Philips expects trade war tariffs to cost it up to €300 million
Philips expects import duties announced by American President Donald Trump and retaliatory tariffs imposed by other countries to cost it between 250 million and 300 million euros this year, the medical technology company said in its quarterly results.
As a result, Philips is more pessimistic about its profitability and cash flow in 2025. The company adjusted its expected profit margin from between 11.8 and 12.3 percent downward to between 10.8 and 11.3 percent. And it now expects its free cash flow to be “slightly positive” for the full year.
The additional costs are mainly due to the 145 percent levies Trump imposed on products from China, and China’s retaliatory measures on goods from the United States. That means that parts for Philips’ equipment that are shipped between the two countries are becoming significantly more expensive. Philips also expects high reciprocal tariffs from the rest of the world once the paused US tariffs resume on July 9.
Philips said it was taking measures to alleviate the effects of the trade war. “We are improving our supply chain agility, taking decisive cost actions to mitigate financial impact where possible, and ensuring we can continue to serve our customers and consumers,” CEO Roy Jakobs said. The company is focusing on “what we can control” in this uncertain macro environment.
In the first quarter, Philips’ turnover decreased slightly to 4.1 billion euros, mainly due to difficulties in the Chinese market. Net profit came to 72 million euros, compared to a loss of 998 million euros a year earlier. Orders increased by 2 percent due to strong performance in the North American market.
