Philips navigates tough comp in second quarter, forecasts pick up in second half 

AMSTERDAM – Philips has seen “a bit slower pickup” for Sleep & Respiratory Care so far this year, but it expects momentum to grow in the third and fourth quarters, says CEO Roy Jakobs. 

S&RC, part of the Connected Care business, saw a strong pickup last year, but that created tough comps for the first and second quarters this year, Jacobs noted during a call to discuss recent financial results. 

“We have strong momentum in masks, where the new launches are gaining traction, and we are working our way back into the markets that we are reentering,” he said. “So, actually, we are looking forward to the second half of the year, where we see Connected Care momentum growing on the basis of the order book and order momentum that we have been seeing, and we are confident that will also then showcase itself into Q3 and Q4 performance.” 

Philips reported a comparable sales decrease of 1% for the Connected Care business in the second quarter, mainly due to a low single-digit decline in monitoring. It reported adjusted EBITA improved by 160 basis points to 10.4%, mainly due to productivity measures, improved operational efficiency and a low comparable base, partially offset by cost inflation. 

‘We’re still working our way back in’ 

Philips announced earlier this year that, following its clearance in France, the company could once again sell S&RC products in all countries except for the United States. What’s been the uptake in Europe and other non-U.S. countries, one analyst asked during the call? 

“It would be hard to say exactly in share terms,” Jakobs said. “We are now back in all markets, and we’re also expanding in those markets. We’re also working closely with the big partners in these markets. But of course, we’re still working our way back in. So, I think it’s too early to call specific market share numbers on that. We are kind of rebuilding momentum and, actually, that’s going in line with the plan.” 

Other highlights from the call 

• Cost management and productivity measures delivered EUR 197 million in savings in the second quarter, bringing the company’s year-to-date total to EUR 344 million. It has a goal of EUR 2.1 billion in savings by 2026. 
• Philips reported restructuring and acquisition-related costs of EUR 86 million in the second quarter, of which EUR 54 million was related to its recall of CPAP and other respiratory devices and a consent decree remediation. That was below its outlook of EUR 150 million, mainly driven by cost phasing within the year. 
• Tariffs on U.S.-China bilateral trade and tariffs on imports from the European Union into the U.S. are both expected to be lower than previous assumptions. At current levels, the estimated net impact of tariffs for 2025 is between EUR 150 million and EUR 200 million, down approximately EUR 100 million from the previous estimate.