Philips Investor Presentation

Important Information

This document and the related oral presentation contain certain forward-looking statements with respect to the financial condition, results of operations and business of Philips. These statements involve risk and uncertainty, and actual results may differ materially from those expressed or implied by these statements. Factors that could cause future results to differ include macro-economic and geopolitical changes, Philips' ability to keep pace with the changing health technology environment, integration of acquisitions, and other risks detailed in the Annual Report 2024.

Market share statements are based on outside sources and management estimates.

This presentation contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

Management uses certain non-IFRS financial measures. These should be used in conjunction with the most directly comparable IFRS measures. Non-IFRS financial measures do not have standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. A reconciliation of these non-IFRS measures to the most directly comparable IFRS measures is contained in this document. Further information on non-IFRS measures can be found in the Annual Report 2024.

All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up precisely to totals provided. All reported data is unaudited. Financial reporting is in accordance with the accounting policies as stated in the Annual Report 2024.

Company Overview

Creating value with sustainable impact. Path to value creation.

Our purpose: To improve people's health and well-being through meaningful innovation.

Our vision: Better care for more people.

Philips at a Glance

EUR 18.0bn in sales; 11.5% Adjusted EBITA margin.

~70% sales from #1 or #2 positions.

~40% of sales from recurring revenues.

~9% of sales invested in R&D.

Leader in ESG as highest ranking Health Tech company.

Global Sales Footprint

• North America: 43%
• Western Europe: 22%
• Other mature geographies: 8%
• Growth geographies: 27%

Market Position

Well-positioned to capture growing and attractive markets, enabling better care for more people through sustainable innovation.

Addressable Market

EUR ~90 billion in 2025, with a 2022-2025 CAGR of mid-single digit.

Structural and Increasing Gap Between Demand and Supply of Care

• Aging population and more patients
• Growing chronic and complex diseases
• Increasing spend on self-care and personal health
• Staff shortages and rising costs
• Expanding access to healthcare

Market Dynamics by Region

Fundamentally attractive market whilst short-term dynamics differ per region.

Closely monitoring hospital demand and consumer sentiment.

Our Businesses

Diagnosis & Treatment

EUR 8.8 billion sales, 11.6% adjusted EBITA margin.

Advancing outcomes for more patients and hospital productivity with precise and predictive imaging.

Ultrasound

Top 2 Globally – #1 Cardiovascular.

Diagnostic Imaging – MR, CT, DXR

Top 3 Globally.

Enabled by industry-leading Enterprise Informatics, #1 in PACS¹ and inter-operability.

Image-Guided Therapy Systems

#1 Globally: #1 Cath lab systems, #1 Interventional cardiology, #2 Interventional neurovascular.

Image-Guided Therapy Devices

#1 Globally: #3 Coronary devices, #2 Peripheral vascular devices, #1 Lead management, #1 3D Intracardiac echography.

Market leading installed base.

Connected Care

EUR 5.1 billion sales, 9.6% adjusted EBITA margin.

Global leader in hospital and ambulatory monitoring, largest vendor-agnostic Enterprise Informatics.

Monitoring

#1 Globally in Hospital and Ambulatory.

Enterprise Informatics

#1 PACS¹, interoperability.

Sleep & Respiratory Care

#2 Globally.

Personal Health

EUR 3.6 billion sales, 16.7% adjusted EBITA margin.

Strong leadership across businesses, supported by innovation and a trusted brand.

Personal Care

#1 Electric shaving & grooming, #1 Intense Pulsed Light.

Oral Healthcare

#2 Globally, #1 US Rechargeable power toothbrush.

Mother & Childcare

#2 Bottle feeding, #1 Pregnancy engagement app.

Leveraging Platforms

We leverage platforms for personal health, monitoring, imaging and interventional to serve our customers across care settings.

Home: Personal health products.

Hospital: Monitoring, imaging, and interventional solutions.

Capabilities: Self-care, Measurements & Insights, Diagnosis, Treatment.

Enabled and connected by Enterprise Informatics and services.

Innovation Strategy

We are deploying our new culture of impact with care, building on the right team and Healthtech capabilities.

