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. QuotePhilips’ 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 UpdateDiagnosis & 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 DetailsGross 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 SheetAs 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 GuidancePhilips 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 ConsiderPhilips 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.Allegro Micro Systems, Arista Networks and Bumble each sport a Zacks Rank of 1 (Strong Buy) at present. 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It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Koninklijke Philips N.V. (PHG): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Allegro MicroSystems, Inc. (ALGM): Free Stock Analysis Report Bumble Inc. (BMBL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks