Philips upgrades guidance on lower tariff assumptions

(Sharecast News) - Shares in Philips surged in Amsterdam on Tuesday after the health tech giant raised full-year guidance on the back of a lower-than-predicted hit from trade tariffs.

The Dutch firm said it now expects adjusted EBITDA margins to be 50 basis points higher than the previous range at 11.3-11.8%, with the estimated net tariff impact at �150-200m "after substantial mitigations", down from earlier forecasts of a �250-300m hit.

The upgrade follows the trade deal struck between EU and US officials at the weekend, which put in place 15% tariffs on all EU imports into America - half the rate previously threatened by Donald Trump.

"We are focused on driving profitable growth and delivering better care for more people," said chief executive Roy Jakobs.

"We did what we said we would do in the first half of the year and remain on track. We increase our full year outlook for margin and free cash flow, including currently announced tariff levels, and we reiterate our comparable sales growth outlook as we continue to build order and sales momentum."

Sales totalled �4.34bn in the second quarter, down 3% over last year but up 1% on a comparable sales basis, as 6% growth in the Personal Health division was offset by a 1% decline in both Connected Care and Diagnosis & Treatment due to tough comparatives.

Income from operations more than halved to �400, from �816m the year before, mainly due to the prior year benefitting from a �538m one-off insurance gain booked the previous year related to the Respironics recall.

Without these other other adjusting items, adjusted EBITDA actually improved to �540m from �495m, helped by improving gross margins, product mix and productivity measures, the company said.

Looking ahead, comparable sales are expected to improve by 1-3% for the year, "with sequential improvement as the year progresses", Philips said.

The stock was up 9.8% at �24.26 by 1132 CEST.