Philips had a difficult time and now wants to 'look ahead' again
Declining demand in China and the cost of settlements in the long-running apnea affair caused Philips to close 2024 with a significant loss.
Published on February 19, 2025
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Philips surprised the market by announcing a cash dividend, but that could not prevent its share price from falling 11%. The technology company earlier today reported revenue growth of 1% over 2024, with modest order growth in Q4 despite headwinds in China. Operating profit rose to 13.5% of sales, a sign of improved efficiency. Nevertheless, the stock price dropped after the opening bell, against analysts' expectations.
Top executive Roy Jakobs says after “crucial years” dominated by recalls and settlements and by a major reorganization, he is daring to look to the future again, he said during the presentation of the annual figures. “The focus goes from defending back to attacking.”
Financial performance
Philips ended 2024 with annual sales of €18 billion, representing a modest growth of 1% from 2023. Operating profit for 2024 was €529 million, with a fourth-quarter contribution of €199 million. This improved profitability indicates more effective operations despite challenging market conditions.
Philips plunged deep into the red again last year. A loss of €698 million was left at the bottom, mainly due to a $1.1 billion settlement Philips reached in the United States last year over problems with sleep apnea devices. Around this time last year, the company announced that it would no longer sell new sleep apnea devices in the United States.
Impending trade war
Last year, orders received again increased slightly. For this year, Philips expects sales growth of 1 to 3%. The company has also raised its productivity savings target for 2023-2025 from €2 billion to €2.5 billion, including €800 million in 2025. At the same time, the company is counting on a further decline in sales in China, partly due to trade tensions sparked by U.S. President Donald Trump.
Trump has now focused on Europe, raising trade tariffs on European steel. Last night, he also announced plans to impose an additional 25% tax on foreign cars, chips, and pharmaceuticals.
Whether Philips, as a producer of medical equipment, will be affected remains unclear. Ceo Roy Jakobs stressed that the company operates in a “turbulent world.” Given the looming trade war, Philips has already taken steps: “In the last two years, we have significantly reduced our exports from China to the US.”
Philips sells chip division to Dutch investors
Philips has sold a business unit that develops chips for the semiconductor industry to a group of Dutch nationals.