Philips shares decline due to falling demand in China

Koninklijke Philips (PHG) American Depositary Receipts (ADRs) fell more than 15% in premarket trading on Monday after the Dutch conglomerate cut its 2024 sales forecast amid a “significant deterioration” in demand in China.

The company also posted quarterly results that mostly missed analysts’ consensus estimates.

Philips said it now expects comparable sales growth in 2024 to be between 0.5% and 1.5%, up from a previous forecast of 3% to 5%.

CEO notes ‘continuing influence of China’

“Demand from hospitals and consumers in China further deteriorated this quarter, while we continue to see strong growth in other regions,” said Chief Executive Officer (CEO) Roy Jacobs. “We have adjusted our full-year sales forecast to reflect the continued impact of China.”

Philips’ third-quarter sales of 4.38 billion euros ($4.74 billion) were lower than the 4.47 billion euros reported last year and also lagged the consensus estimate of 4.55 billion from analysts surveyed by Visible Alpha Euro.

The company’s third-quarter net income of €181 million and earnings per share (EPS) of €0.19 also missed estimates, although adjusted earnings of €0.32 per share narrowly beat expectations.

The company’s ADRs were up 40% this year through Friday’s close, but they were down 16% in premarket trading.