Q2 2025 Group Highlights
* Comparable order intake growth 6%
* Group sales EUR 4.3 billion, reflecting 1% increase in comparable sales
* Income from operations EUR 400 million
* Adjusted EBITA margin increased 130 bps to 12.4% of sales
* Free cash flow increased to EUR 230 million
* Philips increases full year 2025 outlook for Adjusted EBITA margin and free cash flow; reiterates comparable sales growth outlook
Roy Jakobs, CEO of Royal Philips:
“We are focused on driving profitable growth and delivering better care for more people. We built order intake growth momentum, supported by our recently launched AI-powered innovations. Our multi-year agreement with the Indonesian Ministry of Health reinforces the impact for patients of our industry-leading innovations as we provide nationwide coverage for image-guided therapy, expanding access to cardiac, stroke and cancer care for millions.
Sales improved, including accelerated Personal Health sales growth, and we delivered margin expansion through innovation and productivity. We are strengthening our fundamentals through the hard work of our employees around the world. Our focus on innovation and strong execution is driving impact as we continue to put patient safety and quality as our number one priority.
We did what we said we would do in the first half of the year and remain on track. We increase our full year outlook for margin and free cash flow, including currently announced tariff levels, and we reiterate our comparable sales growth outlook as we continue to build order and sales momentum.”
Group and segment performance
Comparable order intake growth sequentially improved to 6%, fueled by innovation and strengthening fundamentals, on the back of 9% growth in Q2 2024. Group comparable sales increased 1%. Adjusted EBITA margin increased by 130 basis points to 12.4%, 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. Free cash flow increased to EUR 230 million.
Diagnosis & Treatment comparable sales decreased by 1%. Adjusted EBITA margin improved by 130 basis points to 13.5%, mainly driven by gross margin improvement due to recently launched innovations, mix effects and productivity.
Connected Care comparable sales decreased by 1%. Adjusted EBITA margin improved by 160 basis points to 10.4%, mainly driven by innovation, and productivity measures.
Personal Health comparable sales increased 6% with growth across most geographies, more than offsetting a decline in China. Adjusted EBITA margin declined by 170 bps to 15.2%, mainly attributable to investment in advertising and promotions.
Innovation highlights
Philips signed a long-term partnership with Indonesia’s Ministry of Health to deliver nationwide coverage of its advanced Azurion image-guided therapy system, expanding access to cardiac, stroke and cancer care to more than 280 million people across all 38 provinces.
Philips continued to strengthen its AI leadership in MR with FDA 510(k) clearance for its SmartSpeed Precise MR software with Integrated Dual AI. SmartSpeed Precise is the industry’s first integrated dual AI solution, delivering up to 3x faster scans and 80% sharper images with one click.
Philips signed large monitoring partnerships with integrated delivery networks and health systems in the US and Europe, including long-term partnerships with customers such as the Rush University System for Health in the Midwest of the US. Philips’ monitoring partnerships help clinicians deliver better care through the AI-powered virtual Patient Information Center iX (PIC iX) and IntelliVue patient monitors.
Philips delivered Spectral CT 7500 and CT 5300 systems to University Health San Antonio. These clinically proven systems offer fast, low-dose, AI-enabled scans for one of Texas’ largest public health systems, enabling them to deliver faster, more efficient workflows.
Philips launched the Flash Ultrasound System 5100 POC, built for speed, precision, and ease of use in urgent point-of-care settings.
Philips launched the i9000 electric shaver range, powered by AI and tailored to user preferences. During China’s 618 festival, Philips ranked No. 1 on JD.com in male grooming sales and in the electric toothbrush category.
Philips launched the RADIQAL clinical trial across multiple hospitals. This study will test the effectiveness of its new ultra-low dose technology, SmartIQ, in reducing radiation without impacting coronary procedure performance.
Productivity
Disciplined cost management and robust productivity initiatives delivered savings of EUR 197 million in the quarter. Philips is on track to deliver on its three-year, EUR 2.5 billion productivity program, including EUR 800 million productivity savings in 2025.
Outlook
Philips updates its outlook, including currently announced tariff impact, which has evolved and continues to be dynamic:
Comparable sales growth range reiterated at 1%-3% with sequential improvement as the year progresses.
Adjusted EBITA margin range increased to 11.3%-11.8%, a 50 bps increase versus our previous outlook. This includes an estimated tariff impact of EUR 150-200 million after substantial mitigations, compared to EUR 250-300 million previously; Adjusted EBITA margin in Q3 expected to be lower than in 2024 primarily due to tariff impact phasing.
Free cash flow increased to EUR 0.2 billion – EUR 0.4 billion for the full year (including the payout in the first quarter of 2025 of EUR 1,025 million Philips Respironics recall-related medical monitoring and personal injury settlements in the US).
This outlook excludes ongoing Philips Respironics-related proceedings, including the investigation by the US Department of Justice.
Capital Allocation
Philips completed its dividend distribution for 2024 in the second quarter of 2025. As approved by the Annual General Meeting of Shareholders on May 8, 2025, a dividend of EUR 0.85 per common share was paid in cash or shares at the election of the shareholder, with 41.4% paid in cash.
