Q2 2025 Koninklijke Philips NV Earnings Call

Unknown Executive: Tuesday, July 29, 2025. During the call hosted by Mr. Roy Jakobs, CEO, and Ms. Charlotte Hanneman, CFO, all participants will be in the listen-only mode.

Welcome to the Philips second quarter and semi-annual 2025 results conference call on Tuesday, July 29, 2025.

Unknown Executive: After the introduction, there will be a opportunity to ask questions.

Unknown Executive: Please note that this call will be recorded and replay will be available on the Investor Relations website of Royal Philips.

Durga Durasamy: I'll now hand the conference over to Ms. Durga Durasamy, Head of Investor Relations. Please go ahead, ma'am.

During the call hosted by Mr. Roy Jakobs, CEO, and Miss Charlotte Hanneman, CFO, all participants will be in listen-only mode. After the introduction, there will be an opportunity to ask questions. Please note that this call will be recorded, and a replay will be available on the Investor Relations website of Koninklijke Philips.

Durga Durasamy: Hello, everyone. Welcome to Philips Results webcast for the second quarter and half year 2025. I'm here with our CEO, Roy Jakobs, and our CFO, Charlotte Hanneman.

I'll now hand the conference over to Miss Dorga Duros, Sami Head of Investor Relations. Please go ahead, ma'am.

Durga Durasamy: The press release and investor presentation can be accessed on our investor relations website.

Hello everyone. Welcome to Philips' results webcast for the second quarter and first half of 2025. I'm here with our CEO Roy Jakobs and our CFO Charlotte Hanneman.

Durga Durasamy: The replay and full transcript of this webcast will be available on our website after this call concludes.

The press release and investor presentation can be accessed on our Investor Relations website.

Durga Durasamy: I want to draw your attention to our safe harvest statement on the screen and in the presentation.

The replay and full transcript of this webcast will be available on our website after this call concludes.

Durga Durasamy: I will now hand over to Roy. Thanks, Durga.

I want to draw your attention to our Safe Harbor statement on the screen. In the presentation, I will now hand over to Roy.

Roy Jakobs: 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 base points in the quarter to 12.4%. demonstrating that our innovation and ongoing productivity measures are driving strong growth 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%.

Thanks, Dora. 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 DNT 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.

Roy Jakobs: and we increased our 2025 adjusted EBITDA margin range to between 11.3 and 11.8 percent. This 50 basis points increase includes recent tariff development. 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.

We reiterate our full-year comparable sales growth outlook of 1% to 3%.

And we increase 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 billion and €0.4 billion.

Roy Jakobs: 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 geography. Globally, our order book has increased in recent quarters. It's up 7% year over year with an improved margin profile from our latest innovation. What does this mean for second half? combined with our robust order book. positions us well to deliver a four-year sales outlook. In diagnostic treatment, orders grew double-digit across most regions. In particular, a strong demand for recently launched innovations which drove order intake growth in both image guide therapy and precision diagnosis.

Of course, all of the above assumes that current tariff levels hold while we continue to focus fully on executing our plan, 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 or intake growth was broad-based across most regions.

We sold 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?

This or momentum.

Combined with our robust order book.

Positions us well to deliver a full-year sales outlook.

In diagnosis and treatment orders, grew double digits across most regions.

Roy Jakobs: Let me share some examples.

In particular, there is strong demand for recently launched Innovations, which drove other intake growth in both Image Card Therapy and Precision Diagnosis.

Roy Jakobs: Our leadership in minimally invasive procedures was underscored in Q2 by a multi-year nationwide agreement with the Indonesian Ministry of Health. This will expand access to image guided therapy using our industry leading Azure platform. Millions of patients with cardiac, stroke and cancer conditions across all of the country will benefit from it. Additionally, this partnership marks a significant step in strengthening Indonesia's healthcare infrastructure for high-impact disease areas. It extends beyond equipment to services. It includes training, scalable digital solutions, and service up. will deliver nationwide long-term care. Meanwhile, in the area of IT innovation, our award-winning Azure Neural Pipeline R3, which we introduced last year, is fueling double-digit year-on-year order growth.

Let me share some examples.

Our leadership in minimally invasive procedures was underscored in Q2 by a multi-year nationwide agreement with the Indonesian Ministry of Health.

This will expand access to image-guided therapy using our industry-leading aerial platform.

Millions of patients with cardiac, stroke, and cancer conditions across the country will benefit from it.

Additionally, this partnership marks a significant step in strengthening Indonesia's healthcare infrastructure for high-impact disease areas.

It includes training, scalable digital solutions, and service apps.

It will deliver nationwide long-term care.

Meanwhile, in the area of IST innovation, our award-winning Azure Neuro Byane R3, which we introduced last year.

Roy Jakobs: This new innovation is also contributing to higher win rate across all our pipelines. In precision diagnosis, we experience also strong year-on-year order intake growth. in both diagnostic imaging as well as in ultrasound. led by Nord America. This is another great example of momentum driven by strong demand, recently launched innovations, and improved commercial execution. NMR, we were the first and remain the only company to offer a commercially available white bore 1.5T helium free system. And this is gaining traction. Customer feedback is positive. And all 1.5T MRI orders today are now from our helium-free Blue Seal system.

Is fueling double-digit year-on-year order growth?

This new innovation is also contributing to a higher win rate across all our biplane systems.

In Precision Diagnosis, we experience also strong year-on-year order intake growth.

In both diagnostic imaging and in ultrasound.

Lab by North America.

This is another great example of momentum driven by strong demand, recently launched innovations, and improved commercial execution.

NMR, we were the first and remain the only company to offer a commercially available whiteboard, a one-off heating-free system.

Roy Jakobs: This breakthrough innovation saves 1500 liters of helium per system, significantly reduces installation costs over lifetime. while offering full flexibility and facility placement. It's SETTING MR FREE!

And this is gaining traction. Customer feedback is positive, and all 1/2T MRI orders today are now from our helium-free Blue Seal system.

This breakthrough innovation saves 1,500 liters of healing per system and significantly reduces installation costs over its lifetime.

While offering full flexibility and facility placement.

Roy Jakobs: We also strengthened our position as an AI leader with the FDA 510K clearance of MR-SmartSpeed Precise Dual AI software. This AI solution delivers three times faster scanning and up to 80% sharper images, all in just one click. CT Growth was driven by strong demand for the CT5300, our AI-enabled productivity workhorse. and the clinically advanced Spectral CT 7500. By the end of the second quarter, these two systems alone accounted for more than half of all CT order intake values. It clearly demonstrates the clinical and operational impact of these recent launches for customers who need to deliver better outcomes, but as much need to increase access to imaging.

It's setting Mr. Free

We also strengthened our position as an AI leader with the FDA's 510(k) clearance of the Amar Smart Speed, Precise, dual AI software.

This AI solution delivers 3 times faster scanning and up to 80% sharper images—all in just 1 click.

CT growth was driven by strong demand for the CT 5300, our AI-enabled productivity workhorse.

And the clinically advanced spectral CT 75500.

By the end of the second quarter, these two systems alone accounted for more than half of all CT order intake value.

It clearly demonstrates the clinical and operational impact of these recent launches for customers who need to deliver better outcomes.

Roy Jakobs: Moving to Connected Care. Following exceptional growth of over 20% in the prior year, underlying order intake remained very resilient. declining slightly. Demand for solutions in hospital patient monitoring remained strong. This is fueled by significant customer partners. including six major US agreements finalized in just Q2 alone. and this includes dislodging and cover. How? Because we drive efficiencies as we streamline operations across care settings and across hospital systems. and Teleview Patient Monitor. plus our AI-powered virtual patient information center. work together to create comprehensive and efficient patient monitoring and information management systems. With a strong and growing order book, up year on year and improving sequentially, and the increasing momentum D&T and Connected Care are well positioned to accelerate growth and margin in the second half of the year.

But as much as we need to increase access to imaging,

Moving to Connected care.

Following exceptional growth of over 20% in the prior year, underlying order intake remained very resilient.

Declining slightly.

Demand for solutions in hospital patient monitoring remained strong.

This is fueled by significant customer partnerships, including six major U.S. agreements finalized in just Q2 alone.

And this includes the launching income.

How?

Because we drive efficiencies as we streamline operations across care settings and across hospital systems.

In tell view, patient monitors.

Plus our AI-powered virtual patient information center.

Work together to create comprehensive and efficient, patient monitoring and information management system.

With a strong and growing order book year on year and improving sequentially, we are seeing an increase in momentum.

Roy Jakobs: Now, let's move to personal health. All three businesses within the segment grew, driven by strong traction from new innovations and enhancements to our core products. Supported by Targeted Investments. These innovations are resonating, not just with customers, but also with high-performing partners. such as Amazon, Costco, Walmart, MSH. JD.com and Douyin. along with local accelerators. Why? because they're driving measurable increases in sellouts. Category Growth and Share, and they are accelerating access to consumers in our key growth markets. In Q2, sell-out trends remained robust across Europe and most growth geographies. Supported by D-SPY. China continues to lack due to subdued consumer sentiment.

DNT and Connected Care are well positioned to accelerate growth and margin in the second half of the year.

Now, let's move to personal health.

All three businesses within the segment grew, driven by strong traction from new innovations and enhancements to our core products, supported by targeted investments.

These innovations are resonating not just with customers, but also with high-performing partners.

Such as Amazon, Costco, Walmart, Amazon, JD.com, and Duin.

Along with local accelerators.

Why?

Because they're driving measurable increases in sell-out.

Category, growth and share.

And their accelerating access to consumers in our key growth markets.

In Q2, sellout trends remained robust in Europe and most growth geographies.

Supported by these Partnerships.

Roy Jakobs: In the US, sentiment has remained relatively stable, but we are maintaining a close watch on evolving consumer dynamics. More broadly, we are continuously tracking consumer sentiment and spending. across all regions. to ensure agility in our response.

China continued to lack due to subdued consumer sentiment.

In the U.S., sentiment has remained relatively stable, but we are maintaining a close watch on evolving consumer dynamics.

