Philips, the Dutch healthcare technology company, has revised its profit margin forecast for 2025, citing the impact of U.S. tariffs on its products. The company estimates a net effect from tariffs ranging between 250 and 300 million euros ($283 million-$340 million), despite efforts to mitigate the tariffs’ effects. The United States is Philips’ largest market, accounting for approximately 40% of its projected sales in 2024, along with one-third of its tax contributions. Philips imports a wide range of products from China, including Respironics breathing masks, electrical shavers, toothbrushes, and other devices, while sourcing medical equipment primarily from Europe. CEO Roy Jakobs acknowledged the uncertain macroeconomic environment, particularly the challenges posed by potential tariffs, and emphasized that the company would focus on what it could control.
In light of the ongoing tariff uncertainties, Philips has lowered its full-year core profit outlook. The company now anticipates its adjusted earnings before interest, tax, and amortisation (EBITA) margin to fall within the range of 10.8% to 11.3%, a decrease from the previously expected 11.8% to 12.3%. While the specifics of the tariffs on the healthcare sector remain unclear, analysts predict that companies may need to absorb the costs in the near term if these tariffs are enacted. In response to this, the U.S. has launched an investigation into the pharmaceutical industry, which could pave the way for additional levies.
Despite the anticipated impact of tariffs, Philips has reaffirmed its forecast for comparable sales growth between 1% and 3% this year. The company reported a smaller-than-expected sales decline in the first quarter, driven by a strong performance in North America that offset a decrease in sales in China. For the quarter ending March 31, Philips reported sales of 4.10 billion euros, down 2% year-on-year in comparable terms but exceeding the analysts’ average forecast of 4.02 billion euros. The company had paid 38 million euros in U.S. customs duties in the previous year, and it intends to mitigate the impact of the tariffs through relief measures and the Nairobi Protocol, which offers tariff exemptions on devices used to treat chronic conditions.
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