execution priorities.
Roy: Yeah.
Roy: Secondly, we have taken very important steps in resolving the vast majority of the consequences of the restaurants recall.
Roy: And in this quarter alone we have major milestones on litigation consent decree and insurance.
<unk> further clarity on the way forward for Philips.
Roy: Thirdly, the progress we are making reinforces our confidence to deliver further performance improvements in 2024, and we are on track with our plans for 2025.
Speaker Change: I would like to thank you for joining the call and we will now take your questions.
Speaker Change: Thank you Sir.
Speaker Change: If any participant would like to ask a question. Please press the star followed by two times one on your telephone.
Speaker Change: Because of time, please limit yourself to one question. This will give more people the opportunity to ask questions that will be a short pause while the participants register for questions.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: We will now go to your first question.
And your first question comes from the line of Richard Felton Goldman Sachs. Please go ahead.
Richard Felton: Hi, good morning, congratulations on reaching assessment.
Richard Felton: Two questions based on fundamentals margins if that's okay.
Richard Felton: First one is a question on precision diagnostics.
Richard Felton: I understand last year that you were still facing some supply chain constraints on certain modalities.
Richard Felton: In particular have been facing some challenges and so while the supply chain challenges normalizing its a precision diagnostics and what does that mean for your margin outlook for that subdivision this year.
Richard Felton: Second question on sleep and respiratory.
Richard Felton: I understand the sneak in respiratory was still loss, making in 2023 now that you've got visibility on consent decree and.
Richard Felton: Better visibility on the outlook.
Richard Felton: The environment in which that business can operate meeting forwards how quickly can you do the right sizing necessary to bring that business back to breakeven and then positive margin territory.
Richard Felton: <unk>.
Abhijit Bhattacharya: Hey, Richard Good morning, this is abhijit.
Abhijit Bhattacharya: On the CV margins, maybe because we give diagnosis and treatment margins last year, we had a big increase there.
Abhijit Bhattacharya: I mentioned just now in the speech as well a 600 basis points that was because we supplied in the first two quarters of last year, a lot of our high more profitable modalities.
Abhijit Bhattacharya: Supply chain constraints.
Abhijit Bhattacharya: Are now mostly gone the last part of that is left is on a month.
Abhijit Bhattacharya: We still have slightly longer lead times than we would like.
Abhijit Bhattacharya: That doesn't mean a lot for the margins it just hampers order intake.
Abhijit Bhattacharya: For the time being.
Second half of the year, we should go past that as far as the margins for BMT. This unit are concerned we have said that we are going to grow margins this year and that.
Abhijit Bhattacharya: No.
Abhijit Bhattacharya: The phasing between the first half and second half.
Abhijit Bhattacharya: Because of last year, So we will grow margins for the year and you will see improvements coming in the second half over last year for the diagnosis and treatment.
Our sleep and respiratory care.
Speaker Change: You are right. That's what we've always said that once we get clarity on the CBOE will take cost actions to make this business a profitable business, even at a $1 billion revenue.
Speaker Change: The good news is that we are already profitable. So we have taken most of those cost structures.
<unk> to come but already in Q1, we are profitable in sleep and respiratory care, which is why I also youll see the turnaround and the increase in connected care margins.
Speaker Change: Great. Thanks very much thank.
Speaker Change: Thank you.
Speaker Change: Thank you we will now go to the next question and your next question comes from the line of Hassan Al <unk> from Barclays. Please go ahead.
Hi, Thanks for taking my questions and it's great to see today's clarity on litigation. Firstly can you talk about the remediation needed as part of the consent decree as well as the remediation that you have been doing over the last couple of years. What do you think is a realistic timeline for you.
Speaker Change: We'll return to the U S market.
Speaker Change: Secondly, given clarity on litigation could we see a return to bolt on M&A in the next year or two.
Speaker Change: And if so in which areas do you see the most opportunities or I'll use squarely focused on resolving and remediate Inc. Quality issues at the company.
Speaker Change: And then finally can you break out order growth in China.
Ex China, how did things and the quarter and how are you viewing this quarter.
Speaker Change: In China and outside of China, and I Wonder if you would expect orders to be positive in Q2 for the group, but also in China. Thank you.
Speaker Change: Thank you all so let me take the first question. So remediation part of the Cds. So I think as we said we're very happy that we now have clarity in essence, we have a very clear roadmap in terms of what we need to do to get back.
Speaker Change: Into the U S market as you know, we already providing patients in the U S with patient interfaces and also some of the respiratory device. So it's not that we are fully out our top market, but to get fully back of course, we need to comply with.
Speaker Change: The remediation requirements asset in the CD, including Veeco plan.
Speaker Change: We haven't put a timeline out we also will not speculate on that we will of course work very hard to get there. We also are not starting now we have indeed been actioning already on that earlier.
Speaker Change: As <unk> said, if you look to the totality of Src, we are growing outside of.
Speaker Change: The U S and also we have been bringing it back into profitability soda sleep and respiratory care business.
Speaker Change: So an improvement and contribution traject should we into Philip switch.
Speaker Change: We are very positive about what.
Speaker Change: But we will not put any specific timeline on.
Speaker Change: Any.
Speaker Change: Injunction because that also.
Speaker Change: Of course collaborations with the FDA that we need to achieve that.
