Philips Q2 Earnings and Revenues Decline Year Over Year, Shares Fall

Koninklijke Philips PHG reported earnings of €0.25 per share in the second quarter of 2025, which decreased from the year-ago quarter’s reported figure of €0.47 per share.

The company’s sales decreased 2.8% on a year-over-year basis to €4.3 billion. Comparable sales increased 1% year over year. The 6% growth in Personal Health was offset by a 1% decline in both Connected Care and Diagnosis & Treatment, due to a high comparison base in prior years, driven by supply chain improvements.

Further, Philips’ comparable order intake increased 6% year over year in the reported quarter.

Sales increased 1% year over year on a comparable basis in growth geographies. Growth geographies showed low single-digit growth, despite a decline in China, with contributions from all segments. Comparable sales in Mature geographies were flat in the reported quarter.

Koninklijke Philips N.V. Price, Consensus and EPS Surprise

Koninklijke Philips N.V. price-consensus-eps-surprise-chart | Koninklijke Philips N.V. Quote

Philips’ stock lost 1.05% in pre-market trading. The dip can be attributed to macroeconomic uncertainties and the impact of currently announced tariffs.

PHG’s Segmental Update

Diagnosis & Treatment revenues declined 4.1% from the year-ago quarter to €2.08 billion. Comparable sales decreased 1%, with growth in Image Guided Therapy offset by a low-single-digit decline in Precision Diagnosis, on the back of a high comparison base in prior years driven by supply chain improvements.

Connected Care revenues decreased 4.5% year over year to €1.27 billion. Comparable sales decreased 1%, mainly due to a low-single-digit decline in Monitoring.

Personal Health revenues grew 3.4% year over year to €862 million. Comparable sales increased 6%, driven by strong growth in all geographies, except China.

Other segment sales amounted to €120 million, down 0.8% on a year-over-year basis.

PHG’s Operating Details

Gross margin expanded 180 basis points (bps) on a year-over-year basis to 46.4% in the reported quarter.

General & administrative expenses, as a percentage of sales, were 3.6%, which expanded 10 bps on a year-over-year basis. Moreover, selling expenses decreased 30 bps year over year to 25%. Research & development expenses decreased 20 bps to 9.3%.

Restructuring, acquisition-related, and other items amounted to a loss of €86 million against a gain of €381 million a year ago.

Philips achieved €197 million in savings this quarter through disciplined cost management and robust productivity initiatives. The company also remains on track to deliver its three-year €2.5 billion productivity program, including €800 million in savings in 2025.

Phillips’ adjusted EBITA — the company’s preferred measure of operational performance — increased 9.1% year over year to €540 million. EBITA margin contracted 130 bps on a year-over-year basis to 12.4% in the reported quarter.

Diagnosis & Treatment’s adjusted EBITA margin expanded 130 bps on a year-over-year basis to 13.5%.

Connected Care’s adjusted EBITA margin was 10.4% in the reported quarter, which expanded 160 bps year over year.

Personal Health’s adjusted EBITA margin contracted 170 bps on a year-over-year basis to 15.2%.

PHG’s Balance Sheet

As of June 30, 2025, Philips’ cash and cash equivalents were €1.82 billion compared with €1.19 billion as of March 31, 2025. 

Total debt was €8.425 billion compared with €7.568 billion as of March 31, 2025.

Operating cash flow was €387 million compared with the year-ago quarter’s €89 million.

In the quarter under review, free cash flow was €230 million compared with the year-ago quarter’s cash outflow of €64 million.

PHG Initiates 2025 Guidance

Philips expects to deliver 1-3% of comparable sales growth.

Further, the adjusted EBITA margin is expected to be between 11.3% and 11.8%

Free cash flow is expected to be between €0.2 billion and €0.4 billion in 2025, including the payout in the first quarter of 2025 of €1,025 million for Philips Respironics recall-related medical monitoring and personal injury settlements in the United States.

PHG’s Zacks Rank & Stocks to Consider

Philips currently has a Zacks Rank #3 (Hold).

Allegro Micro Systems ALGM, Arista Networks ANET and Bumble  BMBL are some better-ranked stocks that investors can consider in the broader Computer and Technology sector.

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Allegro Micro Systems shares have gained 55.5% year to date. ALGM is scheduled to release first-quarter fiscal 2026 results on July 31.

Arista Networks shares have risen 7.3% year to date. ANET is set to report its second-quarter 2025 results on Aug. 5.

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