Philips shares fall most in 26 years after sell-off warning – BNN Bloomberg

(Bloomberg) — Royal Philips NV shares fell the most in 26 years after the medical technology company cut its full-year sales growth forecast due to sluggish demand in China.

Philips expects like-for-like sales to grow 1.5% in 2024, up from a previous forecast of 5%. Order intake fell 2% in the third quarter due to the slowdown in China, the agency said on Monday.

The Amsterdam-based manufacturer has been hit by an anti-corruption campaign in China’s healthcare sector after the Asian country began scrutinizing local purchases of medical technology. The country has introduced strict requirements for domestic products for many categories.

Philips shares fell 17.1% in Amsterdam, their steepest intraday fall since September 1998. The stock is still up about 20% this year.

Uncertainty in China will continue “for the next few quarters,” CEO Roy Jacobs said in an interview with Bloomberg Television. “We see steady growth in the rest of the world.”

The forecast cut is “disappointing and raises questions around 2025,” Barclays analyst Hasan Al-Wakil said in a note. It also represents “negative reading for colleagues about the deteriorating situation in China.”

The manufacturer is trying to restore shareholder and consumer confidence by paying less than expected to settle claims in the United States related to faulty sleep apnea devices. Earlier this year, two of the largest investors, Exor NV and Artisan Partners GP LLC, increased their stakes in the company.

Bloomberg estimates the recall cost Philips about $5 billion. The company is still under investigation by the US Department of Justice regarding this matter and has not yet taken any financial action regarding this matter. His forecast excludes the potential impact of ongoing litigation, including a Justice Department investigation, it said Monday.

Earlier this month, Charlotte Hanneman took over as Philips’ first chief financial officer and board member in the company’s 133-year history.

–With assistance from Tom McKenzie and Lisa Pham.

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