Speaker Change: Secondly on your question on the.
Speaker Change: The clarity that we get now also on cash and cash profile and bolt on M&A.
Speaker Change: Part of the plan that we started last year I've been very clear how important cash generation is now we were very happy with the $1 6 billion cash flow last year now we see that also this year, we will have a strong.
Cash flow.
Speaker Change: Profile of $1 billion, we upped it based upon the clarity we now have on the economic loss statements, we need to do but also the insurance inflow, we half of the year and the litigation settlement. We have today, we can actually pay in full or out of our operational cash flow that also means that we will indeed be able to do bolt on.
<unk> of course, those need to be the right loans and we do.
Speaker Change: Need to look at.
Speaker Change: Our own priorities first base, meaning extracting value out of the current portfolio of assets that we have because we have a lot of potential there, but that doesn't mean that if we see the right target we could do that and we will remain active and of course, if we didn't think of which areas those will be areas, where we are strong either whether it's in the IGT domain, which we kind of see.
<unk>, but it could also be in monitoring or what we said as bolt on acquisition in ultrasound.
Speaker Change: AI.
Speaker Change: Our portfolio of AI solutions that we added there that actually will be coming to market as part of the innovation launching ultrasound actually mid this year.
Speaker Change: That will also bolster our profile and our portfolio towards the market maybe order intake I. Appreciate you can take so alright. Thank you.
Speaker Change: We had a decline in China in Q1 and that is what we expected.
Speaker Change: In the high double digits, because you know last year, we had a growth of.
Speaker Change: The mid thirties last year right. So you had mid <unk> growth last year that was with the incentives coming out of Covid and then you had really the counterbalancing this year.
Speaker Change: The.
Speaker Change: Anticorruption measures, which of course slowed things down the good news as already mentioned you know outside of China, We have returned to growth and most positively.
Speaker Change: North America grew nicely for us in the quarter.
Speaker Change: We are not going to give specific numbers there because let's say that's not something that is even shared by our competitors, but I think we are pleased with the momentum in North America and that also gives us the confidence for the remaining part of the year.
Speaker Change: We expect also China as we seek to contribute in the second half of the year.
In China recently.
Speaker Change: And we've.
Speaker Change: The new incentives that the government is planning to give.
Speaker Change: That should give.
Speaker Change: It's a good impetus so overall I think there is no change in our view on China is fundamentally remains an attractive market.
Speaker Change: For the short term consumer sentiment is subdued.
Speaker Change: We expect that to.
Speaker Change: Improved through the hospitals will continue to work through the industrywide anticorruption measures and then we will.
Speaker Change: Expect to see more hospitals, putting in orders and so therefore.
Speaker Change: The second half, we expect China to contribute and so far we.
Speaker Change: Kind of started the year on plan.
Speaker Change: Perfect. Thank you very much thank you transfer.
Speaker Change: Thank you.
Your next question comes from the line of David Adlington from JP.
David Adlington: J P. Morgan. Please go ahead.
Yes.
David Adlington: Hey, guys. Thanks for taking the questions. So first one.
David Adlington: In your prepared remarks, you mentioned that there was a 100 basis point hit to the DMT margin I think from.
David Adlington: Provision just wondering if it gets more color around that please.
Speaker Change: And then secondly, just in terms of the cost savings you delivered 151 billion I think in the first quarter year on year, but your adjusted EBITDA was only up 30, I just wondered where you are reinvesting some of those savings are with it.
Speaker Change: There'll be eaten up by headwinds elsewhere and then the final one is just.
Speaker Change: Now you've got more clarity on the cash just wondering if you have a plan to reinstate the cash dividend.
Speaker Change: Yes.
Speaker Change: A couple of things so.
Speaker Change: That said we.
Speaker Change: 100 basis points on top of the orders that was a provision for receivables receivables.
Speaker Change: Certain.
Speaker Change: Certain customers.
Speaker Change: Theres no its not an operational performance.
Speaker Change: Factory or anything to do with the cost structure of the business. We're just.
Speaker Change: A.
Speaker Change: Provision on our receivable with the particular customers.
Speaker Change: Thank you.
Speaker Change: If you look at the.
Speaker Change: Overall productivity of course in that.
Speaker Change: That productivity is compensating for our cost inflation.
So you will see that we have a bridge in the deck on slide 13, where you see a 2% is going towards cost inflation.
Speaker Change: That is a negative therefore, you don't see all of it back but you see a significant portion and then the.
Speaker Change: <unk>.
Speaker Change: Part of that I mentioned, the 100 bps.
Speaker Change: On BNP of course has an overall impact on Philips as well.
Speaker Change: On cash.
Speaker Change: Dividend I think it's a bit too early to comment now so let's first get to this year.
Speaker Change: End of the year, we will decide on how we will deal with our dividend for next year.
Speaker Change: As I mentioned the good news is that we can deal with our cash obligations with regard to the litigation from our operating cash flow and that also gets us to the two are.
Speaker Change: Very close to our targeted leverage.
Speaker Change: Next year we.
Speaker Change: Should be actually very good performance after paying off all the time.
Speaker Change: Got it thanks guys. Thank.
Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Ronny Gal from Citi. Please go ahead.
Ronny Gal: Hi, guys. Good morning, and thank you for taking my questions I have two please if I can.
