Tariffs cost Philips €300m
The US China trade war will cost Royal Philips €300m in profits, even after ‘substantial tariff mitigations’.
The latest figures from the Dutch medical electronics giant show a fall of one percentage point (100 basis points) in earning this year as a result of the tariffs. This is also assuming the business picks up in the second half of the year, as its business in China has also fallen by over 10%.
“In an uncertain macro environment that has intensified due to the potential impact of tariffs, we are focused on what we can control. 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,” said Roy Jakobs, CEO of Royal Philips.
Free cash flow will be slightly positive for the full year, after the payout of €1.025bn for the Philips Respironics recall-related medical monitoring and personal injury settlements in the US. This does not include pending ongoing Philips Respironics-related proceedings, including the investigation by the US Department of Justice.
For the first quarter, the company saw sales of €4.1bn, a 2% decline in comparable sales growth mainly due to China.
The company is currently going through a restructuring to cut €800m of costs this after announcing 6000 job losses at the start of 2023. Productivity initiatives delivered savings of €147 million in the quarter, with operating model savings of €42m and procurement savings of €46m. Since 2023, it has cut cots by €1.9bn through productivity initiatives.
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