Philips Q2 Profit Drops, Adj. EBITA Margin Rises; Sees Weak Margin In Q3, Lifts FY25 Margin View

(RTTNews) - Dutch consumer electronics giant Koninklijke Philips N.V. (PHGFF.PK, PHG) reported Tuesday lower profit and sales in its second quarter, while Adjusted EBITA margin improved from last year.

Looking ahead, the company projects third-quarter adjusted EBITA margin to be lower than in 2024 primarily due to tariff impact phasing.

For fiscal 2025, Philips increased outlook for Adjusted EBITA margin and reiterated comparable sales growth outlook. Adjusted EBITA margin range is now expected to be 11.3 percent-11.8 percent, a 50 bps increase versus previous outlook of 10.8 percent-11.3 percent.

The outlook includes an estimated tariff impact of 150 million euros to 200 million euros after substantial mitigations, compared to 250 million euros to 300 million euros expected previously.

Comparable sales growth range is still expected at 1 percent to 3 percent with sequential improvement as the year progresses.

The outlook excludes ongoing Philips Respironics-related proceedings, including the investigation by the US Department of Justice.

Further, Philips is on track to deliver on its three-year, 2.5 billion euros productivity program, including 800 million euros productivity savings in 2025.

In the second quarter, net income fell to 240 million euros from last year's 452 million euros. Earnings per share were 0.25 euro, down from 0.47 euro a year ago.

On a continuing operations basis, income was 242 million euros or 0.25 euro per share, compared to last year's 311 million euros or 0.32 euros per share.

Adjusted income from continuing operations were 0.36 euro, compared to 0.30 euro last year.

Adjusted EBITA margin increased 130 basis points from last year to 12.4 percent of sales, driven by higher gross margin from innovation, product mix and productivity measures that more than offset the initial impact of increased tariffs and currency headwinds.

Adjusted EBITDA grew to 747 million euros from 733 million euros last year. Adjusted EBITDA margin improved to 17.2 percent from 16.4 percent a year ago.

Group sales were 4.34 billion euros, 3 percent lower than prior year's 4.46 billion euros. Group comparable sales increased 1 percent, and comparable order intake increased 6 percent.

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