Philips Stock Drops On Weak Q2 Orders, Despite Profit Growth, Positive Outlook

(RTTNews) - Shares of Koninklijke Philips N.V. Were losing around 11 percent in Amsterdam as well as around 4.4% in pre-market activity on the NYSE, after the Dutch consumer electronics giant reported Tuesday weak orders in its second quarter, even as profit increased significantly, mainly on US tariff refund and slightly higher net sales.

Further, the firm lifted fiscal 2026 Adjusted EBITA outlook to reflect US tariff refund, and reiterated comparable sales growth view.

For fiscal 2026, Philips continues to expect comparable sales growth of 3 percent to 4.5 percent.

The company updated its adjusted EBITA margin guidance to 13.5 percent to 14.0 percent, including a US tariff refund benefit of approximately 1 percent, compared to the prior guidance of 12.5 percent to 13.0 percent.

Free cash flow guidance has been increased to €1.5 billion to €1.7 billion from the previous range of €1.3 billion to €1.5 billionn, reflecting the US tariff refund benefit.

The 2026 outlook includes currently known tariffs and excludes ongoing Philips Respironics-related proceedings, including the investigation by the US Department of Justice and State Attorneys General.

In the second quarter, net income was €386 million, up from €240 million in the prior year period. Earnings per share increased to €0.40 from €0.25 a year ago, while adjusted earnings per share rose to €0.49 from €0.36 in the prior year.

Income from operations included US tariff refund benefit of €186 million.

Adjusted EBITA increased to €717 million from €540 million last year, representing 16.4 percent of sales versus 12.4 percent in the prior year period. The US tariff refund benefit contributed approximately 4.2 percent to the adjusted EBITA margin.

Excluding the US tariff refund benefit, Adjusted EBITA slightly decreased mainly due to cost inflation and higher tariffs, partly offset by higher sales and productivity measures.

Adjusted EBITDA rose to €910 million from €747 million, or 20.9 percent of sales compared to 17.2 percent previously.

Group sales reached €4.36 billion, 1 percent higher than €4.34 billion in the prior year. Comparable sales growth was 4 percent, driven by all business segments.

In the quarter, comparable sales of Diagnosis & Treatment increased 2%, and the growth was 2% in Connected Care and 8% in Personal Health.

Meanwhile, comparable order intake declined 1 percent due to timing of certain large orders. Growth in Diagnosis & Treatment was offset by the timing of certain large Connected Care orders shifting into the third quarter.

Europe delivered strong double-digit order growth, while certain large orders in North America was shifted into the third quarter.

In Amsterdam, Philips shares were trading at 21.05 euros, down 10.54 percent.

In pre-market activity on the NYSE, the shares were at $23.91, 4.40 percent lower.

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