Philips announced on Tuesday that it would be unable to achieve its margin target for 2025 due to the negative impact of the US-China trade war and rising customs barriers.

The Dutch healthcare products manufacturer now expects an operating margin (EBITA) of between 10.8% and 11.3%, compared with its initial target range of 11.8% to 12.3%.

In its statement, the group said it expects the new tariff regime to have a negative impact of €250m to €300m on its accounts.

"In an economic environment that has become even more uncertain with the potential impact of tariffs, we are focusing on what we can control," said Roy Jakobs, the company's CEO.

"We are improving our agility in the supply chain, taking decisive cost measures to limit the financial impact where possible, and ensuring we can serve our customers and consumers," he said.

Philips maintained its forecast of comparable revenue growth of between 1% and 3% for this year, while specifying that most of its performance should be generated in the second half.

Q1 sales on a comparable basis fell by 2% to €4.1bn, mainly due to China, where business contracted at a double-digit rate in diagnostic and treatment devices.

Its adjusted operating margin (EBITA) fell by 0.8 percentage points to 8.6%.

Following this announcement, Philips shares were down 1% on Tuesday morning on the Amsterdam Stock Exchange, compared with a 0.2% decline for the AEX index.


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