Ronny Gal: The first one is shifted but could you sort of alluded to this margin progression that you would expect AT&T in particular through the year, if you could outline a little bit.
Ronny Gal: How we should be thinking about that I think you've talked about maybe 50 basis points or more margin improvement for the full year.
Ronny Gal: Do you still expect margins to be down in the second quarter, and then I guess.
Ronny Gal: But in the back half of the year.
Ronny Gal: Particularly pronounced in Q3 versus Q4.
Ronny Gal: Just because last year was such an unusual year.
If you could if you could help us understand that and maybe just a comment that qualify as well.
Speaker Change: And then I have a separate question.
Speaker Change: The settlement announced this morning.
Speaker Change: Maybe give us all reinsurance I guess would love to understand.
Speaker Change: To what extent they'll kind of exception. So it's all encompassing does it include situations like that as well with injury.
Speaker Change: Just if you could talk through sort of what are some of the <unk>.
Speaker Change: Separate litigation that is outside of the scope of the settlement and then define license settlement what are the steps that are remediated.
Speaker Change: In terms of the court and discussions.
Speaker Change: Yes.
Speaker Change: When can we set up.
Speaker Change: Consider this completely done and dusted.
That would be some color around that would be very helpful. Thank you guys.
Veronica: Hi, Veronica.
Veronica: Good morning, Let me take the first question and then pass it onto ROI for the second one.
Veronica: So.
ROI: The first two quarters of last year, we had very strong improvement in the <unk>.
ROI: Margins of BNP.
ROI: I remember quarter.
ROI: Quarter, one was 600 basis points first half of the year was 500 basis points and we said at that time. It says that that's a bit of.
ROI: Unusual pattern so far this year the way you should read it is that we will improve.
ROI: In the fall.
ROI: In the second half.
ROI: The first half will be.
So, including Q2 will be lower than last year, but then Q3 Q4, you will see the improvement and then you'll see the improvement.
ROI: The full year important to note that the guided range for 2025.
ROI: Is.
ROI: Low teens, we are already in that range. So we will make further progress into the range. This year and then progress.
ROI: The range next year as well so we are on a good track.
ROI: With DMT.
Speaker Change: On the litigation regulatory I May let me, let me take that one.
Speaker Change: Frank I think you I think important question indeed finality.
Speaker Change: I think we are very firm that we believe that for the U S.
Speaker Change: This is final as it can get.
Speaker Change: The settlement addresses all the 60000 known claimants as part of the centers registry, including the 700 filed cases that were active.
Speaker Change: We do not believe that there is a meaningful number of plaintiffs out there that will still come forth as also the view of the plaintiffs themselves.
Speaker Change: And if they do they will be subject to so called lone pine order, which requires them to bring forward a full case at once oils. There will be dismissed and also they will need to kind of comfort with older individual evidence.
Speaker Change: Everything that was gathered as part of this process at now will cease to exist.
Speaker Change: There are six months have actually people can still come forth. After six months actually the whole class action or a whole MTL ceased to exist and Thats also why it was important that with this one.
Speaker Change: Court.
Speaker Change: Approved.
Speaker Change: Court approval.
There was a mediator.
Speaker Change: From the court that actually was part of this whole process.
Speaker Change: He has been very I think affirmative of this deal.
Speaker Change: You also saw that in our announcements.
Speaker Change: She will also make sure.
Speaker Change: This will be going through the court proceedings that we don't know exactly when that will be what we don't expect that it will take too long.
Speaker Change: And so we are actually very confident that this will really put an end to this and that's very important because bandwidth, adding economic loss economic personal injury and medical monitoring we really have put the vast majority of these cases behind us.
Speaker Change: With finality and clarity and therefore this provides us with a fourth which we can focus on really running running the business and growing Phillips and bring it back to where it belongs.
Speaker Change: That's very clear thank you and can I just ask a follow up on on the Doj and I guess, if you have any updates on where you are there with.
Speaker Change: With the process.
We might expect similar finality, all my discussions with them.
Speaker Change: Yes, no Doj I think there's not a lot. We can say this is still ongoing.
Speaker Change: We are in full collaboration have been providing them.
Speaker Change: Documents so actually.
I cannot further comment on that that process, we will going forward. Once we have any further clarity on that I cannot say more antigen currently is still in process.
Speaker Change: Excellent great. Thanks, guys so much.
Speaker Change: Thank you.
Your next question comes from the line of.
Speaker Change: Can you guys Jose from Exxon BNP, probably about please go ahead.
Jose: Hi, Hello, Thanks for taking my questions I have three I.
I hope that's okay first on <unk> can you, maybe abhijit elaborate a bit more on the region and the modality from that customer.
Jose: And the provision passed for <unk> that is adding a 100 basis point impact on the margin that would be helpful.
Jose: The warning letter in your CET, China planned could this impact the rollout of your new instrument.
Jose: <unk>.
Jose: China.
Jose: Stimulus in China is already reflected into the guide for <unk>.
Jose: 2020 for DNT and lastly, maybe Roy a follow up on Ken's question earlier can you update us on the on site to lend to spill settlement ex.
Jose: Ex U S.
Roy: Litigation so outside of the U S. Thank you.
Roy: Yeah.
Speaker Change: Maybe you could could you repeat your question on China. Please.
