Philips Returns to Annual Profit and Sets 2026-2028 Targets as Q4 Sales Rise 7%

Philips said on Tuesday, February 10, that its comparable sales rose 7% in the fourth quarter of 2025, with growth in all segments, as group sales reached EUR 5.1 billion, according to the company's results release. Comparable order intake, a measure of new orders, also rose 7% in the quarter, supported by its Diagnosis & Treatment and Connected Care businesses and by North America.

For the full year, group sales were EUR 17.8 billion, comparable sales rose 2% and comparable order intake rose 6%. The adjusted EBITA margin, a non-IFRS profit measure, increased 80 basis points to 12.3%, and by 160 basis points to 15.1% in the fourth quarter, which Philips said more than offset the impact of incremental tariffs.

The company posted a 2025 profit of EUR 897 million after three straight years of losses, AFP reported, as read via Free Malaysia Today, and its shares rose more than 8% at the opening of trading in Amsterdam.

Segments and cash

Diagnosis & Treatment comparable sales rose 4% in the fourth quarter, Connected Care 7% and Personal Health 14%, Philips said. Fourth-quarter free cash flow was EUR 1.2 billion. Full-year free cash flow of EUR 512 million included a EUR 1,025 million payment for Respironics recall-related medical monitoring and personal injury settlements in the U.S., the company said.

Philips proposed a 2025 dividend of EUR 0.85 per share, payable in shares or cash, and said it will propose the reappointment of chief executive Roy Jakobs.

Outlook and mid-term targets

For 2026, Philips expects comparable sales growth of 3% to 4.5%, an adjusted EBITA margin of 12.5% to 13.0% and free cash flow of EUR 1.3 billion to EUR 1.5 billion. The outlook includes currently known tariffs and excludes ongoing Respironics-related proceedings, including the investigation by the U.S. Department of Justice.

At a Capital Markets Day the same day, the company set 2026-2028 targets of mid-single-digit compound annual comparable sales growth, a mid-teens adjusted EBITA margin in 2028, cumulative free cash flow of EUR 4.5 billion to EUR 5.0 billion, and EUR 1.5 billion of productivity savings.

Jakobs said the company was preparing for its first full year of tariffs in 2026, according to AFP. "You still have to think of multi-hundred million impact of tariffs, but we are offsetting that," he said. Philips expects North America to lead growth this year, with sales in China flat, the agency reported.