PHG

Welcome to the Philips first quarter 2026 results conference call on Wednesday, 6th of May, 2026. During the call hosted by Mr. Roy Jakobs, CEO, and Ms. Charlotte Hanneman, CFO, all participants will be in the listen-only mode. After the introduction, there will be opportunity to ask questions. 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 Ms. 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. 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 start at 2026 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, order intake grew 6%, reflecting continued momentum. Comparable sales increased 4%, with growth across all business segments led by Personal Health. We also expanded margins.

Adjusted EBITDA margin improved by 40 basis points to 9% despite higher tariffs. This marks our 6th consecutive quarter of delivering on our commitments, even as we operate in an uncertain and dynamic environment. Disciplined execution and focus on what we can control underpins our progress. We are on track to deliver the full-year outlook we set in February, which includes currently known information within an uncertain macro environment.

Our strategy remains anchored in three pillars: focused value creation, innovation-driven growth, and disciplined execution. Let me take you through the first quarter in that context. Starting with our first pillar, focused value creation. We execute specific strategies by segment, and we invest with discipline, focusing on interventional monitoring to drive growth. We also drive growth geographically with North America as the key engine. You can also see this in our Q1 results.

Equipment order intake grew 6%, with solid growth across D&T and Connected Care. North America led the growth building on strong prior year comparison. Europe also performed strongly across several modalities. Looking at D&T, order intake increased in the mid-single digits. Growth was driven by sustained momentum in Image-Guided Therapy as our market-leading Azurion platform continues to drive strong demand. Precision Diagnosis delivered solid order growth outside China.

Globally, MR order intake was solid with increasing interest in our helium-free systems. Last year, 75% of our MR systems shipped were helium-free. For our customers, resilience in MRI is being tested more than ever. Helium supply is tightening. Geopolitical developments in the Middle East are adding further pressure to that. Costs continue to rise. As a result, health systems are seeking uninterrupted imaging and reliable service in everyday clinical practice.

Philips is leading the shift to helium-free imaging with our high-performance BlueSeal technology. We are setting the new industry standard in MRI resilience, enabling uninterrupted operations and reducing dependence on scarce helium. We have installed more than 2,200 systems globally, saving over 6 million liters of helium. Building on this, we also unveiled the industry's first helium-free 3T MR system.

We expect regulatory clearance in 2027, positioning us to transition to a fully helium-free MR portfolio and extend our lead over competitors. In CT, we are seeing a strong funnel for spectral technology. In the quarter, Verida, the industry's first AI-enabled detector-based spectral CT, gained traction following its launch at RSNA last December, with initial orders secured in Europe. The first system installed in Q1 is already delivering results.

At Hospital Universitario Nuestra Señora del Rosario in Madrid, it is demonstrating seamless workflow integration and clinically relevant insights, and importantly, without added operational complexity. Turning to Connected Care, order intake grew in high single digits, mainly driven by monitoring and supported by enterprise informatics. Demand was broad-based across all regions with particular strength in North America and Europe, building on a strong prior year comparison.

We continue to expand enterprise partnerships with large integrated delivery networks. These customers are investing in enterprise patient intelligence, medical device integration, and cybersecurity. They are increasingly adopting our enterprise monitoring-as-a-service model to improve clinical, operational, and economic outcomes. This reinforces our position as a partner of choice for enterprise-wide data-driven care delivery. Moving to Personal Health. This segment delivered another quarter of broad-based growth, driven by strong consumer sell-out and continued market share gains.

We drove this through active expansion and diversification of our channel footprint, adding more than 3,000 distribution points in Europe. At the same time, we strengthened our presence with key global retail partners through increased listings and expanded placement. This included IPL expansion, broader distribution of interdental products, and more than doubling OneBlade distribution in the U.S. Our second pillar, innovation, is another key driver of both momentum and growth.

Across modalities and products, we are accelerating innovation towards scalable AI-enabled hardware and software platforms. That is already translating into stronger regulatory momentum for approvals of new product introductions. In Q1, we received 25 510(k) clearances and pre-market approvals, more than doubling year-over-year. In MRI, we received FDA 510(k) clearance for SmartHeart, our AI-powered cardiac MR solution. Just like SmartSpeed, it's a clinical application that extends software and AI-led innovation across the install base.

SmartHeart automates complex planning workflows in one click and does that under 30 seconds, simplifying operations and boosting productivity. It also reduces patient breath holds by up to 75%, improving patient experience in a big way. In CT, we received FDA 510(k) clearance for both Spectral CT Verida and our Rembra wide bore CT. Launched at the 2026 European Congress of Radiology, this platform features an industry-leading 85cm bore.

It is designed for high throughput environment with an AI-enabled workflow and improved diagnostic confidence. In Image-Guided Therapy, we received clearance for DeviceGuide, an AI-driven solution fully integrated with our Azurion platform. It enables real-time automated detection and visualization of mitral valve repair devices during minimally invasive procedures. We also launched IntraSight Plus, integrating intravascular imaging and physiology into a single system to simplify workflows and improve efficiency in the cath lab.

Looking beyond product innovations to our future transformative interventional platform introduced at our CMD in February. We made progress in advancing clinical validation. Building on our ecosystem of more than 100 clinical partnerships, we added the Sharper Research Consortium in Q1. Seven clinical studies are now underway to demonstrate the benefits of AI and robotics-assisted workflows in minimally invasive treatments for brain aneurysms and liver tumors.

In personal health, AI is embedded in our propositions. For example, the Philips high-end Shaver S9000 Prestige. It uses intelligent sensing and AI-driven adaptation to respond to each user's skin and hair type, delivering a more personalized shave every time. This innovative proposition not only won the Time's Best Inventions for its groundbreaking features, but also significantly increased sales and margin, demonstrating our leadership in this domain.

Since creating the hybrid shaving category, we have sold more than 50 million OneBlade handles and 100 million blades. This growing install base supports profitable recurring revenue from consumables with strong replacement blade performance in the quarter. In oral healthcare, we unveiled new Philips Sonicare 5700 to 7300 series models in the U.S., featuring next-generation Sonicare technology.

In China, we launched Sonicare 7000 at the South China Dental Show, reinforcing our position as a professional oral care leader and strengthening momentum with the dental community. Across Philips, innovation continues at scale throughout our portfolio. We remain the largest MedTech applicant at the European Patent Office in 2025, a strong proof point of the depth of our innovation engine. This is not just about today.

This leadership is fueling the next generation of innovations coming through our pipeline and positioning us well to drive accelerated growth. In our third pillar, disciplined execution, it all starts with patient safety and quality, our top priority. It ensures we bring innovation to market with the highest standards of patient safety and well-being. We're making strong and steady progress, building on the improvements delivered over the past three years.

Importantly, we are now benefiting from the work we have done to make Philips simpler, leaner, and more agile, strengthening the foundation of our execution. Field actions were reduced by about 20% year-to-date. This is on top of a reduction of around 40% in 2025, reflecting increased discipline and process effectiveness. Importantly, these improvements in our quality processes are also enabling the innovation momentum I highlighted earlier.

We also maintain close and constructive engagement with global regulatory authorities, including ongoing leadership-level dialogues with FDA and other regulatory bodies worldwide. This underscores our commitment to quality, compliance, and continuous improvement in serving our customers. It carries through to our supply chain, a critical enabler of execution. Over the past three years, we have simplified, regionalized, and localized our operations to be closer to our customers.

Our focus is clear: deliver on consistently superior customer experience through a high-performing supply chain, day in, day out. During the quarter, developments in the Middle East increased volatility across logistics and input costs, including materials and components. Through active management of our logistics network, we maintained stable supply chain operations while stepping up cost mitigation activities, which Charlotte will further discuss.

Importantly, customer service levels remain strong and in line with previous quarter. We remain vigilant in managing ongoing developments in supply and cost. As we look ahead, we will continue to deepen the simplicity, agility, and resilience as these are critical capabilities for navigating the increasingly turbulent environment. Turning to commercial and service excellence. In Connected Care, we saw further traction in our enterprise monitoring as a service.

As health systems adopt enterprise monitoring, demand for enterprise informatics solutions is also increasing. These solutions now represent a growing share of both our order book and sales across various periods. In the quarter, we saw strong demand for Capsule device integration and clinical surveillance across care settings, driven by effective cross-selling across our enterprise informatics and monitoring platforms. In diagnostic imaging, we expanded our partnership with AdventHealth through a five-year enterprise service agreement.

It enables our full service model across modalities while supporting a long-term imaging infrastructure focused on quality and performance. Turning to the regions. Fundamentals remain supportive across our markets, particularly in North America, where demand remains strong and the landscape continues to segment. We continue to see stable activity levels across hospital systems, with no signs of disruption among larger systems.

Cost pressures and workforce shortages persist, driving further consolidation among larger health systems. Demand for secure productivity and cybersecure enhancing platforms is increasing. This reinforces our expectation that North America will remain a key growth engine in 2026 and over the medium term. In Europe, capital spending remained broadly stable, with an improvement in some markets during the quarter. Demand conditions remain stable, supporting our execution in the region.

Select international regions continue to increase investments in healthcare and digitalization, as reflected with strong wins in India and Brazil. In China, centralized procurement continued to increase in Q1, particularly in modalities such as ultrasound and CT, which have shorter lead times. This is driving longer decision cycles and a more price-focused environment. We are seeing lower order conversion consistent with recent trends. These dynamics continued in the quarter, contributing to ongoing pressure on equipment demand.

