Philips Raises Full-Year Margin Outlook on Reduced US Tariff Impact

Royal Philips NV has raised its full-year adjusted operating earnings margin outlook to between 11.3% and 11.8%, reflecting a 50 basis point increase from its previous forecast due to a less severe impact from U.S. import tariffs than initially expected. The company now estimates the tariff cost to be between €150 million and €200 million, down from the €250 million to €300 million predicted earlier, following a new EU-U.S. trade deal that set tariffs at 15%. Despite a 3% sales decline in the second quarter, Philips reported an increase in adjusted EBITA margin to 12.4% and adjusted EBITDA growth, attributing improvements to innovation, product mix, and productivity initiatives. CEO Roy Jakobs emphasized strong demand in the U.S. market and reaffirmed the company's guidance for comparable sales growth of 1% to 3% for the year. Philips continues to implement a multi-year productivity program targeting €2.5 billion savings and is expanding its U.S. presence while seeking tariff exemptions for the healthcare sector. Although the company faced challenges including lower Q2 net income and ongoing legal proceedings related to Philips Respironics, the clarified tariff environment has contributed positively to its financial outlook and stock performance.