Health tech-focused group Koninklijke Philips' (Philips) operating performance continues to benefit from growth in its high margin personal health and part of its diagnosis and treatment businesses. We see Philips as still transitioning toward a business model which could generate more stable profitability while it fully exits the lighting business. However, we see Philips as likely to releverage moderately in the next two years, potentially up to 2.5x adjusted debt to EBITDA, due to further acquisitions and the shareholder remuneration policy. We are therefore affirming our 'BBB+/A-2' long- and short-term corporate credit and issue ratings on the company. The stable outlook reflects our view that the operating performance should continue to be supported by the overall positive growth prospects for