More broadly, we are continuously tracking consumer sentiment and spending.

Roy Jakobs: We continue to execute on our priorities, from enhancing patient safety and supply chain resilience to simplifying our operations.

Roy Jakobs: Here are some key highlights in the course. Firstly, with quality embedded in our businesses, innovation and our culture. We have simplified and strengthened our quality management system and CAPA process. Completed deep reviews of post-market surveillance signals and accelerated our response to newly emerging post-market signals. As a result, we have reduced field actions and product updates by approximately 20% year-to-date. following 20% reduction in 2024 compared to 2023. which reflects Sustained improvement and overall quality performance.

We continue to execute on our priorities, from enhancing patient safety and supply chain resilience to simplifying our operations.

Here are some key highlights in the quarter.

Firstly, with quality embedded in our businesses, innovation, and our culture.

We have simplified and strengthened our quality management system and Coppa processes.

Completed deep reviews of post-market survey signals and accelerated our response to newly emerging post-market signals.

As we build, we have reduced field actions and product updates by approximately 20% year to date.

Following a 20% reduction in 2024 compared to 2023.

Which reflects a sustained improvement in overall quality performance.

Roy Jakobs: Moving to supply chain. Through continued product simplification and operational focus, our teams deliver our products to hospital and patients with greater speed and reliability. In Q2, service levels reached an all-time high of 86%, an improvement of more than 10 percentage points year-on-year. Improved supply chain reliability and agility support our progress in executing tariff mitigation in line with our plan. Lastly, we continue to identify and execute opportunities with a new operating model to reduce complexity and better align our resources to where growth is happening. resulting in strong and continued productivity improvement.

Moving to supply chain.

Through continued products, amplification, and operational focus, our teams delivered our products to hospitals and patients with greater speed and reliability.

In Q2, service levels reached an all-time high of 86%, an improvement of more than 10 percentage points year on year.

We improved our supply chain, reliability, and agility. This supports our progress in executing tariff mitigation in line with our plan.

Lastly, we continue to identify and execute opportunities with a new operating model to reduce complexity and better align our resources to where growth is happening.

Roy Jakobs: Charlotte will discuss this further. The fundamentals of the markets we serve remain strong, though the dynamics continue to vary by region.

Resulting in strong and continued productivity improvements.

Shallot will discuss this further.

The fundamentals of the markets we serve remain strong.

Roy Jakobs: Let me take a moment to reflect on what we're hearing from our Starting with North America. We continue to see steady fundamental hospital demand. Customer pull for productivity solutions remains strong. They seek smarter ways to manage increasing workload and navigate resource constraints whilst having to serve more patients. We are well positioned to meet this need as an innovation and productivity partner, as evidenced by the double digit order intake growth in 2024 and the first half of this year. While we have not observed significant shifts in CAPEX plans, we are closely monitoring the environment. In China, stimulus activity is picking up and tender activity is increasing, although from a low base.

Though the dynamics continue to vary by region.

Let me take a moment to reflect on what we're hearing from our customers.

Starting with North America.

We continue to see steady fundamental hospital demand.

Customer pool for productivity solutions remains strong.

The Sikh smarter ways to manage increasing workload and navigate resource constraints whilst having to serve more patients.

We are well positioned to meet this. We need an innovation and productivity partner, as evidenced by the double-digit order intake growth in 2024 and the first half of this year.

While we have not observed significant shifts in CapEx plans, we are closely monitoring the environment.

In China stimulus, activity.

Is picking up.

Roy Jakobs: That said, we have not yet seen a significant change in market dynamics.

Standard activity is increasing, although from a low base.

Roy Jakobs: Therefore, we continue to maintain a cautious view on China in our full year outlook. Globally, Oslo capital expenditure remains solid. We are seeing increasing demand in Europe and Latin America. India and Saudi Arabia are investing in healthcare infrastructure and digitization. Representing high-growth geographies to us. as also evidenced by the Sharwin deal in Indonesia.

That said, we have not yet seen a significant change in market dynamics.

Therefore, we continue to maintain a cautious view on our outlook for China in our full year outlook.

Globally, capital expenditure remains solid.

We are seeing increasing demand in Europe and Latin America.

India and Saudi Arabia are investing in healthcare, infrastructure, and digitalization.

We are presenting high-growth geographies to us.

As also evidenced by the Sharon deal in Indonesia.

Roy Jakobs: Staying close to our customers and partners is more important than ever. They are navigating an increasingly complex environment. facing rising demand, resource constraints, and shifting priorities. That's why we're focused on innovating with purpose, to deliver better and more care, solving the most pressing challenges through smart, scalable, and AI-enabled solutions. I'm proud of how our teams are stepping up and delivering impact where it matters most.

Staying close to our customers and partners is more important than ever. They're navigating an increasingly complex environment.

Facing rising demand, resource constraints, and shifting priorities.

That's why we're focused on innovating with purpose to deliver better and more care, solving their most pressing challenges through smart, scalable, and AI-enabled solutions.

Charlotte Hanneman: Charlotte will now discuss our second quarter performance and our outlook for 2025. Thank you, Roy.

I'm proud of how our teams are stepping up and delivering impact where it matters. Most

Charlotte Hanneman: I will start with segment-level performance. In diagnosis and treatment, comparable sales decreased by 1% in the quarter, as expected, on the back of a high two-year comparison. Image-guided therapy continued its solid top-line performance, driven primarily by higher installations of our flagship Zurian systems in Europe and growth geographies, along with strong performance in coronary devices. Precision diagnosis sales declined in the low single digits year-over-year. This was mainly due to a particularly high comparison base in magnetic resonance. As we noted in Q1, this elevated base was driven by prior years' improvements in the supply chain and persisted into Q2.

Shallow will now discuss our second quarter performance and our outlook for 2025.

Thank you, Roy. I will start with segment-level performance in diagnosis and treatment, comparable. Sales decreased by 1% in the quarter, as expected, on the back of a high two-year comparison base.

Image-guided therapy continued its solid topline performance, driven primarily by higher installation of our flagship Zuran systems in Europe and growth geography, along with strong performance in coronary devices.

Precision diagnosis sales declined in the low single digits year-over-year. This was mainly due to a particularly high comparison base in magnetic resonance.

Charlotte Hanneman: D&T adjusted EBITDA margin improved by 130 basis points to 13.5%. Recently launched innovations such as Next Generation BlueCL-MR, CT5300, and Azure Neural Biplane continue to contribute to the improvement of the cross-market. The improvement in adjusted EBITDA was further supported by productivity measures, improved operational efficiency and favourable mix effect. There was contribution from services, which was partially offset by cost inflation.

As we noted in Q1, this elevated base was driven by prior years improving in the supply chain and persisted into Q2.

DNT adjusted Abita margin improved by 130 basis points to 13.5%.

Margin.

The improvement in adjusted EBITDA was further supported by productivity measures, improved operational efficiency, and a favorable mix effect.

Charlotte Hanneman: In Connected Care, comparable sales declined 1% in the quarter, mainly due to a low single-digit decline in monitoring. Similar to diagnosis and treatment, our hospital patient monitoring business faced a high two-year comparison base globally following prior period supply chain improvements. As Roy said, we continue to see solid demand in hospital patient monitoring, driven by large partnerships in North America. Connected Care Adjusted EBITDA Margin improved by 160 basis points to 10.4%. This was mainly driven by productivity measures, improved operational efficiency and a low comparable base, partially offset by cost inflation.

That was contribution from Services, which was partially offset by cost inflation.

In Connected Care, comparable sales declined 1% in the quarter, mainly due to a low single-digit decline in monitoring.

Similar to diagnosis and treatment, our hospital patient monitoring business faced a high, two-year comparison based globally following prior period supply chain improvements.

As Roy said, we continue to see solid demand in hospital patient monitoring driven by large partnerships in North America.

Charlotte Hanneman: Personal health delivered strong growth in Q2 across most years. This strong performance was partially offset by a decline in China, reflecting the impact of inventory destocking, which concluded in the quarter as anticipated. Personal health adjusted EBITDA margin declined by 170 basis points to 15.2%. Higher sales and productivity measures were more than offset by mix, cost inflation and advertising and promotion spend to drive long-term demand and support our recent launch. These included the AI-powered i9000 electric shaver range and Sonicare range of tools.

Connected Care's adjusted EBITA margin improved by 160 basis points to 10.4%. This was mainly driven by improved productivity measures and operational efficiency, along with a low comparable base, partially offset by cost inflation.

Personal health delivered strong growth in Q2 across most geographies.

This strong performance was partially offset by a decline in China, reflecting the impact of inventory. These stockings, which concluded in the quarter as anticipated.

Personal health, adjusted EBITDA margin declined by 170 basis points to 15.2%.

Higher sales and productivity measures were more than offset by mix cost inflation and advertising and promotion spent to drive long-term demand and support our recent launches.

Charlotte Hanneman: Finally, fields in the other segment were in line with the previous. And adjusted EBITDA for this segment increased by 24 million euros year-on-year, mainly driven by lower costs and higher royalty income.

These included the AI-powered i9000 electric shaver range and Sonic, a range of toothbrushes.

Finally, seals in the other segments were in line with the previous year.

Charlotte Hanneman: Turning to our group results and operating highlights in the quarter. Comparable sales growth for the group was one percent. Geographically, overall growth was supported by growth geography. This was mostly offset by a decline in China, as expected, mainly due to the decline in personal health. Adjusted EBITDA margin increased by 130 basis points to 12.4%, driven by productivity measures, improved cost margin from innovation, favorable mix effect, and improved operational efficiency. which was partially offset by advertising and promotion spent in personal health, cost inflation, including the initial impact of increased tariffs, currency headwinds, and lower sales in China.

And adjusted Abita for this segment increased by €24 million year on year, mainly driven by lower costs and higher royalty income.

Turning to our group results and operating highlights in the quarter.

Comparable sales growth for the group was 1%.

Geographically, overall growth was supported by growth geographies.

This decline was mostly offset by a decline in China, as expected, mainly due to the decline in personal health.

adjusted a

130 B.

To 12.4%, driven by productivity measures, improved gross margin from innovation, favorable mix effect, and improved operational efficiency.

