Philips said delayed closings of sizable U.S. contracts and market turbulence in China weighed on its second-quarter performance, even as the company raised its margin outlook for the full year after receiving U.S. tariff refunds that helped lift quarterly profitability.
The Dutch maker of consumer electronics, home appliances and medical equipment reported a quarterly core profit margin that exceeded analysts' expectations. However, comparable order intake dropped 1% as several large orders were shifted into the third quarter, the company said.
Philips' U.S.-listed shares fell 4.4% to $25.02 on Monday, while traders indicated a 3% to 5% fall in Amsterdam-listed shares before the bell.
Addressing the timing of business wins, CEO Roy Jakobs told journalists: "That’s not a miss, but rather a timing issue." He added that some transactions are "very large in nature - multi-hundred-million or multi-million, multi-year contracts - and therefore you cannot exactly pinpoint when they will close."
Jakobs and the company highlighted China as an additional drag on second-quarter growth. Analysts at RBC also pointed to continued pressure in the Chinese market as a factor constraining Q2 sales growth.
In July, China announced a policy requiring all public medical institutions to acquire medical equipment through centralized procurement programs. Jakobs said on the press call: "We have seen that this has caused a kind of market turmoil and degrowth." He also said: "We foresee a more structurally challenging situation in China, which we had planned for."
The company framed the lower comparable order intake as a timing issue rather than an operational miss, emphasizing that the lumpy nature of some large contracts makes precise quarter-by-quarter forecasting difficult. At the same time, it acknowledged that the procurement policy change in China has created a more challenging market environment that is expected to have structural effects.
Sector impacts - The developments affect healthcare equipment and medical devices most directly, while consumer electronics and appliances are referenced as part of the broader Philips portfolio. Market reactions to the results were evident in both U.S. and Amsterdam-listed shares.