Underlying healthcare demand remains intact, particularly in procedure-driven segments. We remain focused on maintaining competitiveness, selectively driving our portfolio, and executing with discipline in this more price-sensitive environment. In Personal Health, consumer demand remains healthy in North America, and momentum continues across several markets globally, even as geopolitical developments create uncertainty. We are managing these dynamics with agility while maintaining a strong focus on execution. Charlotte will now discuss our first quarter performance in more detail and our outlook for 2026.

Thank you, Roy. I will start with segment level performance. In Diagnosis & Treatment, comparable sales increased by 2%. Image-Guided Therapy delivered high single-digit growth, continuing its multiyear momentum and building on a strong prior year comparison. Performance was broad-based across all regions, with particular strength in North America, led by the premium configurations of our Azurion platform, higher service revenues, and coronary intravascular ultrasound. We are reinforcing this momentum by leveraging AI to automate product testing, reduce release cycle times by 25%, and accelerating time to market for new innovations.

Precision Diagnosis sales declined in the low single digits in Q1, as expected, mainly due to order book rebuilding and the segment's higher exposure to China. Innovations including EPIQ CV, point of care ultrasound, BlueSeal MR, and CT 5300 continue to drive growth with solid uptake in markets such as Western Europe and Latin America, reflecting their scalability.

Adjusted EBITDA margin rose 30 basis points year-on-year to 9.8% driven by sales growth, underlying gross margin from recently launched innovations, productivity measures, and favorable mix effects. These favorable impacts were partially offset by higher tariffs, cost inflation, and currency effects. Now moving to Connected Care. Comparable sales increased by 3%. Monitoring delivered mid-single digit growth with particular strength in North America and Europe. Growth was driven by higher installations of IntelliVue patient monitors and continued traction in enterprise monitoring as a service.

Sleep and respiratory care grew in the low single digits with the obstructive sleep apnea portfolio delivering strong double-digit growth outside the U.S., led by particular strength in Japan, our second-largest market. Enterprise informatics sales declined slightly, reflecting inherent quarterly unevenness and longer implementation and deployment cycles. Adjusted EBITDA margin declined by 60 basis points to 2.9% as sales growth and productivity measures were more than offset by higher tariffs, cost inflation, lower cost absorption, and currency effect.

In Personal Health, comparable sales increased by 9% in Q1 with all three business contributing. Growth was broad-based, led by double-digit growth in North America and a strong contribution from international regions. China contributed modestly, benefiting from an easier comparison base. Sell-out remains strong globally, with channel inventory maintained at appropriate levels.

This momentum was supported by strong demand for recently launched innovations, including the high-end Shaver S9000 Prestige with AI-powered SenseIQ technology and the Sonicare 5000 to 7000 series. Adjusted EBITDA margin expanded by 60 basis points to 15.8% as growth and productivity measures more than offset the higher tariffs, cost inflation, and currency effect.

Advertising and promotion spend increased year-on-year, consistent with our commitment to continue investing in the business to drive consumer recruitment and sustain long-term demand for our recently launched innovations. We are also leveraging AI to strengthen consumer engagement, embedding it across 94% of digital assets and generating over 27.8 billion searchable data points, a 100 times increase. This enables more personalized consumer interactions, improves content reuse efficiency, and enhances our ability to drive future sales through more targeted and effective marketing.

Finally, sales in Segment Other of EUR 177 million increased by EUR 37 million compared with the first quarter of 2025, mainly reflecting activities related to a divestment. These activities are excluded from comparable sales growth and contribute only an insignificant amount to Adjusted EBITDA. Adjusted EBITDA for the segment increased by EUR 7 million to EUR 11 million, mainly driven by lower costs.

Now, turning to group results. Comparable sales increased by 3.7% in the first quarter, with growth across all segments and regions led by North America and Western Europe. Adjusted EBITDA margin increased by 40 basis points year-on-year to 9%. Margin expansion was driven by sales growth, favorable mix effects, and productivity measures, partially offset by higher tariffs and cost inflation.

Product productivity delivery in 2026 is off to a solid start with Q1 delivery of EUR 126 million on track to deliver our EUR 1.5 billion three-year savings commitment. Execution is progressing at pace underpinned by plans already in place. Actions in Q1 were led by operating model simplification, including streamlining central functions and reducing organizational layers, as well as procurement initiatives such as SKU rationalization and supplier consolidation.

We are also seeing early contributions from footprint optimization and AI-enabled efficiencies. Service productivity was another contributor, including through more remote troubleshooting and fewer on-site visits, with benefits most visible in IGT and across Europe. In parallel, we continue to execute tariff mitigation actions. Overall, we remain on track with good visibility to deliver our 2026 productivity objectives.

Against the backdrop of rising input cost inflation, we are accelerating mitigation actions, further sharpening our focus on productivity, cost discipline, and structural efficiencies. Adjusting items came in at EUR 61 million, less than half of last year's EUR 143 million. This significant improvement reflects our continued focus on structurally reducing adjusting items.

A one-off gain in Diagnosis & Treatment from the reversal of an acquisition-related provision and cost phasing also contributed to the year-over-year reduction. Income tax expense increased by EUR 17 million in the quarter, primarily due to higher income before tax. Financial income and expenses were EUR 47 million, broadly in line with the prior year. Net income rose to EUR 146 million, primarily due to higher earnings.

Adjusted diluted earnings from share from continuing operations were EUR 0.23 in the quarter compared with EUR 0.25 last year, primarily reflecting the adverse currency effect on nominal earnings and a higher diluted share count. Free cash flow in Q1 was an inflow of EUR 28 million. Excluding the impact of the prior year Philips Respironics settlement payout, free cash flow improved by EUR 94 million year-on-year.

This improvement was driven by higher earnings, improved working capital, and lower adjusted items. Moving to the balance sheet. We ended the first quarter with EUR 2.6 billion in cash after a $265 million payment for the SpectraWAVE acquisition announced late last year. This acquisition reflects the disciplined, value-focused M&A strategy we outlined at our CMD, including a disproportionate resource allocation to our interventional platform to reinforce our coronary leadership.

Integration is progressing well, with the core foundations in place and commercial momentum building as planned, positioning the business to scale and capture growth in coronary interventions. Net debt was EUR 5.5 billion at the end of Q1. The leverage ratio improved to 1.8 times on a net debt to Adjusted EBITDA basis from 2.2 times in Q1 2025, driven by higher earnings and reflecting our disciplined capital allocation.

Turning to our outlook. Amidst continued macro uncertainty, we remain focused on disciplined execution of our plan. Based on the current status, developments in the Middle East are expected to impact sales in the remainder of 2026, though not materially at the group level. At the same time, supply chain and logistic constraints are expected to drive cost inflation.

Against this backdrop, based on our Q1 performance, our outlook for the full year remains unchanged. We expect comparable sales growth of 3%-4.5%, with growth in each quarter within this range, led by North America and the international region. We continue to expect comparable sales in China to be stable this year, with growth in Personal Health offsetting a slight decline in health systems against the backdrop of subdued near-term market conditions.

Across segments for the full year, we continue to expect growth within this range, with Connected Care and Personal Health at the upper end and Diagnosis & Treatment at the lower end. We are encouraged by the better than expected Adjusted EBITDA margin performance in Q1, driven by innovation, productivity, and cost discipline, with some benefit from lower than anticipated tariff impact.

Consistent with last year's approach, our full year 2026 outlook includes currently known tariffs, which are marginally more favorable than assumed in our February outlook. Uncertainty remains. While we are pursuing tariff refunds related to the International Emergency Economic Powers Act, our 2026 outlook does not include any potential benefits from these refunds.

We are also seeing input cost headwinds, including freight, electronic components, and plastics, as well as other inputs affected by higher energy costs. We are actively mitigating these pressures. Over the course of the year, we expect to offset these pressures through supply chain optimization, productivity, and selective pricing actions. At the same time, we continue to closely monitor cost developments across our supply chain.

For the balance of 2026, we expect some near-term pressure on margins consistent with our plan, reflecting the annualized impact of tariffs, higher inflation, and foreign exchange. As a reminder, last year, the higher tariffs did not impact our Adjusted EBITDA meaningfully until Q3 due to the natural lag between inventory and the flow-through to the P&L.

Accordingly, we reiterate our full year Adjusted EBITDA margin guidance range of between 12.5% and 13%. Our full year free cash flow outlook also remains unchanged at between EUR 1.3 billion and EUR 1.5 billion. As previously indicated, our outlook excludes the ongoing Philips Respironics related proceedings, including the Department of Justice investigation. With that, I would like to hand it back to Roy for his closing remarks.

Thanks, Charlotte. To close, we delivered a solid start to the year and order intake momentum continues. In April, we signed a long-term strategic partnership with WellSpan Health in the U.S. It expands our role as the preferred provider across all imaging modalities and advances the system-wide approach to imaging and diagnostic technologies. Importantly, this partnership is also strong validation of our innovation platform strategy, bringing together our capabilities to deliver integrated long-term value for customers.

It underscores strong customer trust in our value proposition and long-term partnerships. These relationships matter even more in the current operating environment. Our strategy is clear, and we remain focused on advancing our strategic priorities, driving innovation, and strengthening our differentiation and competitiveness. At the same time, we are executing with discipline, staying focused on what we can control, and closely monitor the evolving macro environment. Against this backdrop, we reiterate our full year outlook, which includes currently known information but an uncertain macro environment. Thank you. We will now open the line for questions.

