Philips Cuts Annual Sales Outlook On Weak Demand From China

Royal Philips NV slashed its sales-growth forecast for the year as tepid demand from China weighs on the medical technology firm’s orders. The shares slumped the most in more than two years.

Philips expects comparable sales to grow as much as 1.5% in 2024, down from a previous forecast of as much as 5%. Order intake decreased 2% in the third quarter due to the China slump, it said Monday.

The Amsterdam-based manufacturer has been affected by an anti-corruption campaign across China’s health-care sector after the Asian nation began to scrutinize local medical-technology procurement. The country has implemented strict domestic product requirements for many categories.

Uncertainty in China will remain in “the next few quarters,” Chief Executive Officer Roy Jakobs said in an interview with Bloomberg Television. “We see solid growth in the rest of the world.”

Philips shares fell as much as 13.1% in Amsterdam, the steepest intraday drop since January 2022. The stock is still up around a quarter this year.

The outlook cut is “a disappointment and raises questions around 2025,” Barclays analyst Hassan Al-Wakeel said in a note. It also presents “a negative read-across to peers on China worsening.”

The manufacturer is trying to regain shareholder and consumer trust after paying less than expected to settle US claims linked to faulty sleep apnea devices. Earlier this year, its two biggest investors Exor NV and Artisan Partners GP LLC raised their stakes in the company.

The recall cost Philips around $5 billion, according to Bloomberg calculations. The company is still being investigated by the US Department of Justice over the issue and has not yet made any financial provisions for that matter. Its outlook excludes the potential impact of the ongoing legal proceedings, including the DOJ probe, it said Monday.

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