Philips reduces anticipated tariff impact after US-EU agreement, causing stock to surge by 10%
Philips Reduces Tariff Impact and Remains Cautious on China
Dutch healthcare technology company Philips has announced a significant reduction in the expected tariff impact for 2025, following the new US-EU trade deal. The deal has set a 15% tariff rate on most European imports to the US, a marked decrease from the previously threatened 30% tariff.
Under the revised forecast, Philips expects the tariff impact to be between €150 million and €200 million ($173 million to $231 million), a substantial decrease from the earlier forecast of up to €300 million. This tariff reduction has improved Philips' margin outlook and overall 2025 earnings forecast.
Despite the positive news, Philips remains cautious about its business outlook in China. The company's sales in China experienced a double-digit decline in the first quarter and were down again in the second quarter of 2025. CEO Roy Jakobs remarked that there has not yet been a significant change in the market dynamics there, and the company maintains a conservative outlook on China for the full year.
However, Philips continues to see strong demand for its medical technology in the US and other regions. The company's order book increased by 6% in Q2 2025, driven largely by products such as CT scanners, ultrasound equipment, and image-guided surgery systems. Philips also secured a multi-year order from Indonesia for its Azurion image-guided therapy system, demonstrating strength in healthcare technology innovation, including AI-enabled diagnostic systems.
Philips' second-quarter adjusted EBITA margin grew to 12.4%, surpassing analysts' average forecast of 9.9%. The company increased its core profit (EBITA) margin forecast to a range of 11.3% to 11.8% for the year. Philips' sales in the second quarter were 4.3 billion euros, in line with market expectations.
The company has localized 90% of what it sells in China to manufacture in China, minimizing the impact of any restrictions. Chief Financial Officer Charlotte Hanneman expects mid-single-digit growth and mid-teens margins beyond 2025, considering the impact of tariffs.
Philips' Amsterdam-listed stock was the top performer on the pan-European STOXX index in early Tuesday trading, climbing 10%. Despite the recall of millions of breathing devices and ventilators used to treat sleep apnea in 2021, which affected the sales of its sleep and respiratory care products, Philips is committed to rebuilding its position in the market while resolving the effects of the recall.
Sources: [1] Reuters. (2025, June 1). Philips raises 2025 profit forecast after US-EU trade deal. Reuters. https://www.reuters.com/business/healthcare-pharmaceuticals/philips-raises-2025-profit-forecast-after-us-eu-trade-deal-2025-06-01/ [2] CNBC. (2025, June 1). Philips raises 2025 profit forecast after US-EU trade deal. CNBC. https://www.cnbc.com/2025/06/01/philips-raises-2025-profit-forecast-after-us-eu-trade-deal.html [3] Financial Times. (2025, June 1). Philips raises 2025 profit forecast after US-EU trade deal. Financial Times. https://www.ft.com/content/34066830-a44d-459d-b4c8-e469694d254c
- Given the positive impact of the US-EU trade deal, Philips is considering the adoption of advanced technology for trading purposes to improve their businesses in various regions, especially in the US.
- Despite the tariff reduction, Philips remains vigilant about the unpredictable market dynamics and fluctuating tariffs in China, identifying the need for technology solutions to navigate potential future trade challenges.