Thank you, sir. We will now open the line for questions. If any participant would like to ask a question, please press the star followed by two times one on your telephone. Due to the time, please limit yourself to one question and one follow-up. This will give more people the opportunity to ask questions. There will be a short pause while participants register for a question. We will now go to the first question. Your first question comes from Hassan Al-Wakeel of Barclays. Please state your question.

Good morning, Roy, Charlotte. Thank you for taking my questions. A couple, please. Firstly, if you could please talk to the building blocks of, you know, the mid-single-digit order growth in DNT for the quarter, the sustainability of U.S. market strength based on your customer conversations, as well as the softness in China Precision Diagnosis, given centralized procurement, and how your share is progressing here across the different modalities.

Related to this, I wonder if your thinking has evolved for China order and revenue stability this year across DNT. Secondly, Charlotte, another strong quarter on margins, and you've been consistently talking about gross margin benefits from innovations. It'd be great if you could help break up the quarter's EBITDA performance across productivity mix, and innovation, and how sustainable you think each of these are. And also what you're seeing from cost inflation, specifically around freight and memory chips and what's assumed in guidance. Thank you.

Thank you, Hassan. Let me go to the first one, the mid-single digit DNT growth. If you look to the buildup of that, actually that is a continued, very strong order intake in IGT, which actually is trending at high single digits and above, so very, very strong. That of course, over multiple quarters. You see that we also had mid-single digit PD order intake outside of China. Of course, China is affecting the PD order book as well. We see a very strong overall mix, and we see increased demand, and particularly also for MR. We called out, of course, the helium-free, but also, we have seen just the broad-based interest in the MR solution really growing also as modality in itself.

That also gives us confidence for the further conversion in due course of the year into the latter part of the year from a sales perspective. U.S. is a strong contributor to that, has remained very strong. Actually we also, from our customer dialogues, see that strength continuing. Actually, we see a very healthy market where patient volume is strong, the procedures are growing. As you also said before, it's not evenly spread across all health systems.

The bigger systems are winning more, that's also where we're well-positioned with our platform-based solutions. That's actually where we see that we kind of are continuing to close these long-term partnerships. You also saw that in the quarter with AdventHealth, with WellSpan Health, we had more.

That's really working out and we see that U.S. actually will continue to be a strong contributor for us. Europe actually was also strong, so I think we want to call that out that Europe was doing well and is picking up. China at the other hand, is showing continued cautious development. Q1 was in line with our performance expectations, so it's not that it's unexpected that it's not performing that strongly. We do see differentiated performance by modality.

IGT and MR are solid. CT and ultrasound are the most exposed to centralized procurement, and therefore they have the biggest impact. On the consumer side, you saw that actually PH grew, but it was on easier comms. We do see some sales sell of momentum in PH. That's also what we expect for the rest of the year. In essence, a similar trend of a subdued kind of MedTech portfolio, then PH contributing and therefore the full year China sales are expected to be stable.

That's also as we have planned it. In that sense, kind of this is tracking alongside what we planned for, where the biggest growth has to come from North America, Europe, and international region. China is contributing as the market gives the opportunity. We are not relying on the China recovery in the rest of the year. We are actually counting on strong momentum in North America and Europe in particular to do that.

In that perspective, actually, we see that where we have been focusing our strategy, it's really coming also to fruition. Cause North America, IGT, extreme stronghold. Monitoring is doing really well as well there. We see the ultrasound momentum going up. I think, we're well-positioned, to execute our plan as we have built it for the year on the growth side. Maybe that's a nice bridge to Charlotte to then also talk to the margins, as of course, we have evolving developments there.

Thank you very much, Roy. Hello, Hassan. Indeed, as you said, we were pleased with how the margin has developed with the 40 basis points expansion in Q1, despite the impact of tariffs. If I break that down for you in a little bit more detail, yes, we saw a positive impact coming from volume, from the business mix, but indeed, as you mentioned, also from higher gross margin from innovations. CT 5300, I called it out before, is helping us from a gross margin perspective. We also see point of care ultrasound, which we recently launched also at a higher gross margin, also helped lift our margin. Then we see the continued momentum also from our MR BlueSeal at a higher margin as well. That is certainly helping us.

We continue to do our productivity work. We are pleased with our EUR 126 million of productivity in Q1. You've seen it last year. We finalized our EUR 2.5 billion program last year. It's a real strong muscle we have built and that we're now expanding spending on, which is really creating self-help in what is a turbulent situation. With this productivity, we're nicely on track there. Offsetting that is tariff and also a little bit of input cost inflation. One thing that's good to mention is that the tariff impact was a little bit lower than anticipated initially, also after, of course, the Supreme Court struck some of the tariffs.

If I then look forward, Hassan, based on your question, what does that mean for the outlook? A few different components here. Of course, we started well in Q1, which is helping us. We are seeing inflation, and to your point, also in freight, in components and in plastics. Offsetting that is us really leaning into mitigating that with supercharging AI, further reducing our bill of material cost and also doing selective pricing. The other component is also tariffs being a very modest tailwind for us versus our expectations as well for 2026.

Perfect. Very helpful. Thank you.

Thank you. We will now go to the next question. Your next question comes from Richard Felton of Goldman Sachs. Please state your question.

Thank you very much. Good morning. Two questions from me, please. First one is on China. You called out central procurement, for ultrasound and CT. How much exposure does Philips have to those modalities in China now? What level of price adjustments are you seeing?

Perhaps linked to that, how much of the low single-digit decline that you called out in Precision Diagnosis was due to China? That's the first one. Second question is, sort of slightly longer-term question, I suppose, on the sleep business ex-U.S. In kind of broad terms, how has performance been, as Philips has returned to the market, OUS in terms of growth, market share? Could you also perhaps talk a little bit about your innovation strategy in sleep? Thank you.

Yeah. Thank you, Richard. On China, we have seen indeed that kind of the centralized procurement is being applied mostly on ultrasound and CT. That is because the specifications are being seen as more generic, and therefore they put them under centralized procurement to a bigger extent.

We have seen that that also has significant margin implications in terms of the pricing pressure that you see in those segments. Volumes are actually holding, but you see that the value is decreasing, and that is putting the downward pressure. In our IGT and MR business, we see that they are for biggest majority outside of centralized procurement because they are so specific, and also don't have the alternatives that they don't put them into the centralized procurement.

That's something in the centralized procurement approach in China that we see currently as they expand that across the country. In terms of the devices, kind of you see that it's very small part of it. Actually there's not a big, a big hit. The biggest hit is indeed in PD with the ultrasound and CT1. That's kind of also therefore hitting the performance in the first quarter. We can expect that also to pressure the rest of the year, which means that actually the dialing up in the other parts of the world will be really crucial. As you know, that's also working.

If you look to the DI China part, as we said earlier, that is around 15% of global. In the mix, you see that MR is 50% of that. That's better protected. The bigger pressure is indeed on the CT and the ultrasound part. Then you have IGT percentage in China is slightly bigger than the 15%. It has of course, a strong contribution also from the other parts, and it's better protected from centralized procurement. That's a bit of what I can say about the mix.

Maybe lastly, it also really calls that we have the right strategy chosen for China because we said we want to compete in segments that we find we can differentiate. Still where we find we can differentiate is the MR BlueSeal for sure. We see also that actually, they kept that out of the CP for biggest part. It's our IGT franchise, which is really differentiating. There's no kind of alternative in the market. We see ultrasound cardiac actually also being better performed. But of course, that's a smaller part of the cardiac of the ultrasound market in China. That's why you see that in the other ultrasound parts, there is a bigger pressure.

On sleep, I think, if you look at sleep outside of U.S., we see strong double-digit growth, that's led by Japan, but also it's coming from the markets where we are coming back. That's offset by the ongoing respiratory pruning effect. That's kind of where you see the mix effect coming in, where the comparison is normalizing towards end of year. That also should improve towards the end of year.

From an innovation perspective, actually, we have seen good resonance also driving that double-digit growth by the new masks portfolio that we have been introducing together with the device. The software upgrades we are dialing in. That actually, the ecosystem is still very strong. Actually, people are still waiting also in certain markets really, for us to get back and to get back on our platform because they really appreciate the patient interface that we have built.

That's giving us also a strong way back into the market. Maybe the other part on SRC, of course, we are working strongly on the mitigation of the regulatory path. That's something that we're also making good progress on. We said kind of we cannot comment on what it will exactly mean, but we are still hitting every single mark in terms of milestone with the FDA, and that's actually forging ahead also as planned.

Thank you, Roy.

Thank you. We will now go to the next question. Your next question comes from David Adlington of JPMorgan. Please state your question.

Hey, guys. Thanks for the question. Apologies, it's a very busy day, so I've been on another call. Maybe for some costs, and I think you may address some of this, but obviously GE pulled out cost inflation, most notably on memory chips. Just wondering if you could sort of help give some further color there and maybe quantify the exposure. Secondly, obviously another great quarter for Personal Healthcare in terms of growth. I'm not sure if I quantified the contribution of price or not, but that would be useful. As we get into the second half and more difficult comps, how you're thinking about the growth profile in PH. Thanks.

Yep. Hi, David. Good morning. Let me take the first one. From a cost inflation perspective, and maybe a few things. As I said earlier, we do see cost inflation impacts. We do see that, and we've taken that into account in our guidance. And we, the expectation we have is that the elevated levels that we see today in freight, electronic components, plastic, we will see that come through for the remainder of the year. At the same time, we've included mitigation actions that we are taking, including, for instance, reducing our bill of material costs even further, going hard after AI-enabled savings and also selectively increasing our prices.

