Philips posts 4% sales growth to EUR 4.4B in Q2, raises margin outlook

Key Takeaways:

Comparable sales rose 4% to EUR 4.4 billion, driven by all three business segments
Adjusted EBITA margin hit 16.4%, including a 4.2% benefit from US tariff refunds
Full-year margin outlook raised to 13.5%-14.0% from 12.5%-13.0%

Royal Philips reported 4% comparable sales growth in the second quarter to EUR 4.4 billion, with all three business segments contributing as the Dutch health-technology company navigated tariff headwinds and cost inflation through productivity gains.

"We delivered another solid quarter with comparable sales growth of 4%, driven by all business segments, and strong disciplined execution within an uncertain macro environment," Chief Executive Officer Roy Jakobs said. Customer demand for Philips' innovations remains healthy, with certain large orders in North America shifting into the third quarter while Europe delivered strong double-digit order growth, he added.

The Personal Health segment led with 8% comparable sales growth and a 23% adjusted EBITA margin, including a 5% tariff refund benefit. Diagnosis & Treatment posted 2% comparable sales growth with a 13.9% margin, while Connected Care also grew 2% with a 17.8% margin. Excluding the US tariff refund benefit of EUR 186 million, group adjusted EBITA declined slightly as cost inflation and higher tariffs offset higher sales and productivity savings of EUR 132 million in the quarter.

The US largely completed its tariff refund process during the quarter, providing a one-time boost that lifted the group's adjusted EBITA margin by 4.2 percentage points. Philips' 2026-2028 productivity program remains on track to deliver EUR 1.5 billion in savings, helping offset inflationary pressures across its supply chain. The company generated EUR 376 million in operating cash flow and EUR 222 million in free cash flow, the latter including the tariff refund receipt.

Innovation and Partnerships Drive Growth

Philips launched SmartIQ for its Azurion image-guided therapy platform, a technology that enables an ultra-low dose protocol using over 50% less X-ray radiation than current low-dose settings, supported by published clinical evidence. The company also unveiled the AI-powered Titanion MR, a next-generation ultra-high-gradient 3.0T MRI system, and a first-of-its-kind 4D MR solution for radiation therapy planning.

On the partnership front, Philips signed long-term enterprise imaging agreements with a premier US health system and Imperial College Healthcare NHS Trust in the UK, both cloud-based collaborations designed to connect care teams and streamline workflows. In Poland, Philips is modernizing more than 200 hospitals through over 300 healthcare technology projects under the country's National Recovery and Resilience Plan. The company was also selected by Karolinska University Hospital to support Region Stockholm's hospital-at-home initiative, delivering remote patient monitoring and AI-enabled clinical services for up to 15,000 patients annually.

Outlook Raised on Tariff Benefit

Philips raised its full-year 2026 adjusted EBITA margin forecast to 13.5%-14.0%, up from 12.5%-13.0%, reflecting the approximately 1% benefit from the US tariff refund. The company reiterated its comparable sales growth outlook of 3%-4.5% and lifted free cash flow guidance to EUR 1.5-1.7 billion from EUR 1.3-1.5 billion. The outlook includes currently known tariffs but excludes ongoing Philips Respironics-related proceedings, including the US Department of Justice investigation.

Philips shares trade on the NYSE under ticker PHG and on Euronext Amsterdam under PHIA. The company generated approximately EUR 18 billion in sales in 2025 and employs roughly 63,700 people across more than 100 countries. Competitors in the medical imaging space include Siemens Healthineers and GE HealthCare, both of which face similar tariff and supply chain dynamics.

This article is for informational purposes only and does not constitute investment advice.