Our culture: Impact with care - For patients, people and planet with patient safety, quality and integrity at the heart.

Culture Pillars: Clarity & Simplicity, Execution & Performance, Accountability & Empowerment, Learning & Collaboration.

The Right Team and Capabilities

• 70% Renewal of Executive Committee
• 75% Executive hires with Healthtech and clinical background
• 78% Employee engagement score

Experienced and Passionate Executive Team

• CEO: Roy Jakobs (Dutch / German)
• CFO: Charlotte Hanneman (Dutch)
• ESG & CLO: Marnix van Ginneken (Dutch)
• Personal Health: Deeptha Khanna (Singaporean)
• Connected Care: Julia Strandberg (American)
• Diagnosis & Treatment: Bert van Meurs (Dutch), Jie Xue (American / Chinese)
• North America: Jeff DiLullo (American)
• Greater China: Ling Liu (Chinese)
• International Regions: Özlem Fidanci (Turkish)
• Innovation & Strategy: Shez Partovi (Canadian)
• Patient Safety & Quality: Steve C de Baca (American)
• Human Resources: Heidi Sichien (Belgian)
• Operations: Wim Appelo (Dutch)

Our Plan

Strategy: Focused growth and value creation.

Innovation: People and patient-centric innovation, business-led, at scale.

Execution: 1. Patient Safety and Quality, 2. Reliable end-to-end supply chain, 3. Simplified operating model.

Supported by a culture of impact with care and HealthTech talent and capabilities.

Focused Growth and Value Creation Strategy

70% of revenue, industry leading margins.

Accelerating growth in attractive leadership segments: Image-Guided Therapy, Ultrasound, Monitoring, Personal Health.

30% of revenue margin upside.

Capture value upside with clear execution roadmap: Scale to unlock insights and deliver profitable growth, Enhance operational excellence, focus on customer productivity, Restore business profitability and position.

Largest Vendor-Agnostic Enterprise Informatics Business

~EUR 1.2 billion sales, ~2x Philips growth.

Imaging Informatics

Diagnosing patients by reviewing images.

#1 Radiology, #1 Cardio, #3 Pathology.

Clinical Integration

Integrating and analyzing data from >1,200 medical devices.

#1 Medical device integration (US).

Telecare

Enable remote care delivery.

#1 eICU, #1 Critical care EMR.

Creating Value for Stakeholders through High-Impact Innovation

€1.7bn, >9% of sales in 2024, industry leading.

~50% of sales from new and upgraded products launched in last 3 years.

>50% of R&D workforce on software, data & AI.

Innovating Sustainably with Quality as Highest Priority

• People and patient-centric: Ecosystem with clinical and technology partnerships.
• Business-led: Businesses are accountable to deliver innovation from creation to delivery.
• Scalable: Focused, standard-setting innovation with higher return.

Innovation is Deeply Clinically Embedded through Global Partnerships

Partners include Mayo Clinic, NYU Langone Health, The University of Chicago, Phoenix Children's Hospital, Karolinska University Hospital, UMC Utrecht, MTIC, Leiden University Medical Center, Tohoku University Hospital, Fortis, Narayana Health, SingHealth, HCL, LU, CNIC, Taichung Veterans General Hospital, Taipei Veterans General Hospital, Peking University First Hospital.

Businesses are Accountable to Deliver Innovation from Creation to Delivery

R&D Spend: 90% on Diagnosis & Treatment, Connected Care, Personal Health; 10% on Enterprise Innovation (Fundamental and breakthrough innovation, ventures and partnerships).

Segments: Diagnostic Imaging, Ultrasound, Image-Guided Therapy, Monitoring, Enterprise Informatics, Sleep & Respiratory Care, Personal Health.

Driving quality through integrated innovation, design and sustainability.

Scalable Innovations Setting the Standard Across Segments of Care

BlueSeal MR

Helium-free, installable everywhere, AI-enabled. >1700 systems installed.

Azurion

One more patient a day, industry leader cardiac care, extending to brain. 5 million procedures a year on Azurion system.

Patient Information Center iX

Monitoring ecosystems across all acuity settings. Up-to-minute data for 1,600 patients. 1 in 2 hospitals use this PIC IX monitor in the US.

