Philips sees growth in Connected Care despite shift in order timing

AMSTERDAM – Philips reported a low double-digit increase in sales for Sleep and Respiratory Care during the second quarter of 2026, helping drive gains within its Connected Care business unit.

That’s compared to a 4% increase in sales company wide and a 2% increase for all of Connected Care.

Philips expects order growth to rebound

Philips reported a 1% decline in order intake for the second quarter – partly due to certain large orders in Patient Monitoring, also part of Connected Care, moving to the third quarter – but expects a return to mid-single-digit increases in coming quarters.

“We had the six, seven quarters of strong growth intake (prior to the second quarter),” said CEO Roy Jakobs during a conference call to discuss the financial results. “Actually, we see that continuing with Q3 onwards. We believe we are on a good trajectory for strong demand of our products.”

Tariff refunds help offset inflation

Jakobs and CFO Charlotte Hanneman said the company was encouraged by its second-quarter performance despite what they described as a challenging external environment marked by tariffs and higher cost inflation.

Addressing tariffs, Hanneman said Philips benefited during the quarter from refunds related to earlier tariff costs.

“In Q2, we received virtually all of the tariff amount claimed,” she said. “This includes an approximately EUR 25 million impact for annual incentive accruals from the increase in our reported full-year guidance, which includes the tariff refund benefit.”

Philips continues to face higher costs across its operations, however. Hanneman said the company expects high-single-digit cost inflation for the full year.

“It has ticked up slightly, but not so much, actually,” she said. “As a result, we're also upping our cost mitigation actions where we have really good line of sight. For 2027, there will be an annualization of the cost inflation – although, of course, depending on how the macro environment will unfold, there will be some puts and takes there. We are taking that into account.”

Productivity efforts drive savings

Philips expects savings initiatives and productivity improvements to help offset those higher costs during the second half of the year. The company generated EUR 132 million in productivity savings during the second quarter, bringing total savings for the first half of 2026 to EUR 258 million.

“As we have always done, we will mitigate with our cost actions to go after further bill of material improvements, further AI boosting to also help us find savings, and further also tariff mitigations,” Hanneman said. “You should think about it as a package.”

• Related: Philips continues to lean on international sleep growth, as FDA path continues.