Koninklijke Philips N.V. NY Registry Shares

Welcome to the Phillips second quarter and semi-annual 2025 results conference call on Tuesday, July 29th, 2025. During the call hosted by Ms. Roy Jacob, CEO, and Ms. Charlotte Henneman, CFO, all participants will be in the listen-only mode. After the introduction, there will be a portion of tea to ask questions. Please note that this call will be recorded and replay will be available on the Investor Relations website of Royal Philips. I'll now hand the conference over to Ms. Durga Durasamy, Head of Investor Relations. Please go ahead, ma'am.

Hello, everyone. Welcome to Philips Results webcast for the second quarter and half year 2025. I'm here with our CEO, Roy Jacobs, and our CFO, Shalotta Hanuman. The press release and investor presentation can be accessed on our investor relations website. The replay and full transcript of this webcast will be available on our website after this call concludes. I want to draw your attention to our safe harbor statement on the screen and in the presentation. I will now hand over to Roy.

Thanks, Durga. Good morning, everyone. Thank you for joining us today. We entered Q2 with momentum, and we further strengthened it throughout the period. Order intake grew 6%, building on 9% last year. Comparable sales increased by 1%, with strength in personal health, offsetting performance in D&T and connected care. Margin expanded by 130 basis points in the quarter to 12.4%, demonstrating that our innovation and ongoing productivity measures are driving strong gross margins. We delivered as planned in the first half of the year, and we are sustaining this momentum into Q3. We reiterate our full year comparable sales growth outlook of 1% to 3%, and we increased our 2025 adjusted EBITDA margin range to between 11.3% and 11.8%. This 50 basis points increase includes recent tariff developments. We now expect full year free cash flow to be between 0.2 and 0.4 billion euros. Of course, all of the above assume that current tariff levels hold, whilst we continue to focus fully on executing our planned tariff mitigation actions, which are well underway and on track. Now, let's look at our Q2 performance in more detail. Let's start with orders first. Q2 order intake growth was broad-based across most regions. We saw sustained double-digit growth in North America and strong performance across growth geographies. Globally, our order book has increased in recent quarters. It's up 7% year-over-year with an improved margin profile from our latest innovations. What does this mean for a second half?