The head of Philips said Tuesday that postponed orders in the United States and a difficult market environment in China were behind the healthcare technology giant’s mixed second-quarter results — even as the company raised its profit margin forecast for the full year.
The Dutch manufacturer, known for consumer electronics, home appliances, and medical devices, released its quarterly earnings Monday, showing a core profit margin that came in above what analysts had predicted. That beat was partly driven by refunds on U.S. tariffs. However, comparable order intake slipped 1% after several large contracts were pushed back into the third quarter.
Philips shares listed in the U.S. dropped 4.4%, settling at $25.02 on Monday. Traders were also signaling a 3% to 5% decline in the company’s Amsterdam-listed shares before markets opened.
CEO Roy Jakobs downplayed concerns about the order shortfall when speaking with journalists. “That’s not a miss, but rather a timing issue,” he said. “Some of these deals are lumpy. They are very large in nature — multi-hundred-million or multi-million, multi-year contracts — and therefore you cannot exactly pinpoint when they will close.”
Analysts at RBC pointed out that ongoing difficulties in China also held back sales growth during the quarter. In July, China introduced a new policy mandating that all public medical institutions purchase medical equipment through centralized government buying programs.
Jakobs addressed the China situation directly during a press call. “We have seen that this has caused a kind of market turmoil and degrowth,” he said. “We foresee a more structurally challenging situation in China, which we had planned for.”