Charlotte Hanneman: Tariffs remain dynamic. We have largely completed short-term mitigation. such as optimizing inventory locations and flow of goods, leveraging special programs, and pursuing exceptions. We made solid progress on midterm initiatives, including supplier network and manufacturing location optimization to enhance cost efficiency and operational agility. This process is carefully managed to balance regulatory, operational, and customer consideration. Our disciplined approach to cost management and productivity initiatives has delivered 2.1 billion euros in savings since the start of our three-year plan in 2023. These savings have contributed meaningfully to adjusted avatar expansion. In Q2, we delivered €197 million in savings, bringing the year-to-date total to €344 million.

It was partially offset by advertising and promotion, spent in personal health, cost inflation, including the initial impact of increased tariffs, currency headwinds, and lower sales in China.

Tariffs remain dynamic. We have largely completed short-term mitigation actions such as optimizing inventory, locations, and the flow of goods, leveraging special programs and pursuing exceptions.

We made solid progress on midterm initiatives, including supplier network and manufacturing location optimization to enhance cost efficiency and operational agility.

This process is carefully managed to balance regulatory, operational, and customer considerations.

Our disciplined approach to cost management and productivity initiatives has delivered €2.1 billion in savings since the start of our three-year plan in 2023.

These savings have contributed meaningfully to adjusted appetite expansion.

Charlotte Hanneman: We remain on track to achieve €800 million in productivity savings in 2025. One of the key levers supporting this multi-year delivery is product simplification and SKU reduction across portfolios. These efforts reduce complexity and cost in R&D, procurement and supply chain. Also, this enables us to focus resources on areas with the highest growth potential. As a result, we're accelerating innovation and structurally improving our margin. Roy mentioned earlier that we are continuing to find opportunities to reduce complexity. and further align with our new operating model. This requires making tough but necessary choices about what we stop doing, freeing up our teams to focus externally on customers and competitive dynamics.

In Q2, we delivered €197 million in savings, bringing the year-to-date total to €344 million.

We remain on track to achieve €800 million in productivity savings in 2025.

One of the key levers supporting this multi-year delivery is product simplification and SKU reduction across portfolios.

These efforts reduce complexity and cost in R&D procurement and supply chain.

Also, this enables us to focus resources on areas with the highest growth potential.

As a result, we're accelerating innovation and structurally improving our margin profile.

Roy mentioned earlier that we are continuing to find opportunities to reduce complexity and further align with our new operating model.

Charlotte Hanneman: These simplification efforts are already delivering results, contributing to productivity savings in Q2 and sharpening our commercial focus, creating the space for our teams to accelerate. Restructuring and acquisition-related costs continue to require close attention. In the quarter, adjusting items amounted to 86 million euros, of which 54 million euros were related to Respironix field action and consent degree remediation. This is below our Q2 2025 outlook range of 150 million euros, mainly driven by cost phasing within the year. Adjusted diluted EPS from continued operations was €0.36 in the quarter, up 20% year-on-year, which benefited from improved gross margin.

This requires making tough but necessary choices about what we stop doing, freeing up our teams to focus externally on customers and competitive dynamics.

These simplifications are already delivering results, contributing to productivity savings in Q2 and sharpening our commercial focus, creating the space for our teams to accelerate growth.

Restructuring and acquisition-related costs continue to require close attention.

In the quarter, adjusting items amounted to €86 million, of which €54 million will relate to Respironics, field action, and consent decree remediation.

Euros, mainly driven by costs faced within the year.

Charlotte Hanneman: Pre-cash flow in the quarter was €230 million, driven by higher earnings offset by working capital outflows due to seasonal phases. Moving to the balance sheet, we ended the quarter with approximately 1.8 billion euros of cash and net debt of approximately 6.6 billion. Our leverage ratio remained in line with Q1 2025 and last year at 2.2 times on a net debt to adjusted EBITDA base. We successfully raised 1 billion euros this quarter through a well-supported notes offering, with the 5- and 10-year tranches oversubscribed more than 3 and 4 times respectively. We remain committed to maintaining a strong investment grade credit.

Adjusted diluted EPS from continued operations was $0.36 in the quarter, up 20% year on year, which benefited from improved gross margin.

Free cash flow in the quarter was €230 million, driven by higher earnings offset by working capital outflows due to seasonal phasing.

Moving to the balance sheet, we ended the quarter with approximately €1.8 billion in cash and net debt of approximately €6.6 billion.

Our leverage ratio remained in line with Q1 2025 and last year, at 2.2 times on a net debt to adjusted EBITDA basis.

We successfully raised €1 billion this quarter through a well-supported notes offering, with the 5-year and 10-year tranches oversubscribed more than 3 and 4 times, respectively.

Charlotte Hanneman: Now turning to the out... Our comparable sales growth outlook remains unchanged at 1-3%, with a greater weighting towards the fourth quarter as previously expected. As Roy mentioned, the strength in our order book across both diagnosis and treatment and connected care, as well as our personal health sales momentum, positions us well to drive accelerated growth in the second half of the year. which is further supported by a lower prior year comparison in China. We continue to expect sequential improvement in comparable sales through the second half of 2025, with Q3 projected to come in slightly above the full year range of 1% to 3%, and further improvement anticipated in Q4.

We remain committed to maintaining a strong investment-grade credit rating.

Now, turning to the Outlook.

Our comparable sales growth outlook remains unchanged at 1% to 3%, with a greater weighting towards the fourth quarter, as previously expected.

As Roy mentioned, the strength in our order book across both diagnosis and treatment, connected care, as well as our personal health sales momentum, positions us to drive accelerated growth in the second half of the year.

This is further supported by a lower prior year comparison in China.

Charlotte Hanneman: The tariff landscape remains dynamic. There have been two notable revisions since the outlook we provided on May 6. Tariffs on US-China bilateral trade and tariffs on imports from the European Union into the US are both expected to be lower than our previous assumptions. At current levels, the estimated net impact for 2025 is between 150 and 200 million euros, down approximately 100 million from the previous estimate. We now expect the adjusted EBITDA margin to be between 11.3% and 11.8%, which is 50 basis points above our May outlook. We estimated the current impact of tariffs using the same consistent approach as before, based on announced measures and net of substantial mitigation actions, which we are actively executing on with agility.

We continue to expect sequential improvement in comparable sales through the second half of 2025, with Q3 projected to come in slightly above the full year range of 1% to 3%, and further improvement anticipated in Q4.

The Tariff landscape remains dynamic.

There have been two notable revisions since the outlook we provided on May 6th.

Tariffs on U.S.-China bilateral trade and tariffs on imports from the European Union into the U.S. are both expected to be lower than our previous assumptions.

At current levels, the estimated net impact for 2025 is between €150 million and €200 million, down approximately €100 million from the previous estimate.

We now expect adjusted Avatar margin to be between 11.3% and 11.8%, which is 50 basis points above our May outlook.

Charlotte Hanneman: As mentioned during our earnings call in May, the tariff impact will be more pronounced in the second half of the year, reflecting the timing lag between higher inventory costs and the recognition of the impact in the P&L. As a result, we expect Q3 adjusted EBITDA margins to decline year-over-year, primarily due to tariffs and the timing of royalty income in the other sector.

We estimated the current impact of tariffs using the same consistent approach as before, based on the amounts measured and net of substantial mitigation actions, which we are actively executing on with agility.

As mentioned during our earnings call in May, the tariff impact will be more pronounced in the second half of the year, reflecting the timing lag between higher inventory costs and the recognition of the impact in the P&L.

Charlotte Hanneman: Moving to free cash. At current tariff levels, we now expect free cash flow for the full year to range between 0.2 and 0.4 billion euros, up from slightly positive previously. As a reminder, our 2025 free cash flow includes the 1 billion euros outflow related to the Resveronic settlement paid in Q1. Our Q3 and full year 2025 outlook excludes potential wider economic impacts and the ongoing Philips Respironics related proceedings, including the investigation by the Department of Justice.

As a result, we expect Q3 adjusted Avatar margin to decline year-over-year, primarily due to tariffs and the timing of royalty income in the other segment.

Moving to free cash flow at current tariff levels, we now expect free cash flow for the full year to range between €0.2 billion and €0.4 billion, up from slightly positive previously.

As a reminder, our 2025 free cash flow includes the €1 billion outflow related to the Respironics settlement paid in Q1.

Roy Jakobs: With that, I would like to hand it back to Roy for his closing remarks. Thank you, Shalom.

Our Q3 and full-year 2025 outlook excludes potential wider economic impact and the ongoing Philips Respironics-related proceedings, including the investigation by the Department of Justice.

With that, I would like to hand it back to Roy for his closing remarks.

Roy Jakobs: Before we conclude, I would like to share that we will host a Capital Markets Day next February. The event will mark the completion of the three-year plan announced when I became CEO. It will provide an opportunity to reflect on the fundamental progress we have been delivering since. It also sets the stage to outline the next phase of our strategy. Accelerating profitable growth, unlocking the full potential of our segments and enabling better care for more people, now and into the future. This positions us to continue building towards our trajectory of mid-single-digit growth and mid-teens margins beyond 2025.

Thank you, shalom.

Before we conclude, I would like to share that we will host a Capital Markets Day next February.

The events will mark the completion of the 3-year plan announced when I became CEO.

It will provide an opportunity to reflect on the fundamental progress we have been delivering since.

It also sets the stage to outline the next phase of our strategy.

Accelerating profitable growth, unlocking the full potential of our segments, and enabling better care for more people now and into the future.

Roy Jakobs: We look forward to that discussion. To sum up, in the second quarter, we delivered solid order intake growth. sales growth and strong margin improvement. As we have said from the start of the year, our performance is weighted towards the second half and we are on track to deliver. Our conference is underpinned by order intake momentum and robust order book. providing clear visibility into second half sales conversion. We are seeing encouraging uptake of our innovations in healthcare settings and sales momentum in personal health. all while the tariff landscape continues to evolve. to keep execution on track and actively adapt our mitigation measures accordingly.

