Philips reported on Monday that the Dutch medical device manufacturer had to reduce its sales forecast for the year and that its shares had fallen 16% because of a sharp decline in demand in China in recent months.
Shares in Philips, which sells products ranging from toothbrushes to medical imaging systems, were down 16% in Monday’s early trade and set for their biggest one-day loss in 26 years.
The shares had risen almost 50% this year as the company recovered from a massive recall of sleep aide machines.
Fears of large litigation bills reduced two-thirds of Philips’s market value between 2021 and 2023. According to the corporation, it has been negatively impacted by China’s declining consumer confidence and a state-led anti-corruption campaign that has reduced orders from Chinese hospitals.
“That compounded effect showed a strong decline in China and a further deterioration versus also what we expected in July,” Roy Jakobs, the CEO, told representatives.”The consumer market is subdued and we expect that to continue for the near term,” he stated. Philips is the most recent in a string of multinational companies to voice concerns about the Chinese economy, in decline despite Beijing’s efforts to boost it.
Jakobs said that orders in China had dropped in the third quarter in a “very material” fashion. Growth in the rest of the world partially offset China’s problems, resulting in a 2% overall decline in comparable orders from the previous year.
Philips has reduced its 2024 comparable sales growth forecast from 3% to 5%, which it claimed could still be accomplished in other markets, to just 0.5% to 1.5% growth.