Speaker Change: On China, the possible impacts from the stimulus is it reflected already in your guidance or in your expectations for <unk> and the acceleration throughout the rest of the year.
Speaker Change: Okay. So first.
On the provision here, we cannot give up close.
Speaker Change: <unk> public.
Speaker Change: Public debt stood between us and the customer so even for privacy reasons, we cannot disclose that.
Speaker Change: On China you can.
Speaker Change: Sure.
Speaker Change: Make it reasonably simple, yes that is part of our guidance, we had anticipated that there would be a recovery in China stimulus only substantiates that expectation so.
Speaker Change: It is part of that.
Speaker Change: Our overall guidance for the year.
Speaker Change: Maybe if they may be.
Speaker Change: Question on the.
Speaker Change: China.
Speaker Change: Morning letter I think you also referred to that.
Speaker Change: I think we are working fully through.
Speaker Change: Kind of follow up actions with the FDA on is we don't expect any current operational impact from that this process remediation.
Speaker Change: Of course, we take it very serious like we take any.
Speaker Change: Finding.
That comes out of any site visit.
Speaker Change: Our boats that are two findings both relates to process compliance there were no reports of patients home. So I think it's important to also.
Speaker Change: I mentioned that we do not see any.
Speaker Change: Impact from it in.
Speaker Change: In terms of settlement ex U S.
Speaker Change: I think it's important that that's also why it's such a breakthrough this quarter that actually this is by far the vast majority of cases secondly, what is very important that we do not admit any guilt as part of this settlement.
Speaker Change: Neither towards patients or diseases also referred to qualify the early testing that showed no appreciable hump was done. So also we look at full confidence to any cases outside of the U S that still might happen.
Speaker Change: We bring that to.
Speaker Change: Two quick conclusion.
Speaker Change: But as said before the most important is that the vast majority of cases was in U S. And also as we all know the U S legal system is.
Speaker Change: In a particular way and Thats why it was so important to Andy's certainty.
Speaker Change: The uncertainty and create clarity on the way forward by getting a settlement on this specific case in the U S.
Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Your next question.
Speaker Change: Comes from the line of.
Speaker Change: One moment, please Graham Doyle UBS. Please go ahead.
Graham Doyle: Morning, guys Hope you can hear me and thanks for taking my questions just two from me.
Graham Doyle: First obviously congratulations on the.
Graham Doyle: I think that's a lot of clarity.
Graham Doyle: Clearly sooner than people were expecting.
Graham Doyle: Just one sort of regulations that really when you look at the P&L for the last few years and I suspect even the next couple of years, there's obviously a lot of adjustments.
Cash charges and things like that.
Graham Doyle: Is that the next focus once we get through the next year or two to sort of square that so that you reported in <unk>.
EBIT won't be so different going forward and kind of lift that that cash generation. Obviously go forward that is question number one and question number two you actually gave us really good insight in terms of like explaining how the unlock or the improvement in China was occurring as these investigations progressed in.
Graham Doyle: You had these sort of regional committee setup and could you give us another update as to how youre seeing that and is everything still tracking as you would expect and what does that mean in terms of order flows even sequentially say Q1 versus Q4, just to get a sense.
Speaker Change: Well things are moving in China. Thank you.
Speaker Change: Yes, Thank you Graham.
Speaker Change: I think good questions. So on the first.
Speaker Change: For sure recognize that of course, we had significant hits into the P&L.
Speaker Change: Into at the lines.
Speaker Change: Towards adjusted items now.
Speaker Change: Also the clarity of today helps to actually further provide guidance around the.
Speaker Change: The adjusted items going.
Speaker Change: Fourth we had many of the adjusted items in last years, Thats, where unfortunately tied to recall as you know so that has been really significantly impacting it now as we have the vast majority of vehicle now behind us we remediated the sleep therapy devices.
Speaker Change: We have kind of clarity on.
Speaker Change: The settlements as we now been providing for that really will allow us to kind of really bringing that number substantially down. We also of course took restructuring to get productivity and you also have seen that contribution into our margin improvement.
Speaker Change: But also there as you have seen we are well on track with the 85000 roles that we reduced by now that doesn't mean that we still have 100000 approximately remaining so there will be some restructuring that will come with that and we also as obviously.
Speaker Change: Keep working Src to get that into the best possible shape. So there's still some of that to come but it will be a different dimensions than the unfortunate big numbers. We have seen so that is for sure a focus that secondly in terms of China I was actually in China, a month ago I've been talking to the Vice President myself of course talking to a lot of cash.
Speaker Change: And looking at situations on the ground so.
Speaker Change: So two parts of the story. One is was a continued impact from these anti corruption industry measures that were taken by the government.
Speaker Change: And as I said before they are working through this.
Speaker Change: They're doing that region by region, but it is not done yet and thats be set already.
Speaker Change: When we came into the year, we still see that also therefore impacting as we speak our expectation is unchanged that actually we do expect that towards the second half of the year, we will see.
Speaker Change: Proven coming in but its too early actually in the first half to really count on that and that's also something that we of course are happening in the first quarter I think the positive for me and this new stimulus program because that indeed was not yet there.
Speaker Change: And also learn more about that Theyre specifically targeting.
Speaker Change: <unk> subsidy to hospitals that can come forth to upgrade their installed base that has aged.
