Koninklijke Philips N.V.

Q2 comparable sales increased 4% year over year. Reported adjusted EBITA margin was 16.4%, up 400 basis points year over year, including a tariff refund benefit; excluding that benefit, margin was 12.2%, down about 20 basis points year over year. Q2 free cash flow was EUR 222 million. On a segment basis, D&T comparable sales rose 2% and adjusted EBITA margin was 13.9% reported, or 9.3% excluding the refund; Connected Care sales rose 2% and margin was 17.8% reported, or 11.7% excluding the refund; Personal Health sales grew 8% and margin was 23% reported, or higher by 280 basis points excluding the refund. For the full year, Philips reiterated comparable sales growth of 3% to 4.5%, underlying adjusted EBITA margin of 12.5% to 13% excluding the tariff refund, and underlying free cash flow of EUR 1.3 billion to EUR 1.5 billion; reported free cash flow was raised to EUR 1.5 billion to EUR 1.7 billion including the refund. Management said Q3 comparable sales growth should be at the lower end of the full-year range, and Q3 adjusted EBITA margin should be below prior year. The company also said Q3 order growth should be solid and orders should return to a mid-single-digit range in Q3 and beyond.

Roy Jakobs framed the quarter as a solid first half in a difficult macro and geopolitical backdrop, emphasizing that growth, orders, productivity and execution were all holding up. He highlighted strong innovation traction in imaging, monitoring and personal health, plus strategic collaborations and large customer wins, as evidence that Philips is strengthening its competitive position. His tone was confident but cautious, especially on China, where he said the company is being selective and realistic about timing-driven procurement effects.

Charlotte Hanneman focused on the mechanics behind the margin and cash results. She said the group’s 10 basis points of first-half margin expansion excluding tariffs was in line with plan, despite higher cost inflation, tariffs and currency pressure, and noted EUR 132 million of productivity savings in Q2 and EUR 258 million year to date toward the EUR 1.5 billion three-year savings target. She also said Philips ended Q2 with EUR 1.8 billion in cash, net debt of EUR 5.7 billion and leverage of 1.8x versus 2.2x in Q2 2025, and explained that the raised full-year margin and cash flow outlooks include the tariff refund benefit.

Analysts pressed management on why D&T’s ex-tariff margin was weak, how much China centralized procurement was hurting business, and whether the full-year margin guide implied an unusually back-end-loaded Q4. Management said D&T was pressured by cost inflation, higher tariffs, currency and China exposure, but that innovation-led gross margin improvements were already visible in CT and MR and should improve further. On the full-year guide, Charlotte said Q3 is expected to be below prior year, but Q4 should step up meaningfully and this pattern is consistent with Philips’ normal seasonality and internal plan. Roy added that China remains selective and margin-pressured in centralized procurement, but North America, Europe and India are strengthening and should offset part of that risk.