Koninklijke Philips N.V. Q4 FY2025 earnings call

• Strong Q4 order intake up 7%, comparable sales growth 7% YOY, broad-based across businesses and geographies.
• Adjusted EBITDA margin improved by 160 basis points to 15.1% in Q4 and 80 basis points to 12.3% for the full year despite tariffs.
• Product innovations: Launched helium-free 3T MRI, Verida spectral CT system, LumiGuide navigation solution; acquired SpectraWAVE.
• Supply chain: Service levels at all-time highs, lead times competitive; offset tariff impact via productivity, cost discipline, and mitigation measures.
• Region-specific: North America strong growth; China cautious near-term outlook but attractive long-term; Europe capital spending stable; Personal Health strong sellout in Europe and U.S., subdued in China.

Diagnosis & Treatment (D&T): Comparable sales improved sequentially, increasing 4% year-on-year in Q4 and flat for the year. Image-Guided Therapy performed particularly well with double-digit growth in Q4, driven by the Azurion platform and coronary intravascular ultrasound; Precision Diagnosis sales were stable. Adjusted EBITDA margin in D&T declined 30 basis points to 11.8% in Q4, but increased 10 basis points to 11.7% for the full year. Connected Care: Closed the year with strong momentum, delivering 7% Q4 growth and 3% full year growth. Adjusted EBITDA margin expanded 150 basis points to 16.5% in Q4 and increased 110 basis points to 10.7% for the full year. Personal Health: Comparable sales growth improved sequentially, growing 14% in Q4 and 8% for the full year. Adjusted EBITDA margin improved 500 basis points to 23% in Q4 and 130 basis points to 18% for the full year.

• Expect comparable sales growth to accelerate to 3% to 4.5% in 2026, led by North America and international regions, China sales stable.
• Adjusted EBITDA margin expected to improve to 12.5% to 13% in 2026, despite tariff impact, driven by growth, operational improvements, and productivity.
• Tariff costs in 2026 fully annualized, net impact EUR 250 million to EUR 300 million net of mitigations.
• Launch additional EUR 1.5 billion productivity program for 2026-2028; adjusting items expected around 200 basis points in 2026, down from 300 basis points in 2025.
• Free cash flow expected in range of EUR 1.3 billion to EUR 1.5 billion in 2026.

• Tariffs remaining a significant headwind, with uncertain macro environment potentially impacting performance.
• Uncertainty around the ongoing Philips Respironics-related proceedings, including U.S. Department of Justice investigation.

Q: Drivers for D&T and Connected Care demand, patient volumes in U.S.?

A: Strong U.S. demand driven by health care system infrastructure investment, monitoring and cybersecurity priorities, strengthening financial health of systems, and procedure momentum in cardiology.

Q: Q1 margin decline, proxy for Q1 2025?

A: Q1 2026 margin decline roughly similar to Q1 2025 decline as tariff impact is a key factor.