May 6 (Reuters) – Dutch healthcare technology group Philips reported first-quarter revenues and margins above market expectations on Wednesday, sending its shares up over 5% in early trade, as strong order intake growth and productivity measures offset the impact of the Iran war and U.S. tariffs.
Philips will press on with cost management, including through more aggressive use of artificial intelligence, and adjust pricing to compensate for the inflationary impact of tensions in the Middle East, CEO Roy Jakobs said in a post-earnings media call.
“It’s very hard to know what is coming down the pipe in the rest of the year. The only guarantee we have is that prices (inflation in general) will go up,” Jakobs said.
He added that the group has installed helium-free magnetic resonance imaging (MRI) scanners at more than 2,000 locations worldwide, reducing the impact on its ability to scan patients caused by shortages of the gas, whose supply chain is heavily reliant on the Middle East.
U.S. TARIFFS PRICED IN
Philips, which makes products ranging from toothbrushes to medical imaging systems, said on Wednesday its sales grew 4% on a comparable basis to 3.91 billion euros ($4.59 billion) in the quarter ended March 31, driven by increased demand in North America and Europe, with an adjusted core earnings margin of 9%. Analysts, on average, had expected sales of 3.88 billion euros with a margin of 8.4%, according to a company-compiled poll.
“This is another quarter of substantially beating well-managed expectations”, J.P. Morgan said in a note to clients.
Philips reiterated its full-year outlook, including an impact from U.S. import tariffs, but said the forecast excluded potential tariff refunds after the U.S. Supreme Court in February struck down the levies.
“We have not started legal proceedings, but we have submitted our request in line with the process that actually was set up for that by the U.S. government”, Jakobs said. “We trust in the system that this will be refunded.”
($1 = 0.8522 euros)
(Reporting by Alessandro Parodi in Gdansk, editing by Rashmi Aich)
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