This positions us to continue building towards our trajectory of mid-single-digit growth and margins beyond 2025.

We look forward to that discussion.

To sum up.

In the second quarter, we delivered solid order intake growth.

Sales growth and strong margin improvement.

As you have said from the start of the year, our performance is weighted towards the second half, and we are on track to deliver.

Our conference is underpinned by order intake, momentum, and a robust order book.

Providing clear visibility into second-half sales conversion.

Seeing encouraging uptake of our innovations in healthcare settings and sales momentum in personal health.

All while the tariff landscape continues to evolve.

Roy Jakobs: These dynamics position us well to execute and deliver against our four-year outlook and operational priorities. and allowed us to increase our four-year outlook for adjusted EBITDA margin and free cash flow, including currently announced tariffs. whilst we reiterate our comparable sales growth outlook for the year. We achieved what we set out to do in the first half. while navigating a complex and in several ways uncharted global environment. Looking ahead to the second half, we're confident in our ability to do the same. We are building on momentum and delivery today with a clear focus on driving underlying margin expansion.

We keep execution on track and actively adapt our mitigation measures accordingly.

These dynamics position us well to execute and deliver against our FY outlook and operational priorities.

And allowed us to increase our full-year outlook for just the margin and free cash flow, including currently announced tariffs.

Whilst we reiterate our comparable sales growth outlook for the year.

We achieved what we set out to do in the first half.

While navigating a complex and, in several ways, uncharted global environment.

Looking ahead to the second half.

We are confident in our ability to do the same.

Unknown Executive: Thank you and we are now ready for your questions.

We are building momentum and delivery today with a clear focus on driving underlying margin expansion.

Unknown Executive: Thank you, sir.

Thank you. And we are now ready for your questions.

Unknown Executive: If any participant would like to ask a question, please press star followed by two times one on your telephone. Due to the time, please limit yourself to one question and one follow up. This will give more people the opportunity to ask questions. There will be a short pause while participants register for questions.

Thank you, sir.

If any participant would like to ask a question, please press star followed by 2 times 1 on your telephone keypad. Please limit yourselves to 1 question and 1 follow-up. This will give more people the opportunity to ask questions. There will be a short pause while participants register for questions.

Hassan Al Wakil: We will now take our first question from the line of Hassan Al Wakil from Barclays. Please state your question, Hassan. Morning and thank you for taking my questions.

We will now take our first question from the line of Hassan Al Waku from Barclays. Please state your question, Hassan.

Hassan Al Wakil: I have three, please. Firstly, can you talk about the improvement in D&T margins and the underlying expansion here? I know that you highlighted gross margin as a driver, but can you quantify how much of that was driven by a gross margin and within gross margin, whether it's price or mix or both, and whether you see yourself at an inflection in the D&T margin?

Hassan Al Wakil: Secondly, on the margin guidance, why have you only banked the tariff improvement and not the EBIT A beat in the quarter? Is this conservatism on your part or do you see or do you not see the margin improvement as sustainable?

Hassan Al Wakil: And then finally, can you please help us unpack the decline in connected care in the quarter by segment, particularly monitoring and SNRC? What is driving this? How is the share gain opportunity being realized in Europe in SNRC? And then in monitoring, I can see that there was a decline this quarter and that comes against a flat performance last year. So I'd love to get the detail behind that.

Morning and thank you for taking my questions. I have 3. Please. Firstly um can you talk about the Improvement in DNT margins and uh the underlying um expansion here? I I know that you highlighted gross margin as a driver but can you quantify, um, how much of that was driven by gross margin uh, and within gross margin whether it's price or mix or both and whether you see yourself at an inflection in the DNT margin. Um, secondly on the margin guidance. Um, why have you only Bank banked the Tariff Improvement and not to the ebit a beat in the quarter, is this conservatism on your part or do you see, um, or do you not see the margin Improvement as sustainable and then finally, um, can you please help us unpack the decline in Connected care in the quarter by segment segment particularly monitoring and snrc, what is driving? This? How is the share gain opportunity be

Unknown Executive: Thank you.

Roy Jakobs: Thank you, Hassan. Let me start with your first question on the D&T margin. We're indeed very pleased with the D&T margin expansion in the quarter of 130 basis points. And as I said in my prepared remarks, a lot of that is indeed related to gross margin expansion on the back of the great innovations that we've been bringing to market, including our Blue Seal MR, our Spectral CT 7500, and as well as our Azurian Neuro biplane. And so we really see strength across the modalities. In addition to that, we've also continued to focus on productivity. You heard me talk about in my prepared remarks about the portfolio simplification, as well as the SKU reduction, and we start seeing the impact of that in our gross margin as well.

Realized in Europe in SNRC. Um, and then in monitoring, I can see that there was a decline in this quarter, and that comes against a flat performance last year. So I'd love to get the detail behind that. Thank you.

Roy Jakobs: And then lastly, we also saw favorable mix impacts that have helped on the back of also solid ITT sales, as well as increased contribution from our services portfolio as well. So there's a lot to be pleased about in the second quarter there.

Thank you. Uh, Hassam, let me start with your first question on the the DNT, uh, margin. We're indeed very pleased with the DNT margin expansion in the quarter of 130 basis points. And as I said in my prepared remarks, a lot of that is indeed related to uh, gross margin expansion on the back of, in our, the great innovations that we've been bringing to Market, including our Blue Seal, Mr. Are a spectral ct7 5500 and as well as our azurion neuro-b play. Uh, and so we really see strength across the modalities uh, in addition to that, we've also continued to focus on productivity. You heard me talk about in my prepared remarks about the portfolio simplification as well as the SKU reductions. And we start seeing the impact of that, in our gross margin as well. And then, lastly, we also saw a favorable mix impact that have that have helped on the back of also, uh, uh, solid IGT sales as well as increased contribution.

Charlotte Hanneman: If I then continue on to your second question on the full-year margin guidance, and again, I'd say that, first of all, we're happy with our outlook revision to include the current tariff levels that have gone down, both from a US-China perspective, as well as from a US perspective. What I would just remind you of, though, is that if we look back at the first half, we are at minus 1% sales growth and 30 basis points of expansion. In order to deliver on this guidance, we have to accelerate our margin expansion in the second half of the year, whilst absorbing the tariff impact that will hit us in earnest in the second half of the year because of the way that flows into our P&L.

From our services portfolio as well, so there's a lot to be pleased about in the second quarter there.

Charlotte Hanneman: Of course, also, we have potential FX headwinds to take into account. So that's also what we're taking into account. What I would add on top of that is, specifically on Q3, we expect adjusted EBITDA margins to go down as a result of that tariff impact impacting our P&L.

If I then continued on to your second question on uh the the full year margin guidance. And again I'd say that um first of all we're happy with our Outlook revision to uh include the reflect, the current tariff levels of uh that have gone down both from a us China perspective, as well as from an EU us perspective. What I would just remind you of though, is that if we look back at the first half, we are at minus 1%, sales growth and 30 basis points of expansion, in order to deliver on this guidance, we have to accelerate our margin expansion in the second half of the Year, whilst absorbing the Tariff impact that will hit us in Earnest in the second half of the year of the W because of the way that flows into our p&l.

Unknown Executive: Thank you Hassan.

So, that's also what we're, we're taking into account, what I would add in on top of that is specifically on Q3 we see, we expect, uh, just that Avatar. Margins to go down as a result of that, tariff impact impacting our pnl.

Charlotte Hanneman: And then on connected care. So if you look at connected care. sales declined 1%, primarily driven by a low single digit drop in monitoring. And as you know, this business grew low single digits last year, following the strong 20% plus growth in 2023, after earlier supply chain improvements that we realized. So it's coming from this high base. And as we also have seen in the order intake growth and the strength there, actually momentum in monitoring is very strong. And also monitoring represents 6% of the total revenue. Demand for monitoring solutions remains strong, especially also with the US demand.

Thank you also, and then on connected care. So if you look at connected care...

Charlotte Hanneman: And we concluded six big partnerships there with major healthcare systems. And if you look to the Respironix and the SoC performance, we had, of course, a very strong pickup last year. Now, we see a bit slower pickup this year, also on the back of that strong uptake last year. We have strong momentum in the masks, as we have shared before, where the new lounges are gaining traction. And we are working our way back into the market that we are re-entering. So actually, we are also looking forward to the second half of the year, where we see actually connected gear momentum growing on the basis of the order book and order momentum that we have been seeing.

The sales declined 1%, primarily driven by low single, um, digit drop in monitoring. Um, and as you know, this business grew low single digits last year following the strong 20% plus growth in 2023 after earlier, supply chain improvements that we realized. So it's coming from this high base and as we also have seen in the order intake growth and the strength, there actually momentum in monitoring is very strong. Um, and also monitoring resents represents 6% of the total revenue. Um the demand for Monitoring Solutions, remain strong, especially also with uh the US demand and we concluded 6 big Partnerships here with major Healthcare systems.

Um, if you look at Respironics, uh, and as you see performance, we had, of course, a very strong pickup last year. Now we see a bit slower, uh, pickup this year. Also, on the back of that strong uptake last year, we have strong momentum in the masks, as we have shared before, with the new uh, launches gaining traction. And we are working our way back into the market that we are.

Charlotte Hanneman: And we are confident that that will also then showcase itself into Q3 and Q4 performance.

Unknown Executive: That's really helpful.

We are entering, and so actually, we are also looking forward to the second half of the year, where we see connected momentum growing on the basis of the order book and order momentum that we have been seeing. We are confident that this will also then showcase itself in Q3 and Q4 performance.

Hassan Al Wakil: If I can just follow up, where are you in the European market on the system side versus where you are prior to the recession? I would hard to kind of say exactly in share terms, Hassan. As I said, we are now back in all markets. We're also expanding into markets. We also are working closely with the big partners in these markets. But of course, we're still working our way back in. So I think it's too early to call specific market share numbers on that. But we are kind of rebuilding the momentum. And actually, that's going in line with the plan.

That's really helpful. If I can just follow up, where are you in the European market on the system side versus where you were prior to the recall, please?

