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Overall the call presented a constructive tone: Philips reported broad-based order and sales growth, margin expansion, strong productivity delivery, robust innovation and regulatory momentum, and meaningful balance sheet improvement. These positives were balanced against notable headwinds in China (centralized procurement), cost inflation (freight, components, plastics) and near-term margin timing effects from tariffs and inflation. Management reiterated full-year guidance (3%–4.5% comparable sales; 12.5%–13% adjusted EBITDA margin; EUR 1.3–1.5bn free cash flow) and emphasized mitigation actions (productivity, selective pricing, AI-enabled cost savings) while acknowledging geopolitical and legal uncertainties.
Philips reiterated its full‑year 2026 guidance: comparable sales growth of 3.0–4.5%, adjusted EBITDA margin of 12.5–13.0% and free cash flow of €1.3–1.5 billion. Management said each quarter should be within that sales range, led by North America and the international region, with China comparable sales expected to be stable and segment guidance skewed to the upper end for Connected Care and Personal Health and to the lower end for Diagnosis & Treatment. The company acknowledged near‑term margin pressure from tariffs, freight, electronic components and plastics but pointed to Q1 momentum (order intake +6%, comparable sales +3.7%, adjusted EBITDA margin +40 bps to 9%, adjusted diluted EPS €0.23, free cash flow +€28m, cash €2.6bn, net debt €5.5bn and leverage ~1.8x) and €126m of Q1 productivity on track to €1.5bn over three years as offsets; guidance reflects currently known tariffs (marginally more favorable than February) and excludes potential tariff refunds and Philips Respironics‑related proceedings.
Order intake grew 6% in Q1 with equipment order intake up 6% and continued momentum across businesses. Group comparable sales increased ~3.7%–4% year-on-year (management cited both 3.7% and ~4%), with growth across all segments and regions led by North America and Western Europe.
Adjusted EBITDA margin expanded by 40 basis points to 9.0% in Q1 (group). Segment margins: Diagnosis & Treatment adjusted EBITDA margin +30 bps to 9.8%, Personal Health margin +60 bps to 15.8%. Adjusted diluted EPS from continuing operations was EUR 0.23 (vs EUR 0.25 prior year). Net income rose to EUR 146 million.
Personal Health delivered broad-based comparable sales growth of 9% in Q1, led by double-digit growth in North America. Distribution expansion: added >3,000 distribution points in Europe and increased retail listings. Strong consumables/recurring revenue: >50 million OneBlade handles and 100 million blades sold.
Q1 product productivity delivered EUR 126 million toward the EUR 1.5 billion 3-year savings commitment; actions include SKU rationalization, supplier consolidation and AI-enabled efficiencies. Adjusting items materially reduced to EUR 61 million from EUR 143 million prior year.
Received 20 510(k) clearances and PMAs in Q1 (more than double YoY). Notable clearances/launches: SmartHeart (AI cardiac MR), Verida spectral CT (initial European orders and first installation), DeviceGuide for Azurion, IntraSight Plus, helium-free MR leadership (BlueSeal >2,200 installs; >6 million liters of helium saved) and unveiled helium-free 3.0T targeting regulatory clearance in 2027.
Signed strategic partnerships and enterprise agreements including a 5-year enterprise service agreement with AdventHealth and a multi-modality strategic partnership with WellSpan Health. Seven clinical studies underway for the interventional platform via a research consortium.
Ended Q1 with EUR 2.6 billion cash after a $265 million SpectraWAVE acquisition payment. Net debt EUR 5.5 billion and leverage improved to 1.8x (from 2.2x in Q1 2025). Free cash flow in Q1 was an inflow of EUR 28 million; excluding the prior-year Respironics settlement impact, free cash flow improved by EUR 94 million YoY.
Field actions reduced ~20% year-to-date (following ~40% reduction in 2025). Supply chain initiatives (regionalization/localization) maintained customer service levels despite Middle East volatility and supported resilience and reduced release cycle times by ~25% in some areas via AI-enabled testing.
Welcome to the Philips First Quarter 2026 Results Conference Call on Wednesday, 6 of May 2026. During the call hosted by Mr. Roy Jakobs, CEO; and Ms. Charlotte Hanneman, CFO. [Operator Instructions]. Please note that this call will be recorded, and replay will be available on the Investor Relations website of Royal Philips. I'll now hand the conference over to Mr. Durga Doraisamy, Head of Investor Relations.
Please go ahead, ma'am.
Hello, everyone, and welcome to Philips' First Quarter 2026 Results Webcast. I'm here with our CEO, Roy Jakobs, and our CFO, Charlotte Hanneman. Our results press release and presentation are available on our Investor Relations website. The replay and full transcript of this webcast will be available on our website after this call concludes. I want to draw your attention to our safe harbor statement on the screen and in the presentation. I will now hand over to Roy.
Thanks, Durga, and good morning, everyone. Thank you for joining us today. I will start with an overview of our Q1 results and our outlook for the balance of the year. Charlotte will take you through the quarter and our guidance in more detail. We started '26 with a clear proof that our strategy is delivering, growth, margin expansion and strong order momentum despite the volatile environment. At the same time, we remain closely connected to our customers and employees. This includes those impacted by the situation in the Middle East. We continue to prioritize their safety, support and continuity of care.
Against this current backdrop, we reiterate our full year guidance. Looking at Q1...