Koninklijke Philips N.V. (NYSE:PHG) Q2 2023 Earnings Call Transcript

Roy Jakobs: On the second one, maybe on the CD. So starting with your last part of the question, I think we will get towards consent decree. So that’s just — it is a matter of time. So I don’t think it’s — there’s no scenario that we will not get there because it was initiated, so it will be concluded. I think if you look at the timeline actually, we are now kind of in a year after it started. But actually if you look to a comparable own experience we had with the AED, which was of much smaller size and complexity, it also was over a year discussion to get to kind of a consent decree. So I would not read also too much into the fact that we are now passing the one-year mark. And also if you look to other consent decree discussions with other parties, you will see that these timelines are not kind of out of out of the normal.

This needs to be done diligently. And as we said before, yeah, this is a significant one given that the sleep and respiratory recall was a sizable affair. So I think that is what we are working through together and that’s also what we will bring to conclusion at the right time.

Graham Doyle: Okay, great. That’s really clear. Thanks a lot guys.

Operator: Thank you. So we will now go to your next question. And your question comes from the line of Sezgi Bice Ozener from HSBC. Please go ahead. Your line is open.

Sezgi Bice Ozener: Hi. Thanks for taking my questions. Just two please. First of all, on the change that you had, the transfer of Enterprise Informatics from D&T to CC, we can see how the margins of that business was so far. But going forward, can you give some color on the projected outlook of that business in terms of growth and margins and what kind of markets you’re seeing there? And second of all, on free cash flow, it was shortly mentioned, of course, the fact that the guidance you the made same despite higher guidance and also even though the second quarter tends to be a lot stronger from a cash flow perspective, was the fact that some of the liabilities are not certain yet a factor in that? And do you see any downside risk to that guide given the first half free cash flow stood much lower? Thank you.

Roy Jakobs: So maybe let me take the first one. Indeed, I think we put Enterprise Informatics to Connect Care. I think the importance was that we really put it as a separate vertical where we combined the different informatics assets actually to ensure that the capabilities to run that in an end-to-end manner actually yield its effect. And I can say that actually we do see the impact coming into play. We have mentioned that the growth we expect should be double of what we grow at Philips. And also we have seen strong growth in that. On order intake, we also said that kind of we will be a bit cautious because we really want to fulfill well. And the delivery of these installations are important. So we’re working hard on adequate delivery.

And the margins are increasing. We have made certain choices for scaling the bigger platforms that we have. And that is healing effect and also we expect with further growth acceleration that that will scale further. So actually we have seen the first impact, which is positive, there’s a lot of momentum as you can understand, there’s a lot of demand for workflow improvement. AI is very hot and a big topic to see kind of how we can help the current customers with generative and analytical AI in their workflow and to drive patient outcomes. So we’re also applying that and we have multi-vendor solutions that actually can help across imaging, monitoring and also in providing care across care settings. So this isn’t a part that actually is generating a lot of interest and be having the dialogues with customers as we speak.