And share terms.

Unknown Executive: So actually, we are staying the course on that and see really that the customers are welcoming us back, as we said earlier.

Um, it is, I would find it hard to kind of say exactly in share terms. So, as Han said, we are now back in all markets. We are also expanding in the markets, and we are working closely with the big partners in these markets. Um, but of course, we're still working our way back in, so I think it's too early to call specific market share numbers on that. Um, but we are kind of building the momentum, um, and actually, that's going in line with our plans. So, actually, uh, we are staying the course on that, um, and we really see that the customers are welcoming us back. As we said earlier,

thank you very much.

Graham Doyle: We will now take our next question from the line of Graham Doyle from UBS. Please state your question, Graham.

Thank you.

We will now take our next question from the line of Graham Doyle from UBS. Please state your question, Graham.

Graham Doyle: Good morning, thanks for taking my questions. Just a couple really relating to China and one quick one on tariffs. Just in terms of the de-stock of personal health, how far to the core did that actually kind of complete? And then would you be able to give us some colour on what you're seeing in terms of the medical equipment side of things on tenders and how that's translating into orders and hopefully at some point revenues? And then very briefly, just on tariffs for 2026, should we effectively take what we're looking at for the second half and sort of annualise that?

Graham Doyle: Thank you.

Morning. Thanks for taking my questions. Um, just a couple really relating to uh, to China and 1 quick 1 on tariffs. Um, just in terms of the, the dto, for personal health, how, how how, um, how far is the quarter that actually can complete and then, would you be able to give us some color on what you're seeing in terms of the medical equipment side of things on on tenders and and that's translating into orders? And, and hopefully, at some point revenues, and then very briefly, just once for 2026, should we affect be? Take what we're looking at for the second half and sort of annualize that

thank you.

Graham Doyle: So thank you, Graham, on China de-stocking. So indeed, we completed the de-stocking program in the second quarter. And at the same time, I think we have been standing behind the continued strong sellout. So I see that combination was important because we built on the momentum that we see step-by-step rebuilding in China. We had an 18-6 festival where we actually saw an improvement for the first time, also in sell-out coming in. We ranked number one on JD.com in our category, so actually it was good performance. So we see China playing out as we planned. We're still cautious on the full year, but we do see it strengthening, and that's also what we'll take in the second half.

So, thank you Graeme on the on China, the stocking. So indeed, we completed the stocking program in the in the uh, second quarter. Um, and at the same time I think we have been spending behind to continue with strong. Sellouts so actually that combination was important because we built on the momentum that we see.

Step by step rebuilding in China. Uh, we had an 186 Festival where we actually, um, saw an improvement for the first time. Uh, also in sellout coming in, uh, we ranked number 1 on JD.com in our category, so actually was good performance. Um, so we see China playing out as we planned. Uh, we're still...

Graham Doyle: As you know, we'll also get the comparable then supporting us, but also on the underlying sell-out, we see that actually we are rebuilding the momentum in the market, and that goes with the demand that step-by-step is increasing.

Graham Doyle: On the medical side, we see also in line with our outlook, as we said earlier, that there's a slow recovery. Tenders are coming into the market. It's a competitive situation, and the process is still prolonged. So that's also something that we see, therefore, still hitting us in the second quarter with slower growth from China on the medical side. But in the second half, we also expect that to improve, although from a low base, and of course also at a slow pace. So I think China is fully baked in the guidance that we have now put out there for the full year.

Graham Doyle: So in that sense, I think we feel comfortable with what we are planning for, and we remain very close to the market.

Graham Doyle: I was there two weeks ago myself again, talking to customers and the government. They really want to strengthen the Chinese market, and we continue to believe in the longer-term prospects of it, but it does take time. I think that's still fair to say. And we are gaining in that market good momentum with the market base, and that's something that we also see then continuing into 26. So we don't expect that this is a short-term hiccup. We expect structural improvement. So step-by-step, we expect China to come back into the mid-single-digit ranges that have been before, and that's what we're working towards.

China Inn on the medical side, but in the uh, second half, we also expect that to improve although from a a low base and of course, also at a slow pace, so I think China is fully baked in the guidance that we have. Now put out there for the full year. Um, so in that sense, it's I think uh, we feel comfortable with we are planning for um, and we remain very close to the market. That was their last 2 weeks ago. Myself, again, talking to customers and the government, they really want to strengthen the Chinese market, and we continue to believe in the longer term prospects of it, but it does take time. I think that's still fair to say, um, and we are gaining in that market. Uh, uh, good momentum with the market base, um, and that's something that kind of. We also see then continuing into 26. So we don't expect that. This is a short-term hiccup. We expect structural Improvement. So step by step, we expect China to, um, to come back into, um, the mid single digit ranges that have been, uh, before. And that's

Graham Doyle: Thank you, Graham.

What we're working towards.

Graham Doyle: And maybe to your next question on the 2026 tariffs.

Charlotte Hanneman: So maybe first to give you a little bit of context. So as we started seeing those tariffs, we've established a multifunctional SWAT team a few months ago, really going through all the different scenarios that we see. And as a result, we've been able to digest the latest dynamic updates. And if we then particularly go into 2026, and also what Roy said in his prepared remarks around us building towards our trajectory of mid-single digit growth and mid-teams margins beyond 2025, that incorporates the new tariff reality.

Yeah, thank you. Uh, Graeme, and maybe to your next question on the 2026 tariffs. So maybe first to give you a little bit of context there. As we started seeing those tariffs, we've established a multi-functional SWAT team a few months ago, really going through all the different scenarios that we see. As a result, we've been able to digest the latest dynamic updates. If we then particularly go into 2026 and also what Roy said in his prepared remarks.

Charlotte Hanneman: So that is the best I can say at this point in time.

Around, uh, us building towards our trajectory of mid-single-digit growth and mid-teens margins beyond 2025, that incorporates the new tariff reality. So, uh, that is the best I can say at this point in time.

Unknown Executive: Thanks a lot guys, appreciate it.

Awesome. No, that's really clear. Thanks a lot, guys. Appreciate it.

Veronika Dubajova: We will now take our next question from the line of Veronika Dubajova from CETI.

Thank you.

We will now take our next

questions.

Veronika Dubajova: Please state your question, Veronika. Hi, guys. Good morning. And thank you, Roy and Charlotte, for taking my questions.

Rover from City. Please state your question, Veronica.

Veronika Dubajova: I will keep it to two, please. One, just was hoping you could elaborate on the strengths you're seeing in personal health and just, in particular, I think you alluded to high single, low double digit growth rates in Europe and the U.S. Obviously, that's quite at odds with a lot of the other consumer data points that we're seeing out there.

Hi, guys. Good morning. Thank you, Charlotte, for taking my questions. I will keep it to two, please. Um, I just was hoping you could elaborate on the strength you're seeing in personal health and, just in particular, I think you alluded to high single-digit to low double-digit growth rates in Europe and the U.S. Obviously, that's quite...

Veronika Dubajova: So, Roy, maybe you can give us a little bit of color on how you're thinking, you know, what's driving that, how sustainable that might be. And I guess the guidance for the year where you're looking for growth that is above the 1 to 3 percent, just curious if it's mid or high single digits kind of what's realistic because the coms do get easier in the back half of the year and clearly China's better. So, that's my first question. I appreciate there's a lot of moving parts.

Veronika Dubajova: And then my second question is just on the order strength, Roy, would love for you to elaborate a little bit on the modalities in particular where you think you're doing better. And maybe you've touched upon the regional color in terms of North America, but if there are any other regions you'd call out there as well, that would be helpful. Thank you so much.

Could you give us a little bit of color on what you think is driving that and how sustainable you believe it might be? Additionally, regarding the guidance for the year, where you're looking for growth above the 1% to 3% range, I'm curious if you're anticipating mid or high single digits—what's realistic given the potential for growth in the back half of the year? Clearly, China is showing positive trends. So, that's my first question. I would appreciate your insights, as there are a lot of moving parts. My second question is about the order strengths, where I would love for you to elaborate a bit more on the modalities, particularly regarding where you think you're seeing better performance. If you could also touch upon the regional dynamics, that would be great.

In terms of North America. But if there are any other regions you'd call out, that would be helpful. Thank you so much.

Yeah, thank you, Veronica, for your questions. Um, let me start on PH.

So, um, as we actually saw in due course, of the year, we see the consumer momentum for our Solutions in particular. Strengthening we saw that in, uh, q1. We saw further Step Up in Q2, and we actually expect that to continue into the second half that momentum that we have been building. Um, that was in particular, of course, uh, outside of the US, uh, sorry the outside of China. So we saw strong us and also strong Europe, and rest of the world. Now, I think we mentioned that this is quite broad base. So we see good uptake about, um, our new grooming and Beauty ranges in particular. We launched the new high-end shaver, the i9000 is really doing really well and that's generating not only good sales but also good margins. So that's a very important Lounge. That is generating traction. We had the mid-range in uh Sonicare that we launched that actually is also making good Headway in China, but also in the rest of world. So actually we see an update that supported and

Now, we still have a second call to go. So we want to be kind of uh, uh, also, uh, prudent on that, the Outlook, what we see is sustained support, uh, for the demand that we have been seeing increasing. So, uh, that's the, um, the Outlook and we remain, of course, uh, also cautious on the consumer sentiment, staying on top of it. But for the moment, um, we are confident on ph Outlook. Now then secondly, on the orders in Health Systems actually. Also, there we saw, it was quite broad-based. So, um, starting with, uh, the strongest which was ICT, uh, which saw double digit order intake growth and that was coming from various places. So we had North America, double digit growth of orders. We had the Indonesia deal that you saw in Asia. We also had good growth in uh, in Europe. So, um, we see that IGT is resonating. We had the new launch of the neural by plane that actually is really coming in strong. Um, but also the base platform still generates

A lot of interest and expanding, its its position. So that in igp, then in PD, we also at high single digit growth. Actually, nicely contributed by both from Mr. And CT perspective, I mentioned that actually. We see now that all our kind of 1 of the orders are coming from the Blue Seal so that is actually making really good inroads, uh, including in China, actually, we see a good good support for that uh platform. Um, and then also in um, our CT range, the

5300 that we launched the AI enabled. Um, uh, kind of platform that really drives, uh, 80% lower radiation and, uh, uh, lower image noise does really well in the market, but also a spectral in volumes actually is picking up, and it's also a nice Step Up in Q2 versus q1 from a CT perspective. And then ultrasound not to forget came in strong as well. Uh, so we had a good contribution from ultrasound, you know, we launched some new Innovations with the Epic, uh the Affinity also knew um point of care um uh offering came into play. So from an, um, DNT perspective, strong pull from a cross regions, then connected care. I already alluded to that. Um, we were very pleased actually that baseball and more than 20% exceptional growth in due to 2024 with a big deal in North America. Uh, we now saw a good growth coming in, um, with a slide decline in Q2 again, fuel strongly from North America, also kind of, uh,

Strong growth there with 6 big Partnerships, but also outside of North America, we see Google momentum and we see the need for more patient monitoring uh, really strengthening uh, and doing that in an efficient manner. And that's what our platform really provides into, um, and provides for. So we kind of, uh, uh, saw that momentum also, uh, uh, doing well. So overall, we have an auto momentum and also, the funnel that actually supports us with the momentum into the second half. Um, we have strong,

Visibility into that. Actually, we see that the new innovations are generating the retraction that we were hoping for, and that gives us the underpinning not only for the order intake outlook, but also for, of course, sales in the second half.

