Philips CEO Cites US Delays, China Policy as Drags on Q2 Results
Philips Faces Challenges in Key Markets During Second Quarter
By Lucie Barbier and Alessandro Parodi
Impact of US Order Delays on Q2 Performance
July 28 (Reuters) - The chief executive of Philips 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.
Market Reaction to Q2 Results
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.
CEO Commentary on Order Timing
"That's not a miss, but rather a timing issue," CEO Roy 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."
China Policy Changes and Their Effects
Analysts at RBC also noted that continued pressure in China affected second-quarter sales growth.
Centralized Procurement Policy in China
China announced in July a new policy requiring all public medical institutions to buy medical equipment through centralized procurement programs.
CEO's Outlook on China Market
"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."
(Reporting by Lucie Barbier and Alessandro Parodi, editing by Milla Nissi-Prussak)