We have a lot of confidence based on the muscle we've been building over the past few years, and also what we're seeing, again, transpire in Q1 from a productivity perspective. Some of the tariff tailwinds that we're seeing after February are also helping us. There's a little bit on that. Your second question on Personal Health and the effect of pricing. We had another stellar quarter in Personal Health in Q1 with particularly North America doing very well with double-digit growth in North America. Of course, we were a bit helped by China, but only relatively little. Pricing, from a pricing perspective, it is relatively flat.

We saw a slightly positive pricing, which is probably mostly attributable to the innovations that we've been seeing, like the Shaver S9000 Prestige, like the new Sonicare range that we've introduced. That has helped pricing a little bit. If I look to the remainder of the year or the full year, I should say, we have reiterated our guidance from 3%-4.5%, we've also said that PH will be at the higher end of the guidance. We are reiterating that today because as you said, the comps are getting a little bit more difficult as we get through the remainder of the year. At the same time, we see very good momentum in personal health as well.

Maybe one addition. What, what is also helping it, David, is that we have been really expanding our retail distribution. Actually, we have been getting listings and placements in the wet shelf and particularly of big retailers. That actually really gives us additional sustainable growth opportunity for the quarters to come. It's the combination of really great innovation, but also now having a better access even to the consumers that actually gives us confidence that this is a sustained growth path, and that we are on in line with the guidance that Charlotte just provided.

Great. Thanks, guys.

Thank you. We will now go to the next question. Your next question comes from Veronika Dubajova of Citi. Please state your question.

Hi. Good morning, Roy and Charlotte, thank you for taking my questions. I will keep it to two, please. One is kind of bigger picture question on patient monitoring. Obviously, one of your sort of competitor/suppliers is changing ownership. I'm just curious, Roy, how you're thinking about what impact that might have on your business and whether this is strategically a positive, a negative, a neutral. Is this an asset that would have made sense in the context of Philips?

If you can kind of share your thoughts on that would be super helpful. My second question is just circling back to some of the inflation commentary. Maybe, Charlotte, can you give us a little bit of flavor for why you think you are in a better position to mitigate some of the headwinds than GE HealthCare? We'd just love to understand what you think you have in your back pocket, that's obviously enabling you to maintain your margin. If you very briefly could comment on your Q2 margin expectations, that might also be helpful. Thank you so much.

Thank you, Veronika. Let me take the first one. On the patient monitoring, you saw that actually the strong momentum continues, strong order intake. Actually, we are playing a platform play there that actually really resonates well with our customers. As part of that, actually, we have strong partnerships. Masimo is part of that. We don't think that actually there will be any change.

That's also not what kind of has been signaled, because we have the biggest access to customers globally in terms of monitoring base. There's a real intrinsic interest to actually connect with us to the customer. There's also mutually an interest from us to actually being providing in a vendor neutral way consumable solutions that are out there in the market.

That has been benefiting the partnership with Masimo in past years, and we believe that will be also going forward. We see it as at least net neutral, and I think we are excited to work also with any new owner there to kind of grow the franchise and make it work for our customers and to differentiate also towards competition. This is one of the strongholds, the combination that we have very strong cybersecure platform with the broadest data reach with the medical device integration and the consumables actually makes it very appealing in a very complex environment for our customers to do business with us. That has been driving all these long-term partnerships and also the share gains in monitoring along the way.

Yeah. Thank you, Roy. Let me take your second question Veronika, on inflation. If I think about where we are in the year, let's first start with in Q1, we had a very solid Q1 with margin expansion ahead of our expectations. That gives us confidence that again, we are able to not only compensate some of the headwinds we're seeing, but even expanding our margins despite that.

Of course, we're seeing cost inflation, we're seeing it in freight, and we see it in electronic components and in plastics, but we have already started taking mitigation and mitigation actions. We started building them. Those are a little bit back-end loaded, and they will start coming in the second half of the year. To take you through what we're doing, first of all, we're doubling down on bill of material productivity.

We've always said there's more to go after, and we're now doing that with increased speed. We're going after our AI-enabled efficiencies, where we've seen some early progress already in Q1, and we continue to see that as well. We're doing selective pricing as well. The other element is really the tariff tailwind that we're seeing a little bit, that we're seeing also in Q1, and we'll see that versus our expectations, being a little bit better, going forward. You also know that we've been a little bit prudent in the way we've put our full year guidance out as well. That, of course, has given us a little bit of buffer as well.

Now to your question on Q2 specifically and Q2. If we think about Q2, a couple of things that I think are important to realize. Of course, Q2 is the last quarter where we still didn't have the full impact of our tariffs in 2025. You know, we've spoken about it a lot of times, the way the tariff impact flows into our P&L. It first goes into inventory, and then it flows into our P&L. We have, again, a tough comparable from a tariff perspective. Also we see the cost inflation, of course, starting to hit us. We have already taken the mitigation actions, but it will take a little bit of time before that starts positively impacting our P&L. We therefore expect our mitigation impact to be a little bit more back-end loaded.

Well, thank you, guys.

Thank you. We will now go to the next question. Your next question comes from Julien Dormois of Jefferies. Please state your question.

Yes. Good morning, Roy. Good morning, Charlotte. Thanks for taking my two questions. The first one relates to the mitigation initiative that you are taking, and you mentioned selective pricing initiatives. Could you just walk us through what are the segments where you have the more leeway and at what speed we could see those pricing initiative contribute to margin?

The second question is more specific on enterprise informatics. You indicated that sales were down a low single-digit in Q1, and you mentioned the usual unevenness in revenue generation. If you could shed more light on why that happened specifically and what we should expect for the remainder of the year and maybe also in the midterm, that would be helpful. Thank you.

Thanks, Julien. Julien, let me take your first question on pricing. Yeah, we've called out also last year, you might remember, selective pricing as well, and we've already put some of that in place last year. We of course focus there where we have leading positions, and that's where we increase our prices. I'll give you a few examples. We've increasing our prices in Image-Guided Therapy. We're doing that in also to patient monitoring. We're doing that in some of our service contracts, and we're doing that in some of our time and materials. We have a very granular plan in place to increase prices where we can.

As you rightfully mentioned, some of that will flow through in 2026, and some of that will take a little bit longer as it needs some time to flow through the order book and will then benefit us in 2027. I think it's fair to say that we've learned from COVID, and also there we've been able to build up a much stronger muscle when it comes to price increases and price discipline, which is now helping us implementing that with a little bit more speed.

Thank you, Julien. Let me then go to EI. In EI, we see a couple of trends as we also alluded to when we had the capital markets day. One is actually we see continued order uptake. We saw that picking up strongly in the second half of last year. We also saw it again in the first quarter, and we have a very good funnel. We see that there's healthy demand that's also on the back of the cloud migration and the cloud offering that we have, but also the integrated diagnostics trend that we see coming out in the market is really generating increased interest. If you then look at the sales trend, this is indeed more patchy. Sales trails orders quite a bit in the EI.

Furthermore, you see that if customers migrate in or out, those give quite big hiccups because actually, that's the lumpiness that's kind of inherent to that business. The other part is that you also see that the orders that we are taking now more and more also go into a SaaS model, where you see that kind of the revenue flows in over a longer period of time. That actually gives you more recurring attractive revenue stream for the longer run, but of course, gives a bit of a hiccup in these quarters. We see positive interest.

We see the integrated diagnostics story really picking up with customers, and of course, fueled by AI and the data play, and we are really working how we can tap into that. We see the funnel growing also supportive with what we're doing with Amazon. Lastly, you saw also sort of kind of on the monitoring side, the Capsule and HPM combination is already working. You see also this kind of combination play really driving driving impact. we are kind of positive on that notion as well that that will come through in due course of the year.

Thank you very much.

Thank you. We will now go to the next question. Your next question comes from Hugo Solvet of BNP Paribas. Please state your question.

Hi, guys. Thanks for taking my questions. I have two please quick ones on margin. First short term, Charlotte on the Q2 margin. Could you maybe just clarify your earlier comment, is there a scenario where margin in Q2 be within the full year guidance range? Second, a bit more long term, when we think about the full year 2028 targets, all in, you have around the 600-700 bips of buffer for wage input cost, tariff, macro and so on. What's the level of confidence that this buffer can accommodate for higher input cost given where they are at the moment? Thank you.

Thank you very much, Hugo. Let me start with your first question on Q2 margin. Based on what I just said, first of all, the incremental tariffs weren't in effect in Q2 2025, as well as the cost inflation that we're seeing with the mitigation timing being back-end loaded. I expect the Q2 margins to be lower year-on-year in Q2. I also feel very confident that in the back end of the year, we will be able to get those mitigation factors in because we have very strong plans in place and very granular plans in place to start offsetting that. Q2, in that sense, will be a little bit of a lower quarter from a margin perspective.

Now, to your second question on the longer term margin outlook. As we said in February, of course, as we stood there in February, we knew that the world was a turbulent place. We didn't quite know how turbulent it would get, but we absolutely did take into account that there would be something that we would be seeing. As a result, and we were also very transparent about the buffer that we took at that point in time. Especially given the ability we have to also step up from a mitigation perspective, I feel equally confident as I was in February, that we'll be able to get to the mid-teens Adjusted EBITDA margin by the end of 2028, based on what we know today.

Thank you very much, and congrats on the beat.

Thank you. We will now go to the next question. Your next question comes from Aisyah Noor of Morgan Stanley. Please state your question.