Unknown Executive: Thank you so much, Roy.

That's super helpful. Thank you so much for.

David Adlington: We will now take our next question from David Adlington from J.P.

thank you.

David Adlington: Morgan. Please state your question, David. David, your line is open. Hey, good morning, guys. Two questions, two, please. So firstly, on personal health, it sounds like you've invested quite a lot. Hello, can you hear me? We can hear you now. Yes. Yeah, we can hear you now. Yep. Hello. Yes, we can. Okay, perfect. Hey guys yeah so uh yeah just on personal health You've invested quite a lot in advertising and promotional spend in the PH in the quarter. I just wondered if you could pull out how much of that was in price, maybe just talk about pricing dynamics.

We will now take our next question. From David Atlantan at JP Morgan. Please state your questions, David.

Your line is open. Questions at 2 please. So, firstly on personal health, it sounds like you invested quite a lot.

Can you hear me?

We can hear you now. Yes. Yeah, we can hear you now. Yeah.

Hello.

Yeah, yes, we can.

Okay, got it.

Hey guys. Yeah, so uh, yeah. Just on personal health.

David Adlington: And then secondly, as you look into 2026, US hospital markets are going to face some challenges in 2026. I just wondered how your early conversations with customers are and how they're thinking about the market. Yeah, thank you, David.

Uh, you've invested quite a lot in advertising and promotional spending and PH in the quarter. I just wondered if you could pull out how much of that was in price. Maybe just talk about the pricing dynamics.

Charlotte Hanneman: So let me take the first question on personal health. Indeed, we fueled the innovations that we've done, and that Roy spoke about, we feel that with advertising and promotion spend, and we've invested quite heavily also, particularly in China, as we are finalizing the de-stocking that we spoke about of the inventory, we were investing behind the sellout by putting marketing campaigns and investing in influencer campaigns there. So that is driving part of the investment there. What I would tell you from a pricing perspective, in personal health, it's broadly flat. So we are not reducing our prices to gain market share or to drive sales.

And then secondly, as you look into 2026, uh, us Hospital, markets, change. Going to face some, uh, challenges in 2026. I wondered how your early conversations with customers are and how they're thinking about the, the market in 2026. Thank you. Yeah, thank you. David. So, let me take the first question, on, on personal health, indeed. Uh, we we fueled, uh, the innovations that.

Roy Jakobs: This is really a marketing campaign to drive the great innovations that Roy just And then on the second question, US capex conversion, maybe over to you, Roy. Yeah, so we see continued strength in the demand in North America. I think we see the patient volumes are strong, procedures are still up. I think what is important to segment over systems kind of where we see specific demands, because on one hand you see kind of the bigger systems still consolidating and we can provide them with really platforms that make them more efficient, because they're really looking for productivity, able to serve more patients, but at a lower cost, because they also face cost pressures.

Impersonal Health. Oh, it's broadly flat. So we are not reducing our prices to gain market share or to drive sales. This is really a marketing campaign to highlight the great innovations that Roy Jakobs spoke about.

Roy Jakobs: At the same time, they also want to have more ambulatory solutions to also serve patients outside of the hospital system. So we see that also ongoing. In part, we saw also that kind of in the deals that we have, there are some monitoring as a service deals still in place. Also, the OPEX is being used to kind of convert that demand. So we continue to see strong demand in North America. It has been fueling now six, one half year actually of double digit growth in orders. And we don't see an immediate trend breach. Of course, we stay on top of it.

And then on the second question the US capex conversion maybe over to you. Uh right, yeah so we um see uh continued strength in the demand in North America. Um I think we see the patient volumes are strong procedures are still up. Um, I think what is important to segment over systems kind of where we see uh specific demands, um, because on 1 hand, you see kind of the bigger systems still consolidating and we can provide them with really platforms that make them more efficient because they're really looking for productivity able to serve more patients but at a lower cost because they also face cost pressures. At the same time, they also want to have more ambulatory Solutions um to also serve patients outside of the hospital system. So we see that um also ongoing in part, we saw so that kind of in the deals that we have. Um there are some um, uh, monitoring as a service deal, still in place. So also the Opex is being used to kind of um uh, convert that demand. So we

Roy Jakobs: We also are very close to our customers and discussing how we can support them. But we are actually looking forward to continue to grow in North America. We have been strengthening our position there, both in terms of our commercial position. We also, of course, continue to support the supply position in line with the trend in the world. So that's something that kind of supports our win rate in North America. But most importantly, we see demand also for next year as strong. And therefore, we continue to fuel the North American market with our innovations.

We continue to see um strong demand in North America. It has been fueling now uh 6. Um uh um uh 1, half year actually of double digit growth in orders. Um, we don't see an immediate Trend reach, of course we stay. On top of it. We also are very close to our customers, um, discussing how we can support them. But we are actually looking forward to continue to grow in North America. We have been strengthening our position there, um, both in terms of our commercial position. Uh, we also, of course, and contain to support the, uh, Supply position, um, in line with the, the, the trend in the world. Um, so that's something that kind of supports our win rate in North America. Um, but most importantly, we see demand also for next year as strong, um, and therefore, uh, uh, we continue to fuel, um, the North American, uh, Market with our Innovations.

Yes.

Ed Reilly Day: Our next question comes from the line of Ed Reilly Day from Rothschild & Co, Redburn.

That's clear. Thank you.

Thank you.

Ed Reilly Day: Please go ahead, Ed. Good morning. Thank you. Yes.

Our next question comes from the line of Riley Day from Roschel and Co. Redbarn, please go ahead.

Ed Reilly Day: Firstly, on ultrasound, could you just give us further colour on the growth in the ultrasound revenue in the quarter?

Ed Reilly Day: And also a follow up in terms of D&T more broadly, if you could either give the China decline or give us more colour on the performance of D&T, excluding China, that would be helpful. And then a quick follow up on the monitoring question from earlier. In terms of your market share in monitoring, one of your competitors has been struggling in recent years. Do you consider you are still taking share in the particularly US market? So on ultrasound, so a growth in ultrasound. We have been slightly declining in ultrasound growth. That was on the back of a strong order intake growth that we've seen coming in.

Good morning. Thank you. Yes. Um, firstly on ultrasound, could you just um, give us further color on the growth. In the ultrasound Revenue are in the quarter and also a follow-up in terms of, uh, DNT more broadly. If you could either give the China decline, or give us some more color on the performance of DNT excluding China, uh, that would be helpful. And then a quick follow-up on the monitoring, uh, question from earlier, in terms of your market, share in monitoring, um, 1 of your competitors has been struggling. Uh, in recent years, I do you consider that you were still, uh, taking share, uh, in the, um, particularly um, US market.

Roy Jakobs: So actually for a second half, we see ultrasound performance strengthening. We have the new launches that are really seeing a good uptake. You heard us talk about kind of the high single digit order growth in precision diagnosis and ultrasound is strongly contributing to that. So we expect that also to come into sales growth of the second half. In the growth.

Roy Jakobs: China versus ex-China. We still have a dilution effect from China coming into Q2, and that's in line with our expectation. Orders strengthening, sales also strengthening into the second half, but still negative. It will turn positive from the second half. That's where kind of our expectation is. That's still up on a low base, and it's in line with our cautious outlook, but it is increasing quarter by quarter. That's, I think, our view on the China dynamics as we see it evolving. And that's also what we expect when you look a bit further ahead into 2026.

So on, um, on ultrasound. So a growth in ultrasound, um, uh, we have been, um, slightly declining and ultrasound growth. Um, that was on, uh, the back of strong order intake growth that we see in coming in. So, actually, for the second half, we see, ultrasound performance strengthening, uh, we had a new lounges that are really seeing a good update, your to talk about kind of the high single digit order growth in, um, Precision diagnosis, and also sounds strongly contain contributing to that. So, we expect that also to come into, um, the sales growth of the second half, um, in the, uh, growth, if you see China versus X China, uh, we still had

Dilution effect from China, uh, coming into, um, into Q2, um, as and that's in line with our expectation, uh, orders strengthening sales. Um, uh, also strengthening into the second half, but still negative. It will turn 46 from the second half, right? That's where kind of our expectation is. That's still

Roy Jakobs: Then on monitoring, we have continued strong momentum in monitoring. I think you saw it from indeed the six deals that we took in North America. We have great momentum in the customers that we also are taking, and that's also what I mentioned, and we are dislodging some incumbents. So we're also taking other sockets. So the combination of our monitors with PICAX, with the AI solution on top, and also Capsule is really driving a very strong positioning. And that's what we continue to build and expand on.

