Lower Demand In China Disrupts Philips Q1 Sales, Cuts 2025 Profitability Target On Potential Tariff Impact

Koninklijke Philips NV PHG reported first-quarter 2025 adjusted earnings per share of 26 cents (or 0.25 euros), beating the consensus of 20 cents.

The Dutch healthcare technology group reported quarterly sales of $4.31 billion (4.09 billion euros), beating the consensus of $4.10 billion.

Comparable sales decreased by 2%, including a double-digit decline in China.

• Diagnosis & Treatment comparable sales decreased by 4%, due to a double-digit decline in China and on the back of a high comparison base in prior years. Adjusted EBITA margin improved, driven by productivity measures, mix effects, and innovation, partly offset by lower fixed cost absorption due to lower sales.
• Connected Care comparable sales were broadly flat across businesses, and the Adjusted EBITA margin was 3.5%, mainly due to an unfavorable mix and cost phasing, partly offset by productivity measures and innovation.
• Personal Health comparable sales increased 1%. A double-digit decline in China largely offset high-single-digit growth. The adjusted EBITA margin remained in line with last year’s.

Also Read: GE HealthCare’s Strong Q1 Took Back Seat To Tariffs, Analyst Sees 2026 Tariff Impact Less Than 2025

“Our order intake growth continued with strong momentum, particularly in the US, coupled with positive growth in personal health, providing an encouraging start to the year,” said Roy Jakobs, CEO of Royal Philips.

“In an uncertain macro environment that has intensified due to the potential impact of tariffs, we are focused on what we can control. We are improving our supply chain agility, taking decisive cost actions to mitigate financial impact where possible, and ensuring we can continue to serve our customers and consumers,” Jakobs added.

Adjusted EBITA margin decreased 80 basis points to 8.6%, mainly due to the decline in sales, partly offset by higher gross margins from innovations and productivity measures.

Income from operations increased to 154 million. Free cash flow was an outflow of 1.09 billion, mainly due to the 1.025 billion payment relating to the Philips Respironics recall-related medical monitoring and personal injury settlements in the U.S.

Guidance: In an uncertain macro environment, Philips’ outlook for the full year 2025 is updated to include the assumed impact of currently announced tariffs, including current bilateral US-China and rest of world tariffs, and the resumption of the paused U.S. tariffs on July 9. It excludes the potential wider economic impact.

2025 comparable sales growth of 1%—3% remains unchanged.

Adjusted EBITA margin range to be 10.8%-11.3% (compared to 11.8%-12.3% previously), including an estimated net tariff impact of 250-300 million euros after substantial tariff mitigations.

The company anticipates that 2025 performance will be skewed toward the latter part of the year, with Q2 showing modest improvement from Q1.

Philips is on track to deliver savings of 800 million euros in 2025.

Price Action: PHG stock is down 4.76% to $24.42 at the last check on Tuesday.

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