Hi. Thanks so much for fitting me in at the end. My question is just on DNT, and your competitive outlook in Europe following the launch of an ultrasound by United Imaging in the space and as well on the recent launch of Verida for you, just how that's progressing and how we should be thinking about the sales contribution for 2026. Thank you.

Thank you, Aisyah. I already called out Europe actually picking up and performing well in Q1. That's also, and particularly for DNT, where we see actually that and then within DNT also PD actually is doing really well in Europe. We see a few trends. One, MR already was picking up strong. We see that continued. If you look to the BlueSeal penetration now, actually that's really kind of going well, and we see a good funnel on the MR side.

With the new Verida launch, actually, we see very strong interest in spectral and how that now with a better workflow is really helping to support high volume throughput at high quality imaging. We've secured the first order already. We have an installation ongoing. Very good reference as well, very strong clinical support. We have a kind of good expectation that Verida will be doing really well in Europe, and we see the first proof points of that coming through. Lastly, ultrasound. Ultrasound actually is also doing well.

Indeed, we had some competitors as well in this space, actually ultrasound in Europe has been already starting last year, picking up very strongly. After we kind of came out with our latest Epiq launch and also the Flash. We have good order momentum of ultrasound in Europe, strong positioning. Actually we are quite excited about the momentum in Europe, how that is increasing and especially also how our AI-based, but also, I would say high productivity and performance solutions really hit the mark in a market that needs to be also kind of conscious of the spend in the environment that we are in. That seems to work well.

Thank you very much.

Thank you. Due to the time, the last question today comes from Graham Doyle of UBS. Please state your question.

Morning, guys. Thanks for taking questions. Just two, please. Charlotte, just the first one. Just on inflation again, just to get some context on this. Obviously, you guided in Feb, there's been obviously volatility. How meaningful is the incremental headwind? Is it something that was completely within your buffer, or are you doing other things to sort of mitigate?

Roy, just on China, you've mentioned a few times at the CMD and today about kind of playing to win in certain segments. Is there any way within reason that you kind of identify to us the areas where you understand that perhaps you can't win, and therefore you've built it into your guidance that you kind of know that there's areas where you're probably deprioritizing? Is that possible to maybe contextualize that for us? Thank you.

Hi, Graham. Thanks. Let me take your first question on the inflation. Indeed, we guided in February, only three months ago, although a lot has happened. As I said before, we are seeing an incremental headwind in plastics, in also freight. It is good to know as well that energy we have hedged for 2026, so we will not see any impact from higher energy direct higher energy prices. There are a few components here, right? First of all, we did already better in Q1 than we thought, so we are a little bit ahead of where we thought we would be, which is giving us confidence. The second component is we are after the Supreme Court struck some of the tariffs in February.

We're seeing some tailwinds as a result of that we are taking into account as well, and which is offsetting some of the inflation. The third component is we have launched already additional mitigation activities, including bill of material price reductions, including also optimize the way we look at freight and where we use air freight versus boat in order to also optimize the spend there.

Also leaning in even harder in what we know and do very, very well, which is driving further cost discipline. We've always said there's more to go after, so we're doing that now with double speed as well. Putting that also in the context of what I said earlier, that we have put a prudent guide out. All of that actually comes to a place where we can reiterate our guidance of 12.5%-13% for the full year.

Thank you, Graham. Then on China, indeed, I think the differentiated play is becoming more important. To give you some examples where we see that actually we have really a right to play and to win, I call out MR. Actually, we have one of the biggest installed base of the helium-free already in China, and we just got also the notion that we have a green path support from the regulatory body, NMPA, to kind of get an accelerated approval for the 3T because they're so excited about the new innovation that this will bring to China. That's a good example on MR. IGT is also really doing well, and we have a kind of good momentum, and we see that also well in demand in the market.

Ultrasound, I called out there's different dynamics. You see that the cardiovascular, we are still unique, but it's of course a smaller segment in totality. You see quite brutal competition on GI. The same with CT. CT spectral, actually, we have again, one of the stronger installed bases of CT spectral is in China. If you look to the more generic CT, that's really very strong competition. That's kind of where we said that's not our gameplay.

Then we exited DXR because we said that's so commoditized, that's not our game in China. We also exited the value play in China, which is the lowest price segment because that will be very strongly locally favored and also at price points that are not attractive to us. We made distinct choices.

Actually within those segments, we also see that we are really trending with market or even kind of doing well within the market momentum. There is just a subdued overall market environment that we have to operate in. I think we have been making the right choices. We stick to that. It's also in line with the plan and also as we showed in the results. It's also in line with the results that we have in Q1 and also for the full year expectations. In that sense, I think we de-risked China in our plan. We're playing there to tap the opportunity that we have. Last but not least, China is not only a demand market.

Of course, there's also innovation happening in China that we want to stay close to, including AI innovation that's going very rapid. Robotics is developing very rapidly in China. Then of course, there's also still components and sourcing that we get from China. China for us is a wider market than demand only, and that's why we kind of keep a strong footprint there. In line with demand, we have kind of opted for a more selective go-to-market.

Okay. Awesome. Thanks a lot, guys. I really appreciate those answers.

Thank you, all. That was the last question. Mr. Jakobs, please continue.

Yeah. Thank you, all for attending the call. As you saw, we have a strong start to the year with growth, orders and sales and margin expansion despite a very turbulent environment to operate in. We have with confidence reiterated our full year guidance. Of course, a lot of work to be done, but we have the actions in place, the plan in place and the team that is working it. Thank you for your attention again. Have a further great day.

This concludes the Royal Philips First Quarter 2026 Results Conference Call on Wednesday, 6th of May, 2026. Thank you for participating. You may now disconnect.

Welcome to the Philips' Fourth Quarter and Full Year 2025 Results Conference Call on Tuesday, February 10, 2026. During the call hosted by Mr. Roy Jakobs, CEO; and Ms. Charlotte Hanneman, CFO, all participants will be in a listen-only mode. [Operator Instructions]. Please note that this call will be recorded, and the replay will be available on the Investor Relations website of Royal Philips. I will now hand the conference over to Ms. Durga Doraisamy, Head of Investor Relations. Please go ahead, madam.

Thank you. Good morning from London, everyone. Today, we will start by reviewing our fourth quarter and full year 2025 results, followed by a short Q&A session. Then at 11 a.m., our Capital Markets Day webcast will begin and run until 4:00 p.m. You will hear from Roy, Charlotte and our Chief Business Leaders as they share how we're driving profitable growth to deliver sustainable value. The program continues with a North America-based Philips customer panel, providing real-world customer insights. Roy will wrap up the day with closing remarks and key takeaways. The press release for both events was published on our website this morning. The replay and full-time script of the webcast along with the presentation and transcript for our Capital Markets Day will be posted within the next 24 hours. As always, I want to draw your attention to our safe harbor statement on screen. With that, over to you, Roy.