Speaker Change: And we also have seen customers putting in their requests of course, it will take time before they have kind of worked through dose less approve it and the market will benefit from it. That's also why we say it's gone up this will benefit the mid to long term attractiveness of the market because it will just help accelerate some of the replacement orders that will come.
Speaker Change: To play when the market opens up more.
Speaker Change: Great that's very clear thanks, a lot guys.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Julian <unk> from.
Julian: <unk> from Jefferies. Please go ahead.
Hi, Good morning, Ralph Good morning, <unk>, Thanks for taking my questions and congrats on the on the settlement.
Julian: The first one relates to the midterm outlook there was no confirmation of the midterm outlook in your material.
So is this an indication that maybe you are currently reviewing it.
Julian: Especially now that you have more clarity on risk.
Julian: Maybe that could lead to an upgrade on that side.
Julian: My second question is more of a housekeeping one on the order book.
Julian: Just to better understand what was the split in the order book between DNP in PC in the first quarter I mean last year with a very diverging trends.
Julian: Just trying to understand whether we're talking about maybe a double digit decline in BNP and some growth in DTC.
Julian: First quarter of 2024.
Speaker Change: And my last question sorry.
Speaker Change: Question is on the.
Speaker Change: Sure.
The growth in the U S in the quarter.
Speaker Change: Zero percent growth in the U S. So just wanted to better understand which division was the most impacted and how we should think about the U S.
Speaker Change: Of the remaining quarters of 2020, thank you very much.
Speaker Change: Yeah, Hi, Julien regarding the mid term outlook I think you.
Speaker Change: So it is in the outlook if you look at our press release or the first.
Speaker Change: Central to the outlook as we reiterate our confidence in delivering the 2025 plan.
Speaker Change: So that is already there and it's already very ultra and the company et cetera. So we have reconfirmed our outlook for 2025.
Speaker Change: You said you know whether there is an upward postal litigation if you remember when we gave the guidance we have excluded litigation related charges. So we've not only confirmed the outlook for the midterm plan, but also for this year right. So most of them have been done and we have upped our.
Speaker Change: Our cash flow guidance for the year.
Speaker Change: Your second question.
Speaker Change: The order book I think.
Speaker Change: It was.
I guess split between both of them, so I don't want to get going to all.
Speaker Change: General and other differences, but this was.
Speaker Change: Let's see overall.
Speaker Change: Impacted mainly by China, so rather than modalities I think the big thing to realize is that the impact was.
Speaker Change: Really from.
Speaker Change: China.
Speaker Change: China bulk of the business is in the E&P. So therefore, the impact on BNP is slightly higher than <unk>.
Speaker Change: And.
Speaker Change: For the U S in terms of.
Speaker Change: Sales I think the main reason there is the.
Speaker Change: Comps compared to last year, because we went out of the blocks with a huge growth last year in Q1.
Speaker Change: And that's what makes it difficult to in terms of the comps for this year.
Speaker Change: That was largely as I mentioned earlier ultrasound and IGT.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: We will now go to the next question.
Speaker Change: And your next question comes from the line of Julien our adult.
Julien: From Bank of America. Please go ahead.
Julien: Good morning, Thanks for taking my questions. So the first one I just want to come back.
Julien: Columbus settlement.
Julien: What's the likelihood of new claims surface. After the six months period for the plenty to sign up for the settlement.
Julien: And just maybe if you can explain us how difficult it might be for them to get a competition and if we need basically to address sort of margin of safety on top of the $1 1 billion.
Julien: For these cases.
Speaker Change: Then the second question on orders so you seem to be pretty pleased with the momentum in the U S and I think at the beginning of the year you said that.
Speaker Change: Orders will be strong in the U S because like finance.
Speaker Change: Wincing conditions will become a bit more easy through the year with interest rate cuts. It seems we are more going into situation, where interest rates because I'm not going to happen before the end of the year.
Speaker Change: Impacted demand at some point in the U S and the final question is about China, So let's put it.
Speaker Change: I'll make the comment that you made did you.
Speaker Change: Any sort of color, but the installed base H in China, because it seems that the sort of like installed base.
Speaker Change: <unk> been upgrading the recent here so.
Speaker Change: It could be lower today, and if you can just give us a bit more.
Speaker Change: Color, but the real benefit from the stimulus that you think could could happen. Thanks.
Speaker Change: Yeah. Thank you Julien.
Speaker Change: Good questions, let me start with the first one settlement.
Speaker Change: So the likelihood of new claims coming after six months so.
Speaker Change: I think it's important as we said that actually we believe that.
Speaker Change: Please continue to Sam by your conference will resume shortly.
Speaker Change: What is it.
Speaker Change: Are you in the call you are now live back thank you.
Speaker Change: Okay, not sure whether you heard meaningful but so let me kind of repeat the essence. So firstly, we said kind of we believe really disputes finality to what is out there that is also not only our opinion, but also of the plaintiffs leadership.
Speaker Change: They actually advertise for three years the case, so actually they believe that the majority of people that know the case was there actually have step forward or in the central registry.
Speaker Change: 60000, as you know, but then also 700 kind of claimants.
Speaker Change: <unk>.
Speaker Change: They have another six months again come forth there after the whole Casey success sort of MTL will be closed also all the preparatory work that was done by all the plaintiff lawyers will cease to exist.
