Philips CEO says US order delays, China pressure weighed on Q2 results
PHG•Q2 results hit by timing of U.S. orders and China pressure
Philips CEO Roy Jakobs said on Tuesday that delayed orders in the U.S. and market pressure in China weighed on the healthcare tech group's second-quarter results, even as it lifted its margin outlook for the full year.
The Dutch maker of consumer electronics, appliances and medical equipment on Monday reported a quarterly core profit margin above analysts' expectations thanks to U.S. tariff refunds, but its comparable order intake fell 1% because certain large orders were shifted into the third quarter.
Management says delayed deals and China policy added pressure
Philips' U.S.-listed shares fell 4.4% to $25.02 on Monday, while traders indicated a 3% to 5% fall in the Amsterdam-listed shares before the bell.
"That's not a miss, but rather a timing issue," Jakobs told journalists. "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 also noted that continued pressure in China affected second-quarter sales growth.
China announced in July a new policy requiring all public medical institutions to buy medical equipment through centralized procurement programs.
"We have seen that this has caused a kind of market turmoil and degrowth," Jakobs said on the press call. "We foresee a more structurally challenging situation in China, which we had planned for."
