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Investing.com -- Royal Philips NV (AS:PHG) on Tuesday raised the upper end of its 2025 margin forecast after reporting stronger third-quarter results driven by higher orders, improved sales and ongoing cost savings.
The Dutch health technology company reported €4.3 billion in sales for the three months ended Sept. 30, up 3% on a comparable basis.
Income from operations was €330 million. Adjusted EBITA rose to €531 million, or 12.3% of sales, compared with 11.8% a year earlier. Net income increased to €187 million from €181 million, while adjusted earnings per diluted share rose to €0.36 from €0.32.
Comparable order intake grew 8%, marking the fourth consecutive quarter of positive growth. Philips said productivity and cost-control measures helped offset inflation and tariff impacts. Free cash flow rose to €172 million from €22 million a year earlier, supported by higher earnings and disciplined working capital management.
“We drove strong order intake and accelerated sales growth, with sustained strength in North America,” chief executive Roy Jakobs said in a statement.
“We expanded margin through innovation, focused execution and cost discipline, remaining firmly on track as we navigate an uncertain macro environment including tariffs.”
Diagnosis & Treatment sales grew 1.3%, Connected Care 5.1%, and Personal Health 10.9%. Connected Care achieved an adjusted EBITA margin of 11.4%, up 410 basis points from a year earlier, while Personal Health reached 17.1%, up 60 basis points. Diagnosis & Treatment stood at 11.8%, slightly lower due to tariffs.
North America led regional performance with 5% sales growth. Mature markets overall rose 3%, while growth geographies increased 5%. Western Europe declined 2% due to the timing of royalty income.
Jefferies Equity Research described the quarter as “another nice performance,” noting that “solid demand and (much) easier comps allow order intake (+8%) in positive territory for 4th Q in a row.”
The analysts said “op. lev. and savings offset inflation/tariffs” and cited continued strength in Personal Health, particularly in China.
Philips launched several new products during the quarter, including the Lumea IPL hair removal device in the U.S., the Rembra RT and Areta RT radiation therapy scanners, and the Transcend Plus ultrasound systems with 26 FDA-cleared AI applications.
The company also began installing its first Azurion system in Indonesia under a health technology partnership with the Ministry of Health.
Philips reported €222 million in quarterly productivity savings and said it remains on track to deliver €2.5 billion over three years, including €800 million in 2025.
Jefferies noted that the company received a new FDA warning letter for three facilities, two in the U.S. and one in the Netherlands, citing nonconformance with manufacturing standards.
The analysts said the issues appear manageable but renew scrutiny of quality and safety processes.
Philips reaffirmed its full-year 2025 outlook for comparable sales growth of 1%-3% and expects its adjusted EBITA margin to be near the upper end of the 11.3%-11.8% range. Free cash flow is projected between €0.2 billion and €0.4 billion.