Speaker Change: Therefore, any individuals that comes thereafter, we will have to come on individual terms, they will be subject to a long order.
Speaker Change: Lone Pine order means that there are certain criteria that you need to fulfill before you even can be.
Taken into the case, you will not have access to any of the expert reports that was made or may need to do it yourself and as you know kind of only four testing we spent millions.
Speaker Change: <unk>.
Speaker Change: Of dollars to get to our outcome. We showed that no appreciable harm was done and Thats also still standing as we have not made any guilt and they are also subject to time restrictions because there is a statute of limitations and that actually is from the starting of the <unk>.
Speaker Change: Recall, so from 2021 onwards anomalies or periods of two to three years.
Speaker Change: Finally, if you look to the trending of the census registry. It has been stable for months already so actually we have seen that there was no significant intra already coming lately. So taking all this together, yes. There is a very strong confidence that we have that actually we.
Have been dealing with.
Speaker Change: With the cases out there and this truly will put an end to the personal injury and the medical monitoring claims in the U S and also the economic.
Speaker Change: <unk> settlement as you have seen before we reiterated actually the provision we took was enough even now after a year. So that was also I think.
Speaker Change: While accounted for and we expect the same with this one.
Speaker Change: Then on the order intake momentum in the U S.
Speaker Change: I think you're fair to say that maybe interest will not move.
Speaker Change: As we expected earlier, but at the same time, we have seen that the system itself are strengthening in terms of the patient.
Speaker Change: And therefore the income they are generating and that also has been strengthening their investments as we said also in our order intake, that's something where we see that our innovations that we have been putting out to the market and have been out there at the HIMSS at five.
Speaker Change: A lot of excitement about what we are offering in terms of our workflow solutions.
Speaker Change: We announced DCT 5300, AI suite that actually putting out of the market the new IGT azilian solution for stroke.
So we are confident that actually the U S market will show continued strength.
Speaker Change: Throughout the year and that is unchanged and that on.
Speaker Change: The installed base H in China, I think it's fair to say that they have a backlog in upgrades also especially in a prolonged period of Covid. That's why we did see actually 2023, when they came off covered a lot of investments coming into play that spot spring last year. So very strong Q1 order growth.
Speaker Change: And we expect that also will therefore continue once the market opens up more now even further now kind of encouraged by the Chinese government that also want to.
<unk> supports the investments to get the <unk>.
Stall based replaced but also for Amazon expansion program as they also need to take care of more patients. So it's a combination that we expect to come into play later into China.
Speaker Change: Thanks, Thanks, Dennis any like any idea, but just like the age of the installed base in.
Speaker Change: In China at the moment.
Dennis: No I would not be able to give a specific number what I do know is that kind of debt. It qualifies for equipment of $6 eight year of age.
So that has gone up.
Dennis: The conditions that they have put out the government and thats kind of where do you have the current.
Dennis: What the customers are currently putting forward.
Speaker Change: Perfect. Thank you very much very helpful.
Speaker Change: Thank you.
Speaker Change: Your next question.
Speaker Change: Comes from the line.
Speaker Change: Robert Davies from Morgan Stanley. Please go ahead.
Yes. Good morning, Thanks for taking my questions most of them being covered I have a few left.
Robert Davies: One was just on you mentioned, obviously the normalization of the order book overall.
Robert Davies: But it's still elevated I think Bruce is pre COVID-19 levels, just how do you think about that sort of delivery timeline. How quickly is that I'm going to catch up is that a part of your kind of confidence in the second half numbers.
Robert Davies: Is it kind of accelerated delivery of that order book through H, two and should we be kind of a normal run rate on the order book by the end of the year that was my first question.
Robert Davies: My second question was on the.
Robert Davies: EBIT Bridge, you provided with the cost headwinds against productivity and pricing measures, which robots in net positive.
Robert Davies: Just be curious within those productivity and pricing how much of that came from head count reductions I guess my question is really has the head count reductions tail off are you still confident to get net.
Robert Davies: A net benefit of cost versus productivity going forward.
Robert Davies: And then finally, just if you could flush.
Robert Davies: Flushed out and a little bit more detail some of the different regional trends youre seeing across the personal health business. Just I know you called out consumer weakness in China.
Robert Davies: But perhaps across some of the other markets I'd be interested thank you.
Yes, hi, Robert regarding them.
Robert Davies: A normalization of order book I think you are right the confidence in the second half comes from the fact that we expect deliveries to take place in the second half.
Robert Davies: And therefore that normalization should happen by the end of the year, maybe we will still be a tad higher at the end of the year, but not as high as we are now so that should kind of build through the second half.
Robert Davies: Sure.
Robert Davies: The head count reduction I mentioned in the speech that the operating model savings already $55 million in the quarter. So it's still significant.
Robert Davies: Because we are just started let's say last year in Q1.
Robert Davies: The reductions so there is still quite some more to come throughout the year.
And then.
I can take.
Robert Davies: So if you look through to the Clos I think what we've seen is that China indeed subdued.
Robert Davies: We see actually a quite strong rebounds in Europe. So actually we saw some strengthening in Europe. We also think that's on the back off.
Robert Davies: Some of the wage increases that have been put out there. So you see consumer has more to spend and we have been benefiting from that also in the growth markets. I think you are a market that is not yet as strong as we would like is North America, we do see the sellout strengthening but not yet fully kind of the.
