Philips Shows Growth Acceleration in 2025 and Raises Targets for 2026-2028
Royal Philips announced its annual 2025 results on Tuesday, marked by a 2% comparable sales growth and a significant margin expansion. The company also unveiled its profitable growth strategy and new medium-term targets during its investor day in Amsterdam.
Annual and Quarterly Performance Highlights
Royal Philips recorded a 2% comparable sales growth throughout 2025, driven by a 6% increase in orders. The Adjusted EBITA margin improved by 80 basis points to reach 12.3%, benefiting from an improvement in gross margin and increased productivity, which more than offset the impact of additional customs duties after significant mitigation measures. In the fourth quarter, results were more dynamic with a 7% growth in comparable sales and an Adjusted EBITA margin increase of 160 basis points to 15.1%. This progress was supported by a 7% growth in orders, fueled by the two major segments. The group generated a free cash flow of 512 million euros for the full year, including a payment of 1.025 billion euros for settlements related to the Respironics product recall in the United States. In the last quarter, free cash flow amounted to 1.200 million euros.
Performance by Business Segment
The Diagnosis & Treatment segment recorded a stagnant comparable sales growth at 0% for the full year with an adjusted EBITA margin of 11.7%, while in the fourth quarter, sales grew by 4% in comparable terms but the margin contracted by 30 basis points to 11.8%. Connected Care achieved a 3% growth in comparable sales for the year and improved its adjusted EBITA margin to 10.7%, with even stronger growth in the quarter at 7% and a margin increase of 150 basis points to 16.5%. Personal Health demonstrated the strongest momentum with an annual growth of 8% and an adjusted EBITA margin of 18.0%, driven by an expansion of 500 basis points in the fourth quarter to 23.0%. Philips successfully completed its three-year productivity program of 2.5 billion euros, with 800 million euros of productivity gains realized in 2025.
Entering a New Phase of Profitable Growth
Philips announced its entry into a new phase of profitable growth based on three pillars: specific strategies by segment, innovation based on platform solutions, and disciplined execution. The company intends to submit to the 2026 general shareholders' meeting a dividend proposal of 0.85 euros per share, with the option for the holder in shares or cash. The outlook for 2026 and the medium-term targets for the period 2026-2028 take into account an uncertain macroeconomic environment and include currently known customs duties. They exclude ongoing procedures related to Philips Respironics, including the investigation by the U.S. Department of Justice.
