Shares of Dutch health technology company Philips experienced a significant drop, falling as much as 13% in early trading on Wednesday. This decline followed the company’s announcement of fourth-quarter results that missed expectations and a forecast of declining sales in China.
The company, known for products ranging from toothbrushes to advanced medical imaging systems, anticipates a mid-single-digit decline in first-quarter comparable sales. This is partially attributed to weakened consumer spending in the Chinese market. Philips also expects a mid- to high-single-digit decrease in China sales for 2025, with CEO Roy Jakobs citing the impact of recent tariffs imposed by both Beijing and the United States, along with regulatory changes and anti-corruption policies influencing healthcare procurement.
“Consumer spending is much lower than before in the Chinese market, while regulations and anti-corruption policies in the country will impact healthcare procurement processes,” Jakobs stated.
Despite the challenges, Bank of America suggested the estimates might be “very conservative,” hinting at potential upside. Jakobs reaffirmed previous estimates that China would constitute roughly 10% of group revenue in the near future, a decrease from over 13% earlier in the decade.
In response to increasing concerns about a potential global trade war, Philips is engaging in discussions with governments in Beijing, Washington, and Europe to safeguard healthcare as an “essential need,” Jakobs confirmed.
Globally, Philips projects a 1% to 3% growth in comparable sales for 2025, a rise from the 1% increase recorded in 2024. The October-December period saw a modest 1% increase in comparable sales, affected by a double-digit decline in China. This growth rate was lower than the 1.7% increase anticipated in a company-provided poll, and significantly below the 6% growth seen in the same quarter of 2023.
Total sales for the quarter reached 5.04 billion euros ($5.27 billion), slightly below the 5.07 billion euros forecasted by analysts. Adjusted earnings before interest, tax, and amortization (EBITA) came in at 679 million euros, narrowly missing the consensus forecast of 683 million euros. Philips proposed an annual dividend of 0.85 euros per share, consistent with the dividend paid in 2023.
