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Philips builds strong order intake momentum and drives margin expansion in Q2

1. Philips reports 6% order intake growth with EUR 4.3 billion sales. 2. Freer cash flow rose to EUR 230 million, indicating strong liquidity. 3. AI innovations notably improve operational efficiency and sales growth. 4. Philips expands partnerships for healthcare services, enhancing market reach. 5. Adjusted EBITA margin increased to 12.4%, supporting profitability.

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Why Bullish?

The positive outlook and innovations imply increased market confidence, possibly driving PHG's stock up. Historical instances show similar metrics often precede stock rallies, as with tech firms introducing new products.

How important is it?

The article’s emphasis on growth and innovations directly aligns with investor interests, heightening its importance for PHG's price action.

Why Short Term?

Immediate growth signals in order intake and margin revisions impact stock in the near term. Past similar announcements have spurred quick market reactions.

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July 29, 2025 Q2 2025 Group Highlights Comparable order intake growth 6%Group sales EUR 4.3 billion, reflecting 1% increase in comparable salesIncome from operations EUR 400 millionAdjusted EBITA margin increased 130 bps to 12.4% of salesFree cash flow increased to EUR 230 millionPhilips 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. Click here to view the release online For further information, please contact:Michael Fuchs Philips Global External Relations Tel.: +31 6 1486 9261 E-mail: michael.fuchs@philips.com Dorin Danu Philips Investor Relations Tel.: +31 20 59 77055 E-mail: dorin.danu@philips.com About Royal Philips Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health technology company focused on improving people’s health and well-being through meaningful innovation. Philips’ patient- and people-centric innovation leverages advanced technology and deep clinical and consumer insights to deliver personal health solutions for consumers and professional health solutions for healthcare providers and their patients in the hospital and the home. Headquartered in the Netherlands, the company is a leader in diagnostic imaging, ultrasound, image-guided therapy, monitoring and enterprise informatics, as well as in personal health. Philips generated 2024 sales of EUR 18 billion and employs approximately 67,300 employees with sales and services in more than 100 countries. News about Philips can be found at www.philips.com/newscenter. Forward-looking statements and other important information Forward-looking statementsThis document and the related oral presentation, including responses to questions following the presentation, contain certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. Examples of forward-looking statements include statements made about our strategy, estimates of sales growth, future Adjusted EBITA*, future restructuring and acquisition-related charges and other costs, future developments in Philips’ organic business and the completion of acquisitions and divestments. Forward-looking statements can be identified generally as those containing words such as “anticipates”, “assumes”, “believes”, “estimates”, “expects”, “should”, “will”, “will likely result”, “forecast”, “outlook”, “projects”, “may” or similar expressions. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these statements. These factors include, but are not limited to, macro-economic and geopolitical changes – including the war in Ukraine and ongoing conflicts in Israel and the Middle East – as well as measures such as announced and proposed tariffs and trade actions introduced in response to rising global tensions; Philips’ ability to keep pace with the changing health technology environment; Philips’ ability to gain leadership in health informatics and artificial intelligence in response to developments in the health technology industry; integration of acquisitions and their delivery on business plans and value creation expectations; ability to meet expectations with respect to ESG-related matters; securing and maintaining Philips’ intellectual property rights, and unauthorized use of third-party intellectual property rights; failure of products and services to meet quality or security standards, adversely affecting patient safety and customer operations; the resilience of our supply chain; challenges in simplifying our organization and our ways of working; attracting and retaining personnel; breach of cybersecurity; challenges in driving operational excellence and speed in bringing innovations to market; treasury and financing risks; tax risks; reliability of internal controls; compliance with regulations and standards involving quality, product safety, (cyber) security and artificial intelligence; and compliance with business conduct rules and regulations including privacy, existing and upcoming ESG disclosure and due diligence requirements. As a result, Philips’ actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. For a discussion of factors that could cause future results to differ from such forward-looking statements, see also the Further information chapter included in the Annual Report 2024. Third-party market share dataStatements regarding market share contained in this document, including those regarding Philips’ competitive position, are based on outside sources such as specialized research institutes, as well as industry and dealer panels, in combination with management estimates. Where information is not yet available to Philips, market share statements may also be based on estimates and projections prepared by management and/or based on outside sources of information. Management’s estimates of rankings are based on order intake or sales, depending on the business. Market Abuse RegulationThis press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation. Use of non-IFRS informationIn presenting and discussing the Philips Group’s financial position, operating results and cash flows, management uses certain non-IFRS financial measures. These non-IFRS financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measure and should be used in conjunction with the most directly comparable IFRS measures. Non-IFRS financial measures do not have standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. A reconciliation of these non-IFRS measures to the most directly comparable IFRS measures is contained in this document. Further information on non-IFRS measures can be found in the Annual Report 2024. PresentationAll amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up precisely to totals provided. All reported data is unaudited. Financial reporting is in accordance with the accounting policies as stated in the Annual Report 2024. Per share calculations for all periods presented have been retrospectively adjusted to reflect the issuance of shares in 2025 with respect to the share dividend for 2024. *) Non-IFRS financial measure. Refer to Reconciliation of non-IFRS information.

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