And we are also taking, uh, sockets. Um, so the combination of monitors with pickaxe, with the AI solution on top, and also capsules is really driving a very strong positioning. Um, and that's, uh, what we continue to build and expand on.

Great, thank you very much.

Richard Felton: Our next question comes from the line of Richard Felton from Goldman Sachs.

Thank you.

Richard Felton: Please state your question, Richard. Thank you very much. Good morning.

Our next question comes from the line of Richard Felton from Gomen Sax. Please state your question, Richard.

Charlotte Hanneman: Two questions for me, please. The first one is a follow-up on the D&T margin. Charlotte, you mentioned SKU reduction as one of the drivers for margin expansion in that division. I'm just curious how far along you are in that process? How much more is there to go on that SKU rationalization? And within D&T, which businesses are most impacted by that?

Charlotte Hanneman: And then my second question is a slightly bigger picture question. As Philips plans for a CMD in February 2026, I'd be interested to hear your thoughts on what parts of the current strategy have been working well and which areas you think there are still rooms for improvement.

Charlotte Hanneman: Thank you. Thank you, Richard.

Thank you very much. Good morning. Uh, 2 questions for me, please. Uh, the first 1 is the follow up on the DNT margin. Um, Charlotte you mentioned SKU reduction as 1 of the the drivers for margin expansion of that division. Um, just just curious how how far along you are in that process. How much more is there to go? Uh, on that SKU rationalization and within DNC, which which businesses are most impacted by that. Uh, and then my second question, um, I suppose at a slightly bigger picture question as Philips plans for a CMD, uh, in February 2026. Uh, I'll be interested to hear your thoughts on you know what parts of the current strategy have been working well and which areas you think there are still rooms for improvement. Thank you.

Charlotte Hanneman: Let me take your first question on DMT margin and double clicking a little bit on the on the SKU reduction that we've been working on. A few more color that I would give. First of all, this is really a multi-year process that we started last year. We're making good progress, but it's really a quarter after quarter, year after year progress. Because as you can imagine, if we're, for instance, reducing the number of transducers in ultrasound, which we are doing, that takes time to phase that out of the market. So we are making progress. We're on track there, but we also see this is a multi-year process as well.

Thank you, Richard. Let me take your first question on on the NT. Mark margin and double clicking a little bit on the, on the fku reduction that we've been working on, uh, a few, uh, a few more color that I would give. First of all, this is really a multi-year process that we started last year. We're making good progress, but it's really a quarter after quarter a year after year progressed, because as you

Charlotte Hanneman: And then to your question on the number of modalities, we're looking at all modalities in DMT. So I gave you an ultrasound example. We've been working on IGT, reducing the number of platforms there. We're looking at MR. So it's really across all modalities that we're looking at this. And as I said earlier, we're seeing the initial impact with reducing complexity, which ultimately helps R&D production and supply chain as well as procurement.

Roy Jakobs: Thank you, Richard, for your second question on the CMD.

You can imagine if we for instance, reducing the number of transducers in ultrasound which we are doing that takes time to face that out of the market. So we are making progress. We're on track there but we also see this is a multi-year year process as well. And then to your question on the number of modalities we're looking at all modalities in DNC. So I gave you an ultrasound example. We've been working on Azure, on the IGT reducing the number of platforms there. We're looking at Mr. So it's really a cross all modalities that were that were looking at at this and as I said earlier we're seeing the initial impact with reducing complexity which ultimately helps R&D uh production and supply chain as well as procurement.

Roy Jakobs: Now, we're looking forward, of course, to give you the full update in February. I think what we, maybe just a short kind of look back and what's coming, in the plan that we presented, we said that we had a lot of fundamental work to do. And I think as you have been seeing and also as we're showcasing today, we have a much better control on our patient safety and quality, on the supply chain and also on the simplification and the organizational productivity. That is what has really been working well. We've put a lot of progress in and we're starting now to kind of bear the fruits because on Parallel, we started to innovate and really focus our innovation on bigger platforms that have kind of scalable impact.

Thank you, Richard, for your second question on the CMD. Um, we're looking forward, of course, to getting you the full update. Um, in February, I think what we, um, maybe just a short kind of look back and what's coming. Um, in the plan that we presented, we said that we had a lot of fundamental work to do and I think as you, uh, have been seeing, and also as we showcased today, we have much better control over our patient safety and quality, on supply chain, and also on the simplification and the organizational productivity. That is what has really been working well. We have put a lot of progress in, and you’re starting now to kind of bear the fruits because in parallel, we started to innovate and really focus on our innovation.

Roy Jakobs: And that innovation you see now coming through in the momentum that we have seen dialing up over the last year. Now, if you see the 7% year-on-year growth, but in particular now also in this year, and we also take that into the second half. So the profitable growth expansion will be, of course, a big theme also as part of the CMD, because we want to expand our innovations and our positions. especially also building on the strongholds that we have. So we're very excited about kind of be able to do that on a stronger platform that we have been putting in place for Philips overall.

Roy Jakobs: And that is kind of from an innovation perspective, that is from a commercial perspective, that's also from an operational perspective. And I think you also saw how quickly we can now adjust our supply chain. I think if you would go three years back, it would have been a much bigger struggle. Now we can really quickly adapt. We have the mitigation fully in play. We're able to up our service levels. We have been down in quality incidents. And actually we have been driving margin expansion across the period in a very strong way. You see that margin expansion also coming through in Q2.

On bigger platforms that have kind of scalable impact now, and that innovation, you see now coming through in the order intake growth momentum that we have seen dialing up over the last year. Now if you see the 7% year-on-year growth, but in particular now also in this year, and we also take that into the second half. So the profitable growth expansion will be, of course, a big theme also as part of the CMD because we want to expand our innovations and our positions, especially also building on a strong stronghold that we have. Um, so we're very excited about kind of, uh, uh, being able to do that on a stronger platform that we have been putting in place for Philips overall, and that is kind of from an innovation perspective, that is from a commercial perspective, there's also from an operational perspective. And I think you also saw how quickly we can now adjust our supply chain. I think if you would go 2, 3 years back, it would have been a much bigger circle. Now, we can really quickly adapt. We have the mitigation fully in play. We're able to up our service levels.

Roy Jakobs: And we're also kind of intend to continue that strong operational margin expansion into the full year. Of course, we have tariff that we have to take into account. And we also will take that into account moving forward. But as I also mentioned at the beginning, we continue to build our trajectory into this mid single digit growth and these kind of mid to high teens margins for the different segments that we play in.

We have been down in quality uh incidents. And actually we have been driving margin expansion across the period in a very strong way. You see that margin expansion also coming to through in Q2, um, and we're also kind of intend to continue that, strong operational margin, uh, expansion into the full year. Of course, we have tariffs that we had to take into account, um, and we also will take that into account moving forward, but as I also mentioned at the, at the, at the beginning, remarks, we continue to build our

Roy Jakobs: So that's something that we're excited by and we'll start to talk to in February.

Actually into this mid-single digit growth. And this kind of, um, uh, meta hiking margins for the different segments that we play in. So, that's something that we're excited by. And we'll, um, we'll start to talk, uh, to, uh, in February.

Thanks very much.

Hugo Solvet: Our next question comes from the line of Hugo Solvet from BNP Paribas. Please state your question, Hugo. Hi guys, thanks for taking my questions and congrats on the results. I have two quick follow-up, please.

Thank you.

Please State your question Hugo.

Hugo Solvet: First on China Trends, you mentioned the stocking ending in the quarter and a follow-up to Graham's question. On the momentum that is rebuilding, can you clarify whether or not that implies that you're restocking or seeing restocking already in Q3 and how confident are you in delivering probably the flat to low single-digit sales increase into H2 that is implied by the guide?

Hi, guys. Uh, thanks for taking my questions and congrats on the results. Uh, I have two quick follow-ups, please. Uh, first on China trends.

In the quarter and follow up to grams question, uh, on the momentum that is rebuilding. Can you clarify whether or not that implies that you're restocking or seeing?

Roy Jakobs: And Roy, maybe on the second question, beyond 2025, I appreciate there's a lot of moving parts, tariffs, cost inflation, China, but also you and Charlotte have been doing a fantastic job on cost efficiency measures. What's your level of confidence to get above the mid to high, above the mid teens, sorry, given your current guide for mid to high teens? In the call earlier, you referred a lot to mid teens, but just wondering if mid to high is still within reach. Thank you. Yeah, thank you, Hugo.

Who's talking already, uh, in Q3 and or confident, are you, uh, in delivering the the the flat to low single digit sales, increase into H2? That is the guide. Um, Roy maybe on the second question Beyond 2025, I appreciate there's a lot of moving. Parts tariff cost inflation China but also uh, you you in Charlotte have been doing a fantastic job on cost efficiency measures what what's your level of confidence to to to get above the mid to? I

above the,

Current guide for me to it, in the code earlier, you referred a lot to meet teens but uh, just wondering, uh, if uh, me too, I is still Within Reach.

Thank you.

Roy Jakobs: Let me take the first one on the China trend. So on pH, so what we said, kind of, we expected the first half, we need still to kind of finish the destocking program, that indeed has happened. So what means, what that means is that currently, our partners have stock levels, which they see appropriate in line with the seller levels. So that was the first step of getting to that new balance. That's how we go into the second half. So there's no need to restock. Now we want to keep sellout in line with stock, right? So that's actually what the whole destocking program was geared towards.

Yeah, thank you, Hugo. Let me take the, uh, the first one on the China trend. So, on Q2, what we have said is kind of what we expected for the first half.

Roy Jakobs: Now, what the other point I said is, there's still subdued consumer demand in China, but we do see more spend, right? So and that's kind of where we see the sellout momentum strengthening. And we will build on that also in the second half. Overall, that still is in the cautious outlook on China for the full year. So I think we are getting and seeing more confidence in the China recovery and getting the signals for that. But we still remain kind of cautious on it. That's also how we baked it into our full year guidance. So that actually the majority of course, our plan is winning outside of China.