Robert Davies: The sell in we also note that actually customers have been reducing their inventory levels. So they are pretty tight on their cash management as well.
Therefore actually it makes shorter lines. So in sum I would say globally, we expect that consumer will strengthen throughout the year and also in terms of that towards the guidance that we expect they will be also towards that guidance of 3% to 5% down and now starting with three that should actually full year increase.
Robert Davies: But that will also be on the back of China, which second half will have the most I think contribution into that.
Speaker Change: That's great. Thank you.
Speaker Change: Thank you.
Speaker Change: We will now take our next question. Your next question comes from the line of Seth <unk> from HSBC. Please go ahead.
Seth: Thanks for the presentation and taking my questions and congrats on the settlement and one thing one question on the insurance claims can you give us a color on how these insurances work and whether your premiums for insurance are likely to go up.
The payout and do you have the same kind of insurance and protect liability in all of your products and my second question.
Seth: Two.
Seth: Connected care going forward, you mentioned youre growing.
Seth: A bit to get pad, which is normally a lower margin market, but in this case, you mentioned that the leasing model makes it more attractive do you have any other factories that will create a different margin outlook for connected care going forward.
Seth: Yes.
Seth: And also regarding insurance claims.
Speaker Change: Yes, it's a bit of speculation now.
Speaker Change: Whether it will go up or not so that's something we will see in the next round.
Speaker Change: Because it's the first time, we are claiming such larger models. It's not that we have a long history of claims. So we will have to see how those discussions go but also the actions that we're taking to improve quality et cetera should have who will be part of those discussions regarding connected care in Japan.
Speaker Change: It is not a low margin market. So I just want to correct that.
Speaker Change: We have a very strong sleep and respiratory care business that operates on a recurring revenue basis. So that also drives module so as far as Japan is concerned.
Let's see.
The core of the underlying business still remains very strong.
Speaker Change: Thanks, very much as a follow up may I ask like usually what's the term of insurance is like do you conclude insurance agreement on the yearly premium or is are we looking more on a multiyear multi year base depends on each policy before so I think that would be too much of detail too.
Speaker Change: But there are policies, which you have two year terms, one year terms et cetera, so each one of them differs.
Speaker Change: But I think it's important that we have this.
Speaker Change: These insurances for all our products.
Speaker Change: Ongoing and common business. So I think that's also how this will be seen this is part of our long term kind of insurance.
Speaker Change: The trajectory that we have out there.
Perfect. Thanks very much.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Falko Friedrichs Deutsche Bank. Please go ahead.
Falko Friedrichs: Thank you good morning, I have two clarification questions on the fidelity of the settlement agreement here.
Falko Friedrichs: Firstly can you confirm that there's no chance of a court trial now so essentially.
Falko Friedrichs: Anyone in defense of schedule III can anyone still bring their case two quarters is that essentially impossible now under the agreement.
Falko Friedrichs: Then secondly on.
Falko Friedrichs: These additional testing programs you are running.
<unk> to the FDA requests.
Falko Friedrichs: First of all going as planned and then.
Falko Friedrichs: In case those additional tests go against you right and let's just say they show potential harm to patients could that put anything with this framework put in place at risk or could that open up a new avenue for plaintiff lawyers, a little bit more clarification. There would also be helpful.
Speaker Change: Thank you.
Speaker Change: Yes. Thank you.
Speaker Change: To clarify further so in terms of the core trial. So the <unk> will not be pursued so that says, especially nvme MTL will be terminated so they cannot kind of pursue further trials out of the current NPL or sensors registry what could happen.
Speaker Change: Is that people individually light to come forward and still go on an individual case, but as we said even for dose there will be very high barriers to do so because it will be standalone, they will need to adhere to the lone pine order that will need to come up with their own expert reports galassi show whatever causality, they want to show and.
Speaker Change: We have our own testing as you know that shows no appreciable harm and there is time limitations towards the time that they can do this that's why we are.
Speaker Change: Very confident on the finality as we said before.
Speaker Change: I think also what is important.
Speaker Change: <unk> there is no correlation at all between the testing and finality of this case.
Speaker Change: So any further outcome in testing, we will not have any impact on the current settlement settlement is as is the amount is capped and final.
And there will be no testing related to this.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Your next question.
Speaker Change: Comes from the line of.
Glen Gil: Glen Gil from AVN.
Glen Gil: Jeff. Please go ahead.
Glen Gil: Yes, very good morning. This is <unk> from ABN, although too.
Glen Gil: Two questions from my end first.
Glen Gil: $540 million to be received from the insurers.
Jeff: The risk pool disclaims to which part of the vehicle is exactly related to this is the physical equal of course.
Jeff: Economic loss parts personal injury bought or is it the total.
Jeff: The issue at all.
Jeff: Or any other insurance related distributions ongoing.
Jeff: Then the second question would be on the legal sabre battling that you have with <unk>.
Speaker Change #100: Can you give us a bit indication.
Speaker Change #100: Timelines are.
Speaker Change #100: What's the range of outcomes is if you have any.
Speaker Change #100: Thanks.
Yes so.
The insurance is not for the recall cost, but everything outside of that so the whole list to give.
Speaker Change #100: It does not cover the recall cost but of course, the product liabilities the personal injury monitoring all of that.