OneBlade

New hybrid shaving category. 90% market share. 100+ million blades & 50+ million handles sold.

Recently Launched AI Innovations Fuel 50% of Sales

• Visual Patient Avatar: Activating peripheral vision in the operating room.
• SmartSpeed Precise: Dual-AI MR reconstruction for 3x faster scans with 80% sharper images.
• Elevate Ultrasound: AI-solution for advanced imaging, intuitive workflows.
• Azurion Neurobiplane: Most flexible biplane system, secure and fast parking, capturing from every angulation.
• BlueSeal MR technology: Industry first 1.5T helium-free MR with AI-enabled Smart Workflow, installable everywhere.
• HealthSuite Imaging: Cloud-based, AI-driven imaging for remote access to critical data.
• AI-enabled CT5300: Powerful AI reconstruction for lower dose, higher image quality, next-level confidence.
• 19000 shaver: Intelligent personalization, premium technology.

Execution as Key Value Driver

• Patient safety and quality as highest priority.
• Reliable end-to-end supply chain.
• Simplified operating model.

We Have Made Solid Progress on Our Execution Priorities

Patient Safety and Quality Embedded in Businesses, Innovation and Culture

• Enhancing patient safety and quality.
• Innovation, quality design, integrated process.
• Improving compliance.

End-to-End Supply Chain Delivering Better Lead Times and Service

• Supply chain set-up.
• Product simplification.
• Supplier reliability.

Simplified Operating Model Driving Accountability and Agility

• Business in lead – clear accountability, lean, agile.
• Right team, HealthTech capabilities.
• Deploying culture of impact with care.

Continued Solid Execution of the Three-Year Plan

Reiterating Sales Outlook While Reflecting Net Tariff Impact

Productivity Initiatives to Deliver EUR 2.5 Billion in the 2023-2025 Period

Margin Increase from Productivity, Pricing and Supply Chain Improvements

Adj. EBITA margin progression (cumulative drivers 2023-2025):

• Adj. EBITA FY2022: 7.4%
• Volume: 4-5%
• Pricing, mix, COGS: 3-4%
• Non-manufacturing cost reduction: ~4-5%
• Inflation: ~(6)%
• Risk: ~(2)%
• Adj. EBITA FY2025E: Low-teens

Performance actions include: End-to-end supply chain and procurement, Pricing actions, Mix and innovation, Reduction in roles, R&D prioritization, GBS and hyper-automation.

Balanced Capital Allocation Focusing on Organic Growth, Margin Improvement and Cash

1. Organic growth: Main premise of our value creation.
2. Dividend stability: Pay-out of 40-50% of net recurring income. Continued, stable dividend policy.
3. M&A: Disciplined, bolt-on M&A in core areas.
4. Share buy-backs: In April 2024, completed EUR 1.5 billion program announced in July 2021. Continuing to evaluate periodically.

Shareholder returns: Maintain strong investment grade rating.

2023-2025: Execute Our Plan, Drive Profitable Growth

Making solid progress on execution:

• Patient Safety & Quality as first priority.
• Reliable supply chain.
• Simplification of operating model.

Within a more challenging macro environment.

Creating value with sustainable impact.

2025+: Deliver on Full Potential of Our Segments

• Focused growth and value creation strategy.
• Delivering people and patient-centric innovation at scale.
• Execution as key value driver.

Delivered by Healthtech talent and culture of impact with care.

Better Care for More People

Historical Financial Performance Summary

Balanced Capital Allocation Policy

Organic Return on Invested Capital

2019: 13.6%, 2020: 12.3%, 2021: 14.7%, 2022: 5.8%, 2023: 10.3%, 2024: 12.1% (WACC 7.4%)

Mergers & Acquisitions (in billions of EUR unless otherwise stated)

2015-2017: ~3.6, 2018: ~0.6, 2019-2020: ~0.4, 2021: ~3.2

Dividends

2019-2024: 0.85

Share Repurchase (in billions of EUR unless otherwise stated)

2013-2016: 1.5, 2017-2019: 1.5, 2019-2021: 1.5, 2021-2024: 1.5