Philips boosts earnings outlook on US tariff refunds

Dutch healthcare technology firm Philips has improved its earnings forecast, largely due to a significant refund of US tariffs. The company received 186 million euros ($211 million) in tariff reimbursements, recovering nearly all the money previously levied. This development follows a US Supreme Court decision in February that invalidated a substantial portion of former President Donald Trump's tariffs, deeming them beyond his regulatory powers.

Philips CEO Roy Jakobs highlighted the company's proactive approach, stating, "When there was the opening to claim for tariff refund based on the court ruling, we were one amongst the first to very proactively hand in all the requirements to apply for it." He added, "And therefore, we are also one of the first to get it back almost in full."

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When there was the opening to claim for tariff refund based on the court ruling, we were one amongst the first to very proactively hand in all the requirements to apply for it.

The refunds provided a welcome boost, particularly as Philips derives nearly half of its sales from North America and had been significantly impacted by the tariffs. The reimbursement contributed to better-than-expected second-quarter profit margins. While the remaining portion of the refund is expected in the third quarter, the company still contends with other US customs duties.

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And therefore, we are also one of the first to get it back almost in full.

"We believe tariffs is an unfortunate… reality that we need to take into account if you want to do business in this world," Jakobs commented. Philips reported a net profit of 386 million euros for the second quarter, up from 240 million euros in the same period last year. Quarterly sales were 4.4 billion euros, a slight increase from 4.3 billion euros year-on-year. The company maintained its annual revenue growth forecast of 3 to 4.5 percent.

However, Philips continues to face challenges, including ongoing legal proceedings related to the 2021 recall of its DreamStation sleep apnoea devices. Millions of these devices were recalled due to concerns about foam degradation, which could pose risks to users, including potential cancer risks. In April, the company agreed to a $1.1 billion settlement for US lawsuits concerning the faulty machines, without admitting liability.

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We believe tariffs is an unfortunate… reality that we need to take into account if you want to do business in this world.