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Philips Stock Falls After Company Cuts Margin Guidance, Citing Tariffs
Advisor Insight
Shares of medical equipment company Koninklijke Philips ( PHG ) shares are dropping Tuesday after the Dutch conglomerate said it had cut its target profit margin due to tariffs.
The company, which announced the new guidance as it posted better-than-expected quarterly sales, said it was reducing its full-year adjusted earnings before interest, taxes, and amortization (EBITA) margin target. Its first-quarter adjusted EBITA margin had fallen 80 basis points year-over-year to 8.6%.
“Philips’ outlook for full year 2025 is updated to include the assumed impact of currently announced tariffs,” the company said, citing an “uncertain macro environment.”
“This includes current bilateral US-China and rest of world tariffs, the resumption of the paused US tariffs on July 9 and excludes potential wider economic impact," the company said. It kept its comparable sales growth forecast unchanged at between 1% and 3%.
The company said it projects its full-year adjusted EBITA margin range to be 10.8%-11.3%, including an estimated net tariff impact of 250-300 million euros after “substantial tariff mitigations.” That amounts to a 100 bps reduction versus the previous forecast.
The lowered guidance comes as the company posted first-quarter sales that beat analysts’ estimates. The company posted revenue of 4.1 billion euros versus a 4 billion euros consensus forecast from analysts polled by Visible Alpha.
The company's shares are down a bit more than 2% this year.
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