Speaker Change #100: The second question you had was on silk locally.
Speaker Change #101: Yes, So let me maybe I can think of it. So I think so there is no timeline.
Speaker Change #101: That we can give to that of course that is still in process and therefore also it's kind of too preliminary to give a range of outcome for the show clean case. So I think this is something that is ongoing.
Speaker Change #101: And we will keep you posted on any contribution that might flow from there.
Speaker Change #101: I think as much as we can say now.
Speaker Change #101: You asked whether there are other insurance things that we are pursuing the answer is no. This is the only one we have indicated that last year, we have been exactly in line with the estimates in there.
Speaker Change #101: It has ended up in in the same dilemma the cash flow this year.
Speaker Change #101: Yeah.
Speaker Change #102: Perfect and maybe as a.
Speaker Change #102: Follow up on the sofa.
Speaker Change #102: Because if memory serves me well <unk> was also included in the.
Speaker Change #102: Well it wasn't clause action beauty.
Speaker Change #102: The MD altitude.
Speaker Change #102: So.
Speaker Change #102: Did anything come out of that or.
Is it is there nothing that really touched him at this point in time.
Speaker Change #103: No its a separate MTL. So there is currently no no impact from that.
Speaker Change #104: Alright, Thank you very much.
Speaker Change #105: Thank you.
Speaker Change #105: This is the time.
Speaker Change #105: Last question comes from the line of Ed.
Ed: Edward Lee day of Redburn Atlantic. Your line is open. Please go ahead.
Ed: Thank you very much and I'd add my congratulations to the execution of a settlement.
Ed: Few follow ups.
Ed: On the patient monitoring.
Clearly you had strong comps for a number of quarters from last year.
Should we see patient monitoring growing in fiscal 'twenty four is possible and if you could provide some color on that would be helpful.
Ed: You could also provide any color on the ultrasound business growth within the quarter and how that relates to market growth that would also be helpful. Thank you.
Ed: Yes.
Speaker Change #107: Yes so.
Speaker Change #108: We are monitoring we do see growth this year. So there is no.
Let's say, we have no doubts like I said in Q1, we have tough comps.
Speaker Change #108: Last year so therefore.
And in terms of ultrasound also we had I think if I remember from top of my head and the third is growth.
Speaker Change #108: In the 30% plus growth in Q1, so therefore the Q1.
Speaker Change #108: This year is of course, a slight decline, but very slight.
Speaker Change #108: And the good news is that we have quite some innovation coming in ultrasound, which is launching as we speak. So we really expect to gain good momentum on top of a very strong last year to continue that momentum this year as well.
Speaker Change #108: So we will continue to gain share there.
Speaker Change #109: Thank you for that.
Speaker Change #110: Thank you.
Thank you gentlemen that was the last question I will now hand back to Mr. Jacobs for any points you may still like Kuwait.
Jacobs: Yes. Thank you all for your questions much appreciate it.
Let me close out by just repeating once more to key messages of today's announcements first of all we delivered results in line with our performance improvement plan for the first quarter as a result of strong continued focus on our execution.
Jacobs: <unk> very important steps taken in resolving the consequences of the rest of our Rx recall in the quarter, but major milestones on litigation.
Jacobs: Consent decree.
And on insurance, which provides clarity on the way forward for Philips and fairly.
Jacobs: The progress we are making reinforces our confidence to deliver further performance improvement in 2024, and we are on track with the plan for 2025.
Speaker Change #112: Thank you all for listening have a great day.
Thank you. This concludes the Royal Philips first quarter 2024 results conference call on Monday, The 20 <unk> of April 2024. Thank you for participating you may now disconnect.
Speaker Change #112: Okay.
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Speaker Change #112: Okay.
Speaker Change #112: Yes.
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Speaker Change #112: Yes.
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Speaker Change #112: Yeah.
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Speaker Change #112: Okay.
Speaker Change #112: Hum.
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Speaker Change #112: Yes.
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Speaker Change #112: Good.
Speaker Change #112: Yes.
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Speaker Change #112: Yes.
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Speaker Change #112: Yeah.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Sure.
Speaker Change #112: [music].
Speaker Change #112: Okay.
[music].
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: [music].
Speaker Change #112: Sure.
Speaker Change #112: Thank you.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Thank you.
Speaker Change #112: [music].
Okay.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Sure.
[music].
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
[music].
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Yes.
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Speaker Change #112: Yes.
Yes.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Sure.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: [music].
Okay.
Speaker Change #112: [music].
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Yes.
Speaker Change #112: Okay.
Yes.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Okay.
[music].
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
[music].
Okay.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
[music].
Speaker Change #112: Thanks.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Sure.
Speaker Change #112: Thank you.
[music].
Speaker Change #112: Thanks.
Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Yes.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Sure.
[music].
Speaker Change #112: Thank you.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: No.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Yes.
Speaker Change #112: Okay.
Speaker Change #112: Thank you.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
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Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Okay.
Great.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Sure.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Thank you.
Speaker Change #112: Thank you.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Please.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Sure.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Yes.
Speaker Change #112: Sure.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Yeah.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: [music].
Yes.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Speaker Change #112: Sure.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Yes.
Yes.
Speaker Change #112: Yes.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
Speaker Change #112: [music].