Koninklijke Philips N.V. (NYSE:PHG) Q4 2022 Earnings Call Transcript

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Roy Jakobs: Yes, let me take the testing. So, indeed, we have shared encouraging testing results in December, including the details that also part of the deck that we shared. The ozone testing is still due. As we shared earlier, we hope to disclose the data in due course early 2023. Actually, we are also there positive on what we are seeing, but we need to run through the full cycle. And most importantly, we also want to do it in, again, good alignment with the regulator before we bring out the data. So, we are testing all the cycles, so including indeed the 200 and beyond. I do not want to pre-empt the results, because we will disclose them when we also have discussed that and in alignment with the regulator. But I can tell you that we are positive on it and kind of we will come back to you when we are able to share.

Graham Doyle: Okay. Thank you very much. Just a quick follow-up on the order book, actually. Just the sort of trimming that was done in order to, I suppose, reprice and improve the quality of your order book, is there any more of that to do or do you feel like you’ve kind of gotten through that?

Abhijit Bhattacharya: No, we have done that. So that is done. It was a onetime cleanup that we did, and that’s the end of it.

Graham Doyle: Okay. Great. Thank you very much, guys.

Operator: Thank you. We’ll now go to our next question. And your next question comes from the line of Falko Friedrichs from Deutsche Bank. Please go ahead. Your line is open.

Falko Friedrichs: Thank you very much. Good morning. My first question is whether you can update us on your latest thinking about your return to the market in your Sleep Care business? And when you think you can be back to your previous market shares? And then, my second question is on the definition of your low-teens adjusted EBITA margin target. Does that mean 10% to 13%? I’m asking because for some people, low-teens are starting at 13%. So, would be great to clarify that. Thank you.

Roy Jakobs: Okay. Let me take the first and then probably Abhijit can take the second. So, as we shared, the first priority for the Sleep & Respiratory Care business is finalizing the recall. So, we have all our efforts on that. And we were encouraged and also, as you saw, as promised, we got to the 90% produced in end of 2022. We now want to bring that to 100% for sleep therapy devices by end of Q1 so that then we can ensure all patients will get the devices, whilst we also then need to work through the respiratory side. Now that, in combination with the dialogues that we currently have with the regulator, will determine when we can go to market. As these dialogues are ongoing, we don’t want to kind of get ahead of us and get ahead of that in terms of coming out with any specific detail around that.

As shared, whenever we have that outcome, we will immediately come back to you. For the moment, the first priority is really finalizing the recall, and we have all our efforts and resources focused on that, as well finalizing the testing, as you have seen, because we know how important that is for patients, and then also working through any other consequences so that we can restore in full the market position that we had. Now, I think it’s realistic to say that this will take a bit of time because of the position that we are in, but we are really determined to get back to where we were.

Abhijit Bhattacharya: Yes. And on the second one, we have taken 11% to 13% as the low teens range, just to clarify, Falko.

Falko Friedrichs: Okay. Thank you.

Abhijit Bhattacharya: Thanks.

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

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