Shares of Royal Philips NV (PHG) plummeted 5.03% in intraday trading on Tuesday, as the Dutch healthcare technology company slashed its profit margin forecast for 2025 due to the expected impact of tariffs. The company cited a net impact from tariffs of between 250 and 300 million euros ($283 million-$340 million) despite "substantial tariff mitigations".
Philips now expects its adjusted earnings before interest, tax and amortization (EBITA) margin to come in a range between 10.8% and 11.3%, down from the previous forecast of 11.8%-12.3%. The revised outlook takes into account the potential resumption of all tariffs at currently announced rates, particularly affecting its operations in the United States, which accounts for about 40% of its projected 2024 sales.
Despite the profit margin cut, Philips maintained its 2025 comparable sales growth guidance of 1% to 3%. The company reported flat Q1 adjusted earnings of 0.25 euros per share, while sales declined slightly to 4.1 billion euros from 4.14 billion euros a year earlier. CEO Roy Jakobs stated that Philips plans to mitigate the potential impact of trade tensions through pricing and supply chain adjustments, including accelerating production at some of its U.S. locations and further localizing its Chinese operations.
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