Core Viewpoint - Philips has updated its financial outlook for 2025, maintaining a comparable sales growth forecast of 1% to 3%, while adjusting its adjusted EBITDA margin expectations down to 10.8% to 11.3% due to tariff impacts and other factors [1][20]. Financial Highlights - In Q1 2025, Philips reported sales of €1,965 million, reflecting a nominal sales decline of 3% and a comparable sales decline of 4% compared to Q1 2024 [3][4]. - The adjusted EBITDA for Q1 2025 was €235 million, with an adjusted EBITDA margin of 12.0%, showing an increase from the previous year [3][4]. - Free cash flow for the quarter was negative at €1,091 million, primarily due to payments related to the recall of Philips' respiratory devices [4][20]. Business Details - The diagnosis and treatment segment saw a comparable sales decline of 4%, largely due to a double-digit drop in the Chinese market, although EBITA improved to €187 million with a margin of 9.5% [5]. - The connected care segment reported a nominal sales growth of 2% in Q1 2025, with a significant reduction in operational losses compared to the previous year [6][7]. - The personal health segment achieved a comparable sales growth of 1%, supported by strong international performance despite a decline in the Chinese market [9]. Innovation Highlights - Philips introduced new AI technologies to enhance imaging precision and patient outcomes, particularly in MRI systems [12]. - Innovations in ultrasound systems have demonstrated significant improvements, such as a 50% reduction in cardiac imaging time [14]. - Collaborative agreements with hospitals in Belgium, Sweden, and Brazil aim to enhance patient monitoring and modernize workflows [19]. 2025 Financial Guidance - The company has revised its 2025 financial guidance, incorporating the estimated impact of tariffs, with an adjusted EBITDA margin forecast of 10.8% to 11.3% [20]. - The overall performance is expected to improve in the second quarter compared to the first quarter, with a slight positive cash flow anticipated after accounting for significant recall-related expenses [20].

Core Insights - The company reported a 2% decline in comparable sales, primarily due to significant declines in China, while showing growth in Personal Health outside of China [5][10] - Order intake increased by 2%, driven by strong performance in North America, despite challenges in the Chinese market [4][10] - The adjusted EBITA margin decreased by 80 basis points to 8.6%, influenced by lower sales, although partially offset by higher gross margins from innovations [6][10] Group and Segment Performance - Comparable order intake rose by 2%, with North America showing strong momentum, while China experienced a decline [4][10] - Group comparable sales decreased by 2%, with double-digit declines in all segments in China, but slight growth in Personal Health in other markets [5][10] - Diagnosis & Treatment sales fell by 4%, impacted by a high comparison base and declines in China, while Image-Guided Therapy maintained strong performance [7][10] Financial Performance - Income from operations increased to EUR 154 million, while free cash flow showed an outflow of EUR 1,091 million, largely due to a significant payment related to the Philips Respironics recall [6][10] - Productivity initiatives yielded savings of EUR 147 million in Q1, contributing to a target of EUR 800 million in savings for 2025 [12] Innovation and Technology - Philips was recognized as the leading applicant in medical technology at the European Patent Office in 2024, highlighting its commitment to innovation [9] - New AI technologies were introduced to enhance imaging and patient outcomes, with significant advancements in MRI and ultrasound systems [15] Outlook - The company updated its full-year 2025 outlook, factoring in the impact of announced tariffs, with an estimated net tariff impact of EUR 250-300 million [13][16] - The outlook for comparable sales growth remains unchanged at 1%-3%, with expectations for modest improvement in Q2 compared to Q1 [16]