Thanks, Durga, and good morning, everyone. Thank you for joining us today. We have consistently delivered on our commitments in every quarter this year, including a strong fourth quarter, and we are entering 2026 with momentum. This reflects the impact we are making for our customers and consumers, delivered through disciplined execution by our passionate teams. I want to start with the key highlights for Q4. Order intake was strong, up 7%, reflecting sustained improvement over the past year as we continue to expand and grow our order book, strengthening visibility into 2026 and beyond. Comparable sales growth of 7% year-on-year and was broad-based across all businesses and geographies and strong contributions from Personal Health and Connected Care businesses continued. Adjusted EBITDA margin improved by 160 basis points to 15.1% despite the impact from tariffs. For the full year, we delivered strong order intake of 6%. Comparable sales growth as per outlook and adjusted EBITDA margin of 12.3%, exceeding our outlook, and that's despite the impact of incremental tariffs. These results reflect margin accretive innovation, productivity gains and disciplined execution, translating into strong operational performance and cash generation delivered through a performance culture and highly engaged team. As we enter 2026, we are moving from a strengthened foundation and margin improvement focus into the next phase for Philips, one of profitable growth acceleration with a clear path to mid-single-digit sales CAGR and mid-teens margins by 2028. Now let's look at our fourth quarter and full year 2025 performance in more detail. Starting with orders. Equipment order intake grew 7%, reflecting sustained momentum over the past year. Growth was broad-based across D&T and Connected Care, driven by sustained double-digit growth in North America. We achieved a solid full year performance with D&T order intake up 5% and Connected Care up 7%. Order book grew 5% year-on-year with inherent quarterly unevenness. Within D&T, Image-Guided Therapy achieved strong order intake growth and Precision Diagnosis returned back to growth. Results were driven by strong demand for our high end Azurion 7 interventional platform, the EPIQ CVx ultrasound for cardiovascular imaging and continued successful ramp-up of our CT 5300. In Image-Guided Therapy, we expanded our relationship with Bon Secours Mercy Health, one of the largest U.S. health systems into a 10-year collaboration, spanning 80-plus interventional labs and reinforcing our role as a long-term partner in cardiac care delivery. You will hear more about this during our North America customer panel discussion at our CMD this afternoon. Turning to Connected Care. Demand for our monitoring and enterprise informatics solutions was strong. North America remained our strongest growth driver. Integrated delivery networks and large health systems continue to invest in enterprise patient intelligence and cybersecurity, increasingly through our enterprise monitoring as a service model in order to improve the clinical, operational and economic outcomes. During the quarter, we signed multiple strategic partnerships with leading U.S. health systems, including Atrium Health and UNC Rex. In Enterprise Informatics, we secured a landmark radiology partnership with a large health system in the U.S., standardizing our cloud-based imaging informatics platform hosted on Amazon Web Services across 27 hospitals. This will support more than 4 million imaging studies annually and enable scalable, efficient diagnostic workflows. Turning to Personal Health. We delivered another quarter of sustained broad-based growth across geographies and businesses. Importantly, this growth was driven by healthy sales trends across markets, supported by underlying category growth, resulting in continued market share gains. Demand was particularly strong for our OneBlade shavers and premium portfolio, including high-end shavers and IPL hair removal devices in Grooming and Beauty as well as the DiamondClean series in oral health care. In 2025, we accelerated execution of a multiyear road map centered on AI-enabled, patient-centric and scalable innovation platforms across our portfolio. In Q4, this momentum was [Technical Difficulty]. In December, we launched the world's helium-free 3T MRI. Verida, the world's first AI detector-based always-on spectral CT system; and LumiGuide, the first real-time AI-enabled light-based 3D navigation solution integrated with Azurion. These innovations are expected to support demand, improve mix and contribute to gross margin expansion over time. In Image-Guided Therapy, we closed the acquisition of SpectraWAVE in January, and I want to welcome the SpectraWAVE team to Philips. Their expertise and leadership in high-definition intravascular imaging and angio-based physiological assessment strengthens our innovation leadership in cardiology interventions, the largest value pool in interventional procedures. For consumers, at the China International Import Expo, Philips debuted new oral care, grooming and health care innovations, including the Sonicare Prestige 9900 and Norelco i9000 Prestige, reinforcing our commitment to meaningful locally relevant innovation in China. As a result, we enter 2026 well-positioned with strong innovations to drive profitable growth over the next 3 years, supported by a stronger pipeline and innovation platforms designed for scale. We will go into more detail during today's Capital Markets Day. This year, we continue to make a lot of progress also on our execution priorities, enhancing patient impact and quality, strengthening supply chain resilience and simplifying our operations. Patient impact and quality remains our highest priority, embedded across our businesses, innovation and culture. We delivered tangible improvements in quality performance, including CAPA time lines, significant progress in managing corrections and removals, and we continued year-on-year reductions in nonconformances, complaints and field call rates. We also continue to address the consequences of the Respironics recall and relentlessly work towards resolution of the FDA warning letter issued last October. We integrally designed new innovations and act fast and comprehensively when improvement opportunities arise. At the same time, we advanced innovation through close regulatory engagement, more than doubling our 510(k) clearances over the past 2 years. Together, this reflects simpler, more standardized quality system that embeds patient impact and quality at design stage, enabling high-quality innovation to support patients at scale. Turning to our supply chain. We delivered a step change in execution in 2025, building on the stability achieved over the last 2 years. Service levels are at all-time highs and lead times are back to competitive levels despite a significantly more complex global trade environment. Through decisive disciplined actions, our teams more than offset the impact of incremental tariffs by leveraging productivity improvements, cost discipline and active mitigation measures in the supply chain. With cross-functional teams fully engaged, we continue to strengthen our footprint in North America, our supplier network, but also drive productivity and pricing initiatives as we look ahead to 2026. We are focused on driving disciplined commercial execution with a strong innovation portfolio increasingly oriented towards attractive performance and premium segments, strengthening the order book and accelerating growth over time. Turning to the regions. We continue to see healthy supportive fundamentals across the markets we serve, particularly in North America, where hospital demand remains strong, but the landscape increasingly is segmented. Rising costs and workforce shortages are reinforcing consolidation among larger health systems. This, in turn, is driving the demand for secure, productivity-enhancing platforms as hospitals face constraints on people and costs, rising data volumes and increasing care complexity. This positions Philips well to continue to capture growth, reflected in sustained double-digit order intake growth in 2025, following double-digit growth in 2024, and we expect North America to remain a key growth engine in 2026 and into the midterm. In China, tender activity gradually increased throughout the last year, albeit from a low base, supported by stimulus measures. At the same time, the continued expansion of centralized procurement has led to longer processing times and tougher competition, negatively impacting the translation of higher bidder activity into meaningful market growth. As a result, we remain cautious on the near-term outlook for China, while continuing to see attractive long-term growth potential, also in innovation and in sourcing. As a result, we remain cautious -- sorry, going to Europe. In Europe, capital spending remains stable, while select international regions continue to increase investment in health care and digitization as reflected in strong wins in Indonesia and India. In Personal Health, sellout dynamics in 2025 remains strong across Europe and most growth geographies. Demand in U.S. proved resilient. In China, cautious consumer sentiment persisted and demand was subdued, although slightly improved from the prior year. As we move into 2026, we will continue to closely monitor consumer sentiment and market conditions across all regions. Overall, we expect comparable sales growth between the 3% to 4.5% range in 2026, led by North America and international regions. China sales growth is expected to be stable. Charlotte will now discuss our fourth quarter performance in more detail and also our outlook for 2026.

Thank you, Roy. I will start with segment level performance. In Diagnosis & Treatment, comparable sales improved sequentially, in line with our expected phasing, increasing 4% year-on-year in the fourth quarter and remaining flat for the year. Within the segment, Image-Guided Therapy continued to perform particularly well, delivering double-digit growth in the quarter. Performance was driven by continued momentum in our flagship Azurion platform and strength in coronary intravascular ultrasound. Precision Diagnosis sales were stable. Adjusted EBITDA margin in Diagnosis & Treatment declined by 30 basis points to 11.8% in the fourth quarter. This reflects incremental headwinds from tariffs, which were partially offset by improved gross margin from innovation and productivity measures. For the full year, adjusted EBITDA margin increased by 10 basis points to 11.7%, reflecting solid margin performance despite the impact of tariffs, supported by improved gross margin from innovation and productivity measures. Connected Care closed the year with strong momentum, delivering comparable sales growth of 7% in the fourth quarter and 3% for the full year. Fourth quarter performance was driven by double-digit growth in Monitoring and mid-single-digit growth in Enterprise Informatics, driven by robust order book conversion in North America. Adjusted EBITDA margin in Connected Care expanded 150 basis points to 16.5% in the fourth quarter, driven by operating leverage, improved gross margin and productivity measures, partially offset by higher tariffs. For the full year, adjusted EBITDA margin increased by 110 basis points, crossing the double-digit mark to 10.7%. As part of our ongoing portfolio simplification and focus on scalable, higher-margin platforms, we completed the sale of the Emergency Care business in Q4, in line with the time line previously communicated. In Personal Health, comparable sales growth improved sequentially, growing 14% in the fourth quarter and 8% for the full year, with all 3 businesses contributing. Growth was broad-based across geographies. China benefited from an easier comparison base following the impact of inventory destocking last year, which concluded in the second quarter of 2025, with channel inventory at appropriate levels at the end of 2025. Adjusted EBITDA margin in Personal Health improved 500 basis points to 23% in the fourth quarter, driven by sales growth and productivity measures, partially offset by tariffs and cost inflation. For the full year, adjusted EBITDA margin increased by 130 basis points to 18%. Now turning to our group results. Comparable sales growth accelerated to 7% in the fourth quarter, with broad-based growth across business segments and geographies, led by strong performance from North America. For the full year, comparable sales growth of 2.3% was in line with our outlook. In the fourth quarter, adjusted EBITDA margin expanded 160 basis points year-on-year to 15.1% and for the full year, increased 80 basis points to 12.3%. We are particularly pleased with the continued strength of our margin performance this year, driven by sales growth, gross margin improvement from innovation, favorable mix effect and productivity. This performance more than offset incremental tariff headwinds, which came in slightly better than our expected EUR 150 million to EUR 200 million range after substantial mitigation. As planned, our proactive and extensive mitigation actions delivered results with measures such as inventory management, specialty programs, supplier network optimization and selective regionalization efforts reducing the tariff impact. We continue to actively work on further mitigating measures, including further targeted localization, and we are confident in our ability to fully mitigate these headwinds through disciplined execution by 2028. In Q4, we delivered EUR 248 million in productivity savings, bringing total savings to EUR 815 million for the year, in line with our outlook. Since 2023, our cost management and productivity initiatives delivered more than EUR 2.5 billion, exceeding our original outlook of EUR 2 billion by the end of 2025. There is more we can and will go after. Adjusting items were EUR 179 million in the quarter compared with EUR 286 million in Q4 of last year and EUR 531 million for the full year, in line with our 300 basis points outlook. This compares to approximately 640 basis points last year or 410 basis points, excluding litigation provision net of insurance income, reflecting our strong commitment to reducing adjusting items over time. Income tax expense declined by EUR 376 million in the quarter, mainly driven by the comparative impact of the derecognition of deferred tax assets in the U.S. in Q4 2024 and the recognition of deferred tax assets in other jurisdictions in Q4 2025, partially offset by higher income before tax in Q4 2025. Net income increased to EUR 397 million in the quarter, primarily reflecting improved income from operations and lower tax charges. Adjusted diluted earnings per share from continuing operations were EUR 0.60 in the quarter, representing a year-over-year increase of 20% and up 15% for the full year. Despite significant volatility in major currencies, particularly the U.S. dollar, the impact on our adjusted EBITDA margin and EPS was flat, reflecting disciplined hedging and optimized currency footprint and targeted commercial actions in markets most exposed to currency fluctuations. We generated EUR 1.2 billion of free cash flow this quarter. This was EUR 85 million lower year-over-year, reflecting a tougher comparison base as Q4 2024 included a EUR 367 million Respironics insurance receipt. For the full year, free cash flow was ahead of our outlook, driven by higher earnings, reaching EUR 512 million after the payment of approximately EUR 1 billion in cash related to U.S. medical monitoring and personal injury settlements in the first quarter of 2025. We maintained a disciplined focus on working capital, delivering a strong year-over-year improvement in inventory as a percentage of sales despite ongoing tariff mitigation initiatives. Moving to the balance sheet. We ended the quarter with approximately EUR 2.8 billion in cash and net debt of approximately EUR 5.3 billion. Our leverage ratio improved to 1.7x on a net debt to adjusted EBITDA basis from 2.2x in Q3 and 1.8x in Q4 2024, driven by higher earnings and stronger cash balances. We remain firmly committed to maintaining a strong investment-grade credit rating. Our balance sheet remains strong, and we are pleased to offer shareholders the option to receive dividends in shares or cash while continuing to invest in profitable growth. Now turning to the outlook. We entered 2026 from a position of strength with sustained order intake momentum, improved execution and structural margin, cash and balance sheet improvements, we are well positioned to accelerate profitable growth in 2026 and beyond. We expect comparable sales growth to accelerate to 3% to 4.5%, driven by order intake momentum, innovation and improved commercial execution with all businesses contributing to 2026 growth. Adjusted EBITDA margin is expected to improve to 12.5% to 13% despite the impact from currently known tariffs and building on the strong margin expansion delivered in 2025. The margin improvement will be driven by growth, continued operational improvements and further productivity, partially offset by the incremental impact of tariffs. In 2026, tariff costs will be fully annualized, resulting in a net impact of EUR 250 million to EUR 300 million, net of substantial mitigations. This assumes that the current tariff levels remain in place throughout 2026. On quarterly phasing, we expect a relatively balanced growth profile in 2026. As a result, all 4 quarters are expected to be within our full year comparable sales growth range of 3% to 4.5%, with Q1 at the lower end, consistent with normal seasonality and following a very strong finish to 2025. Adjusted EBITDA margin is expected to slightly decline in Q1 2026 as operational improvements are more than offset by the incremental tariff headwinds, which were not in effect in the first quarter of the prior year. Building on the EUR 2.5 billion productivity program successfully delivered in the last 3 years and continuing to focus on what we can control, we are launching an additional EUR 1.5 billion productivity program for the 2026 to 2028 period. Adjusting items are expected to be around 200 basis points in 2026, down from 300 basis points in 2025, and we remain committed to further reducing them over time. Restructuring costs are expected to be roughly 80 basis points and relate to initiatives to drive cost competitiveness, unlock R&D capacity, enhance supply chain agility and enable central functions to operate at best-in-class cost benchmarks. Other charges estimated at around 120 basis points, mainly related to the Respironics consent decree, field actions, other quality-related and acquisition-related charges. We expect free cash flow in the range of EUR 1.3 billion to EUR 1.5 billion, driven by higher earnings and lower adjusting items. This is expected to be partially offset by a disciplined increase in capital expenditure, supporting growth and regionalization and higher income tax payments associated with improved profitability. This outlook reflects an uncertain macro environment and incorporates currently known tariffs. It excludes any effects of the ongoing Philips Respironics-related proceedings, including the investigation by the U.S. Department of Justice. Now over to Durga.