We need still to kind of, um, uh, finish the docking program that indeed has happened. So what that means is that currently our partners have stock levels, which they see appropriate in line with the sellout levels. So that was the first step of getting to that new balance. That's how we go into the second half. So, there's no need to restock now. We want to keep sellout in line with stock, right? So that's actually what the whole, um, uh, uh, the stocking program was geared towards. Now, what your point I said is there's still subdued consumer demand in China, but we do see more spend, right? So and that's kind of where we see the sellout momentum strengthening and we will build on that also in the second half. Overall, that's still in the course of the outlook on China for the full year. So I think, uh, we are getting, um, uh, uh, and seeing more confidence in the China recovery and getting the signals for that, but we still remain kind of cautious on it. That's also how we baked it into our full year guidance.

Roy Jakobs: Now we win in China with the market, but we are not getting ahead of ourselves in terms of expectations of that market and the contribution.

Roy Jakobs: Now, if you then look into your second question, in terms of the beyond 2025 margin expansion, I think we have been putting a lot of work into margin expansion. So far, there was a lot of what we would call self-help in that first part of the trajectory where we have been driven at productivity and specialist organizational simplification in a big way. What 2025 and beyond will also very much focus on how we can drive growth, get the impact on that, get the impact from mix, because that driving the higher growth and higher margin segments will also help us to expand through that lever.

So that actually, the majority of course, our plan is winning outside of China. Now, we win in China with the market, but we are not getting ahead of ourselves in terms of expectations of that market and the contribution. Now, if we then look into your second question in terms of the beyond 2025 margin expansion.

Roy Jakobs: Whilst we will not back off from productivity, we already continue to kind of look into how we can further strengthen that journey that we have been on in terms of how we can lean out our organization. We have been resetting the organization model to winning in segments with a more verticalized model that is working. And we will continue to drive that also moving forward. So we see ample opportunity to continue to work on margin expansion. Of course, we also need to take inflation and tariffs into account. It will be a mix of all that kind of will determine how much and how far we can go.

I think, um, we have been putting a lot of work into uh, margin expansion. Uh, so far there was a lot of uh, what we would call self-help in that first part of the trajectory where we have been driven a productivity and a specialist of organizational simplification in the in in a big way, what 2025 and Beyond was also very much focused on how we can drive growth, get the impact on that. Get the impact from from mix because driving the higher growth and higher margin segments. Will also help us to expand uh uh through that. Uh, lever whilst we will not back off from productivity. We already continue to kind of look into how we can further strengthen that Journey that we have been all in terms of how we can lean out our organization, we have been resetting at the organization model to winning in the segments with a more verticalized model that is working and we will continue to drive that also moving forward. So we see ample opportunity to continue to work on margin.

Roy Jakobs: And that we will then also be able to further explain when we have the CMB in February.

Expansion. Of course, we also need to take inflation and tariffs into account. It will be a mix of, of all that kind of will determine how how much, and how far we can go. Um, and that we will then also be able to, uh, further explain when we have the CMD, uh, in in February,

Thank you.

Julien Dormois: Our next question comes from the line of Julien Dormois from Jefferies. Please go ahead, Julien. Hi, good morning, Roy. Good morning, Charlotte. Thanks for taking my questions. I have three, if that's okay. The first one relates to the large order you signed in Indonesia. Just wondering whether that was included in the order intake in the second quarter, and maybe give a rough idea of whether that was meaningful into the 6% order intake you posted in the quarter. Second question relates to China, but at the group level. I think you previously alluded to sales in the country to be down single to high single digit for the full year.

Thank you.

Our next question comes from the line of Julian De Meaux from Jeffries. Please go ahead, Julian.

Hi, good morning. Good morning, Salah. Thanks for taking my questions. I have a few. That's okay. The first one relates to the large order you signed in Indonesia.

Julien Dormois: So just curious what's been the overall momentum. So let's say, for example, Q2 versus Q1, and how we should think about the back half of the year for the country, again, at the group level. And my last question is on the other business line. We have seen innovation and central costs come down quite a bit, and that's probably been driven most likely by productivity initiatives. I was just wondering whether we could ultimately see the adjusted EBITDA for the other line turn structurally positive in the years.

Uh, most likely by productivity initiatives, I was just wondering whether we could ultimately see the adjusted AITA for the other line turn structurally positive in the years to come. Thank you.

Julien Dormois: Okay, let me take the first one to start off with. So the Indonesia order is included for into the order intake, but only for a limited amount of period because you know, we are quite stringent on our order intake policy. So that's kind of there's a multi-year deal. So it had a contribution into the order intake for the quarter. But as we also mentioned, actually the strongest contribution in North America, double digit order intake growth. So that was not from Indonesia. And also it's coming from the other segments. I mentioned that we had high single digit order intake growth in PV and we had strong Hospital Patient Monitoring Order Intake back on a very strong comparable.

Okay, let me take the first 1 to start off with. So Indonesia order is included for into the order intake but only for a limited amount of period because, you know, we are quite stringent on our order intake policy. Um, so that's kind of there's a multi-year deal. Um, uh, so it had a contribution into, um, the order intake for, um, for the quarter. But as we also mentioned, actually, the strongest contribution in North America, double digit order intake growth. Uh, so that was not from Indonesia and also it's coming from. Um, the other segments I mentioned that we had high single digit order intake growth in PB, and we had strong

Roy Jakobs: So that showed that actually was a very broad-based contribution into order intake growth from across our segments and across the world. So I think she and we are very happy with the Indonesia deal because it's a nationwide deal. It shows the strength of the platform to really contribute in a meaningful manner to 280 million of patients and giving them access to this technology which was very limited to date. And of course, with that, there's also a sizable amount of revenue attached to it, but that's over time. And therefore, only part of that we have been taking into the order intake into the quarter.

Hospital patient, monitoring order intake at on, uh, the back on a very strong comparable. So that showed that actually, uh, was a very broad base contribution into order intake growth from across our segments, and across the world. Um, so I think, uh, uh, she and we are very happy with the Indonesia deal because it's a nationwide deal. It shows the strength of the platform to really contribute in a meaningful manner to 280 million of patients, gone up and giving them access to this technology which was very limited to date. Um and of course uh with that uh there's also a sizeable amount of um, of Revenue.

Roy Jakobs: Then China at the group level. So in terms of if you look at the China outlook for the year, it's still in line with what we guided and what kind of the expectations were. So China had a negative first half and will turn into positive in the second half. And that's actually then will be compounding to kind of an Slight contribution of China into this year's plan. But we will still mainly depend on other regions and geographies to kind of deliver on our four-year outlook. And that's also what we kind of are confident in doing and what we have planned for.

Attached to it, but that's over time. Uh, and therefore, only part of that we have been taking into the order intake in the quarter.

Then, um, China at the group level.

Charlotte Hanneman: So I think it's on the China question and then the third one for you, Sol. Yeah, thank you, Julien. I think your third question on the other bucket, which indeed includes innovation, central costs, but also very much royalty income. So what we've guided for 2025 is that we keep the outlook as is, that the benefit you saw in Q2 is primarily phasing because of the way the royalty income is flowing through our P&L. I would think in a very similar way for the years beyond 2025. Yeah, there are puts and takes, but overall, I don't see meaningful shifts there.

So, in terms of, if you look at, um, uh, the China outlook, um, for the year, it's still in line with what we, um, uh, what we guided and what kind of the expectations were. So, China has a negative first half and will turn positive in the second half. Um, and that's actually then will be a compounding, uh, to kind of slide contribution of China into this year's plan, but we will still mainly depend on the other regions and geographies, um, uh, to kind of deliver on our full-year outlook. And that's also what we kind of are confident in doing and what we have, uh, what we have planned for. Uh, so I think is on the, um, on the China question and then the third one for you. So, yeah. Thank you, Julia. And take your third question on the other bucket, which indeed includes Innovation Central costs but also very much royalty income. So, what we've guided for 2025 is that we keep the outlook as is that what the.

The benefit you saw in Q2 is primarily phasing because of the way the royalty income is slowing through our P&L. I would think in a very similar way for the years beyond 2025. Yeah, there are puts and takes, but overall, I don't see meaningful shifts there.

Charlotte Hanneman: Thank you, Memo. Thank you.

Thank you very much.

Unknown Executive: Thank you all.

Roy Jakobs: That was the last question. Mr. Jakobs, please continue. Thank you so much for dialing in today. We're happy to announce that we delivered a strong quarter with strong order intake growth of 6% on the back of 9% last year, giving us good confidence and momentum into the second half with positive sales growth, especially seeing also strong sales momentum in personal health, which we see continue in the second half. And we work on margin expansion in a combination of innovation contribution as well as productivity.

Thank you.

Thank you all. That was the last question. Mr. Jakobs, please continue.

Roy Jakobs: And then based on that, we have been raising the outlook for the year, including the recently announced tariffs by increasing by 50 base points, the adjusted outlook, and then also free cash flow for the year. So we will continue our execution focus. focus on what we can control and making sure we deliver the year as we have been laying out and presenting to you.

Thank you so much, uh, for dialing in today. Um, we're happy to announce that. Uh, we delivered a strong quarter with strong order intake growth of 6% on the back of 9%, uh, last year, giving us good confidence and momentum into the second half. Uh, we had positive sales growth especially seeing also strong sales momentum in personal health which we see continued in the second half and we work differently on Mark margin expansion in a combination of um Innovation contribution as well as productivity. And then based on that, we have been raising the outlook for the year including in in uh including the recently announced tariffs by increasing by 50 base points, the adjusted Outlook and then also a free cash flow um for the year. So we will continue our execution Focus.

Unknown Executive: So thank you for your attention. Looking forward to engage with you later and more. Thank you.

Unknown Executive: This concludes the Royal Philips second quarter and semi-annual 2025 results conference call on Tuesday, July 29, 2025. Thank you for participating. You may now disconnect your line.

Focus on what we can control and making sure we deliver the year as we have been laying out and presenting to you. So, thank you for your attention. Looking forward to engaging with you later and more.

Thank you. This concludes the Royal Philips second quarter and semiannual 2025 results conference call on Tuesday, July 29, 2025. Thank you for participating. You may now disconnect your lines.