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• Order Intake Growth: Double-digit growth in North America; 4% increase excluding China.

• Diagnosis & Treatment Orders: Mid-single-digit global growth; strong demand in Image Guided Therapy and Precision Diagnosis.

• Adjusted EBITA Margin: Improved by 30 basis points to 9.5% in Diagnosis & Treatment; declined to 3.5% in Connected Care.

• Personal Health Sales: 1% growth on a comparable basis; double-digit growth in Europe and growth markets excluding China.

• Group Comparable Sales: Decreased 2%, with a double-digit decline in China.

• Net Income: Increased by EUR1.1 billion to EUR72 million.

• Free Cash Flow: Outflow of EUR1.1 billion due to Respironics settlement; excluding this, increased by EUR270 million year-on-year.

• Productivity Savings: EUR147 million in Q1; on track for EUR800 million in 2025.

• Full-Year Sales Outlook: Comparable growth between 1% and 3%.

• Adjusted EBITA Margin Outlook: Expected to range between 10.8% and 11.3% for 2025.

• Tariff Impact: Estimated annual net cost impact of EUR250 million to EUR300 million after mitigations.

• Warning! GuruFocus has detected 3 Warning Signs with PHG.

Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Order intake grew despite a double-digit decline in China, driven by strong growth in North America and Diagnosis & Treatment.

• Sales performance exceeded expectations, driven by Personal Health growth and royalty phasing.

• Innovations and productivity measures led to an improvement in gross margin.

• Personal Health sales returned to growth, with strong performance in Europe and other growth markets.

• The company is making progress on execution priorities, including patient safety, quality, and supply chain resilience.

Negative Points

• China experienced a double-digit decline in sales, impacting overall performance.

• Tariffs are expected to have a significant impact, with a net cost impact estimated between EUR250 million to EUR300 million.

• Adjusted EBITA margin decreased by 80 basis points to 8.6%, despite efforts to improve productivity.

• Free cash flow was negatively impacted by a EUR1 billion payment related to the Respironics settlement.

• The macroeconomic environment remains uncertain, with potential impacts from tariffs and subdued consumer demand in China.

Q & A Highlights

Q: Can you elaborate on your tariff mitigation efforts, particularly regarding supply chain optimization? A: Roy Jakobs, CEO, explained that Philips is further regionalizing its footprint, focusing on localizing production in key regions like the U.S. and China. The company is accelerating localization in the U.S., leveraging existing facilities and investing in new ones, such as a multi-million investment in Minnesota for cardiac devices. Charlotte Hanneman, CFO, added that mitigation efforts include inventory management and pursuing exemptions, which are expected to save several hundred million euros.