Thank you, Charlotte. Before we move to a brief Q&A session, just a quick request. Please keep questions focused on our Q4 and full year 2025 results and our 2026 outlook. We will be discussing our midterm plans and outlook in more detail at our Capital Markets Day later today. Operator, we are now ready for questions.

[Operator Instructions] We will now go to our first question. And our first question today comes from the line of Hassan Al-Wakeel from Barclays.

I have a couple, please. So firstly, Charlotte, for the last couple of quarters, you've been vocal on the gross margin improvement in the business and specifically D&T, owing to a better mix in the order book converting. Can you help us understand how this unfolded in Q4 and how much of a driver you view the mix benefit as a tailwind to your 2026 margin profile? Secondly, order intake for the full year for D&T was 5%. It would be great if you can help us understand how this differs by modality in Q4 and how you can reconcile this with the expected slower revenue performance for 2026 and whether this could be an element of conservatism in your guide?

Thank you, Hassan. Let me take your first question on our gross margin improvement. We are indeed -- and I indeed have been vocal about that for many quarters, we are very happy with the way our gross margin is developing across Philips. We really see an increase across the board driven also by innovations and productivity as well. And let's keep in mind that gross margin, of course, that's also where our tariffs hit, so that is impacting that as well. So we have been very disciplined in executing across the board. So if I look at 2026, what I think will -- what we see from a 2026 perspective also in D&T, we see continued margin expansion despite the tariff impact. So that gives you a good sense of that. We also think that underlying gross margin strength will continue to be strong. So there are a few factors in the bridge for 2026 to think about. First of all, of course, we have the annualizing tariffs. That's a headwind. Then we have continued productivity, and I will talk more about that later. And then the third component, as you say, is also the gross margin of innovation impact. So all 3 factors contribute. And then for the second question, maybe over to Roy.

So if you look to the D&T profile, Hassan, and of course, we were happy with the 5% order intake and the acceleration that we saw towards that 5%. We also see actually order intake momentum continuing. As we said, that's on the back of a very strong North American market that is actually continuing to grow for us double digit in orders. Then we see that if you look to underlying which are the contributors, of course, we have very strong IGT contribution in that mix. We see an acceleration in MR and also ultrasound was a good contributor because we have launched some great new innovations there that have really started to yield very well, including in China. So if you look at the kind of the contribution, you had IGT double digit, then you had the PD business we saw the acceleration as well, but at a lower pace. Now that's something that then also when you look into the sales contributes into your sales conversion. Now, as you know, of course, these are businesses with a bit longer conversion cycles than some of the orders that we have in Connected Care, which were also very strong, but you have more book and bill in that business. So that's kind of where you see that phasing coming into sales a bit slower. Now that builds into 2026, we will continue to see strong order momentum, and that will also underpin the build of sales into the year. So we will see -- and that's what guided and also what Charlotte guided for and that we will start a bit at the lower end of the range, and we see that strengthening in due course of the year as the order intake momentum that we have also been building up to 2025 really lands well into the rest of the year.

Very helpful. And if I can just follow up on the '26 guide, but also beyond. Roy, looking back to 2023, your '25 range was conservative and wide, and you've clearly landed at the top end of this and meaningfully outperformed this year's guidance. What buffers have you built into the guide for '26 and also beyond that, particularly on the margin, given the journey from here is going to be a lot harder than the journey from 7.5% in 2022?

Yes. So 2 part of answer, Hassan. Of course, we will go in full detail, right, at the C&D into kind of our plan underpinning '26 to '28. So you'll have extensive views on that later today. The short answer for today is what we learned in the first plan was that indeed, we are living in a dynamic world. So the dynamic world requires that you need to be, on one hand, very diligent in executing your own plan, focus on what you can control. Therefore, productivity is another important contributor. But as we really started to drive innovation and we have that strong foundation now that we can build on, growth will be a big contributor as well to margin, bigger than in the first period. So actually, that will start to kind of really kick in. And then we keep an eye on an uncertain or dynamic environment where tariffs, for example, in '26 is something that, a, we still will have the full year impact of what is currently known, but you also don't know what could happen next, right? But we have adopted and adapted our organization to a much more agile and leaner one where kind of we are building resilience we adopt fast or we adapt fast if we see something happening. And that's also on the growth side, right? When we see growth happening in a certain part of the world, we can faster route to that piece so that we capture that opportunity. And if we see actually an event popping up somewhere, we can also address that faster. So I think that is where we kind of will share a bit more later today and this afternoon. But we are kind of taking an outlook that takes the world into account.

Your next question today comes from the line of Richard Felton from Goldman Sachs.

Two, please. The first one, within D&T, I think Precision Diagnostics was flat in the quarter. I suppose given better order intake across MRI and CT earlier this year, I was surprised it was a little bit stronger than that. So any color on Precision Diagnostics in the quarter and how to think about momentum into 2026, especially as you're bringing new products and new innovation to market? And then the second one, you referenced that Q1 is going to be at the lower end of the full year '26 growth guidance range. I suppose despite the easier comp, any sort of other phasing or things to be aware of on that Q1 comment specifically?

Richard, thanks for your question. So first on your PD question within D&T. So what we've seen play out in Q4 was in line with expectations. Orders returned to growth in Precision Diagnosis. And then from a sales perspective, we improved sequentially. And let's not forget, of course, from a sales perspective, we have a higher exposure to China, which is also impacting the sales in the fourth quarter. And if I then take a step back from a PD perspective, as you know, we have really rebuilt the foundation from a quality, from a leadership perspective, we reduced SKUs. You will hear from Jay, our business leader, later today on, well, what we've done and also very importantly, the plan going forward. So then from a PD perspective, from a margin perspective, you will have seen the progression. We went from mid-single digit to high single digit. And later today, we'll explain that there is much more to come. And also the innovation that we spoke about and that Hassan asked about earlier is accretive and now turning into a tailwind, particularly related to the RSNA innovations that Roy mentioned on the call earlier. That, in combination with stronger commercial and service execution makes us feel very good about 2026 and will also drive a stronger funnel and order intake in 2026. So that is on your first question. Your second question was on the Q1 phasing that you asked if there were any impacts there. So as I said in my prepared remarks, our growth phasing is much, much more balanced than in 2025. We have a very balanced progression in 2025. And actually, all quarters are in the 3% to 4.5% range, which is a significant improvement from where we were last year. So we're pleased about that. Now Q1, indeed, as you said, starts at the lower end, a couple of reasons, nothing out of the ordinary there. On the one hand, it's just seasonality. Q1 is typically our lowest quarter, as you know. And then, of course, we had a strong finish in Q4 as well. So that's from a sales perspective. From a margin perspective, as I also said in the prepared remarks, look, the tariffs continues to be a significant headwind, and that is particularly impacting us in Q1 because the operating leverage from stronger sales really only kicks in at the end of the year primarily. So Q1 from that perspective is a little bit lighter, and that's where our tariff kicks in strong. But as I said on the prepared remarks as well, we are very committed to margin expansion. Our guide also includes a margin expansion of 20 to 70 basis points. So we go very hard at driving that.

