Philips lowers sales forecast due to falling orders in China

Dutch medical device maker Philips on Monday cut its full-year sales target, blaming falling demand from Chinese hospitals after reporting third-quarter results.

Markets reacted negatively to the announcement, with Philips’ share price falling more than 11 percent in morning trading on the Amsterdam Stock Exchange’s AEX blue-chip index.

A “significant deterioration” in demand in China forced Philips to adjust its expected sales growth to 0.5 to 1 percent in 2024, the Amsterdam-based company said.

Previously, Philips expected sales growth of three to five percent.

“Demand from hospitals and consumers in China deteriorated further this quarter, while we continue to see strong growth in other regions,” Chief Executive Roy Jacobs said.

“We have adjusted our full-year sales forecast to reflect the continued impact of China,” Jacobs said.

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Sales in the third quarter were 4.37 billion euros ($4.7 billion), down two percent from the same period last year.

Without exceptional items, sales remained stagnant.

The company’s net profit doubled year-on-year to €181 million, with Jacobs pointing to “the performance and improved profitability of our industry-leading AI-driven innovations.”

Earlier this year, Philips struck a $1.1 billion deal to settle US lawsuits over faulty sleep devices.

The crisis erupted in 2021 when millions of devices were recalled over concerns that users risked inhaling pieces of noise-cancelling foam and concerns that it could potentially cause cancer.

Having started out as a lighting company more than 130 years ago, Philips has undergone major changes in recent years, selling off assets to focus on producing high-quality electronic products for healthcare.

Source: AFP