Philips raises profit forecast after tariff impact drops

Philips expects American import tariffs to have less impact on its annual figures than previously anticipated. The healthcare technology company now expects the tariffs to have a negative impact of 150 million to 200 million euros. Previously, that estimate was 250 million to 300 million euros. Philips announced this when presenting its second-quarter results.

As a result, the company is also slightly more optimistic about its profitability for the current fiscal year. Philips is raising its expected adjusted profit margin from 10.8 to 11.3 percent to a new range of 11.3 to 11.8 percent.

However, the import tariffs will still weigh on the third-quarter results, which are expected to come in lower than in the same period last year.

Philips had been more pessimistic about the company’s profitability after the presentation of the first quarterly results, partly due to the import tariffs. The additional costs are mainly due to the tariffs the United States imposed on products from China and the subsequent retaliatory measures.

As a result, components for Philips' equipment that move between the two countries became more expensive. In May, both countries lowered these tariffs for a period of 90 days.

Philips has also factored the trade agreement between the United States and the European Union into its revised forecast. As part of that deal, a general U.S. import tariff of 15 percent on European goods was agreed upon.

Philips CEO Roy Jakobs stated that the company is continuing with negotiations for an exemption from the tariffs. He also noted that the tariffs do not necessarily lead to higher prices for medical equipment, as Philips already manufactures many of its products locally, including in the U.S., which exempts them from such duties.

From April through June, Philips generated revenue of just over 4.3 billion euros, compared to more than 4.4 billion euros in the same period last year. This resulted in a net profit of 240 million euros, down from 452 million euros a year earlier.

On Tuesday, the company also announced a partnership with the Ministry of Health in Indonesia, under which image-guided surgery technology will be made available in hundreds of hospitals across the country. According to Philips, this will improve access to cardiac, stroke, and cancer care for Indonesian patients.