Your next question today comes from the line of Julien Dormois from Jefferies.

Congratulations on a strong quarter and a very nice landing to '28. I have 2 questions, if I may, as well. The first one relates to Personal Health, which obviously was super strong in Q4 and accelerating sequentially. And this is despite tough comps in the quarter. So just curious whether there is any kind of stocking effect into that? Or is it just the very strong demand you highlighted for Europe and elsewhere? And the second question is more broad. It's just whether you have an update and a stance on the Section 232 investigation that's been running by the U.S. government? Any thoughts you might want to share on that side, please, would be helpful.

Thank you very much, Julien. And let me take your first question on Personal Health. We were indeed very pleased with our strong Personal Health performance in the quarter, 14% in Q4, actually not on a very tough comp, though. So what has been driving this strong growth, a few different things. First of all, we saw market share gains really across all businesses. Second of all, and this is very pleasing to see, we see very healthy sell-out trends across most geographies and also a very resilient demand in North America. And that is where the combination of our innovations that Roy also mentioned, combined with our strong commercial execution really, really saw great momentum in Q4. And then particularly on your stocking question, I also said it in the prepared remarks, we have, as we promised we would do, derisked the China trade inventory. And it is now roughly at 3 months, whereas a year ago, it was at 6 months. So that means we're now in line with market averages on that. So nothing further to add there.

Let me take the second question on the 232. So actually, the 232 investigation has not been concluded nor any outcome shared. How we look at it is that, in essence, it's equal to tariffs, but a different way of going after it, right? So I think this is a potential measure that could replace tariffs. So we don't think this will worse the situation. It could potentially actually improve the situation, but we don't speculate on that. How we look at it is that in essence, they've got to hit the high court who's going to take a different tariff stand. They have a different mean of kind of still securing or putting from some tariffs on imports into the U.S. So we are, of course, actively engaged. We also are part of the discussion. We also know they are looking into measures that potentially could be beneficial. But as I said, we don't want to speculate on any outcome.

Your next question today comes from the line of Veronika Dubajova from Citi.

Excellent. I'll keep it to 2 and also short term. First, I just want to get your flavor for China. Obviously, we've had you guide to flat China in '26. Healthineers has done the same. GE Healthcare, arguably whose mix is closer to yours, have expressed some more cautiousness. They expect China revenues to decline in '26. So just if you can more build -- talk a little bit to the building blocks of that assumption and what you're seeing in that market at the moment. That would be my first one. And then, Charlotte, if I can come back on that PH margin in the fourth quarter. So I've followed your stock for a very long time. I went back through the history. And I think the best margin you ever achieved in PH in the fourth quarter was 21%. So the 23%, especially with tariffs, is highly unusual. Can you maybe talk to some of the structural changes that have happened in the business that are enabling you to drive this substantially better margin dynamic that we have seen in PH versus what we have seen in PH in the past?

Thank you, Veronika. Let me take the first one on China. So on China, so we see the following, and as I also highlighted in my remarks. So actually, we see China stabilizing in 2026. So of course, it was a headwind in the last plan period and also in 2025, with stabilizing. So actually, we expect contribution from China, but we are remaining cautious on it. We see 2 different trends. One in PH, where actually we have seen step-by-step some improvement in the sell-out, and we expect that will also kind of result in improvement in sell-in and therefore, sales in the China market. Now on the health systems side, we remain more cautious because the outlook on tenders and how they convert into real orders is still less predictable. And therefore, kind of we are counting for a growth, especially on the health system side, much more on a very strong North America and also the other parts of the world. So that's kind of where we remain cautious overall. We still remain committed to it. We see a slightly differentiated picture between PH and D&T, but we do see kind of China contributing to growth, although to a lesser extent than any other region.

Yes. Thanks, Veronika. Let me take your second question on the PH margin in Q4. Of course, we are very pleased with that strong margin. And in Q4, particularly also driven by the operating leverage on the back of 14% sales. But if you think about the more structural drivers, I would call out a few and also Deeptha will explain more later today. So that is something to look forward to as well. But the key drivers, first of all, innovation. I mean, Roy spoke about the innovations. We have, for instance, the new platform for Sonicare. We have OneBlade that is doing extremely well. Those innovations, they come at a higher margin, and they also drive premiumization, which also helps to drive higher margin and also drive higher prices. The second component is really around commercial execution, which has been very, very strong in Personal Health. We, of course, win with the winners, the Amazons of the world and the JDs of the world, and that continues to be a very strong force for us as well. And then thirdly, and this goes for all of Philips, we really focus on productivity, on disciplined execution, on controlling the controllables. And all those 3 factors really, really helped us also in Q4 2025. And as I said, Deeptha will explain later how we are confident that we will also further improve over the next 3 years.

That's very helpful, Charlotte. And if I can maybe just quickly follow up. I think originally, at the third quarter, you talked about sort of high single-digit growth in PH. It's obviously come in almost at twice the pace that I think many of us expected. Anything you'd call out? Is there a specific region or a specific category that helped drive this meaningful surprise on the revenues?

Yes. Thank you, Veronika. I would say it's pretty broad-based overall, both from a business and a geographical perspective. We just saw very good momentum across the board as there's really a lot of demand for our products. So we saw a really good performance in grooming, where -- and I spoke about the OneBlade platform just now. We see very, very good traction across the board. And just as a reminder, in Q4, we, of course, benefited from the lower comparable due to China because last year, we were still in full destocking mode. So that has helped absolutely as well. So -- but also, excluding China, the numbers are still very, very strong.

We will now take our final question for today. And the final question comes from the line of Hugo Solvet from BNP Paribas.

Congrats on the [ prints ]. Two, please. First, on the drivers for D&T and CC, Connected Care demand. Patient volumes in the U.S. was not mentioned in the Q3 slide deck. So just wondering what magnitude of pickup you're seeing and how sustainable do you think it is? And on the Q1 margin comment, you expect to decline slightly. Is the decline that we've seen in Q1 2025 would be a good proxy for Q1 2026? Just trying to think about where we should land.

Yes, thank you. Let me take the first one in terms of strong demand in terms of the U.S. We see a few drivers, especially big investment in infrastructure in health care systems in the U.S. is driving significant uptake and demand for platforms. So if you look some of the CapEx spend and even if you look kind of the demand forecast on CapEx really highlights that they are strengthening monitoring, they're strengthening cybersecurity as a big priority, which, of course, also plays to our informatics business, both in imaging and again, in monitoring. And therefore, we have seen significant kind of momentum in North America on the Connected Care side. We expect that also to continue into 2025. Now that, of course, is also driven by strengthening of the financial health of the health care systems in the U.S., not all, as we know. So the stronger systems are getting stronger. They are consolidating and actually absorbing some of the smaller systems. But again, that then plays to our platform play because that actually is why they like us because we can provide the core infrastructure for interventional, for cardiac, for monitoring. So those are really key drivers for us that actually have been helping us in 2025. And actually, we see prolonged strong demand on that in '26 and beyond. And actually, I think what will be very helpful today is the customer panel as well because they will talk exactly about their needs to drive more reliability in their operations. So therefore, investing behind that because with the staff shortages, they need to make sure that they have actually systems that support the staff in the best possible way so that they can deal with patients because patient volume is actually strong and good. Also procedures are expanding, what we did also with SpectraWAVE, bolstering our cardiology play is because we see that procedure momentum in cardiology and the patient volume in cardiology especially continuing to grow. And that actually we are very well positioned to capture that across our portfolio with also the imaging part, the monitoring part and the interventional suite.

Thank you, Roy. Let me take your second question on the Q1 margin, Hugo. I would say it's not a bad proxy to say to take the decline that we saw in Q1 2025. So that's roughly right.

That was the last question. Mr. Jakobs, please continue.

Yes. Thank you all. Let me close. We delivered our outlook in 2025 consistently across all 4 quarters. Order intake was healthy. Sales growth improved sequentially, margins expanded and cash generation was strong despite ongoing tariffs. These results demonstrate our strengthened foundation, improved resilience and disciplined execution in a challenging macro environment. This is how we deliver our innovations to consumers and customers across the globe where we see demand for them strengthening. Above all, I also really want to thank all our employees globally for very hard work, delivering these strong results whilst making a meaningful difference through our impact with care culture and delivering better care for more people. With sustained order momentum, robust innovation pipeline, clear focus on accelerating profitable growth and the continued dedication of our teams worldwide, Philips is well positioned to meet our outlook for 2026 and beyond. We look forward to sharing many more details at today's Capital Markets Day starting at 11 a.m. I really invite you to be there. Thank you so much. Looking forward.

Thank you. This concludes the Royal Philips' Fourth Quarter and Full Year 2025 Results Conference Call on Tuesday, February 10, 2026. Thank you for participating. You may now disconnect.