Philips lifts outlook after profit beat, voices concern over China

[July 24, 2023]  By Diana Mandia

(Reuters) -Dutch health technology company Philips on Monday modestly increased its full-year targets after beating quarterly earnings expectations but expressed concern over China's drive to become self-sufficient in health-related technologies.

The Amsterdam-based group, a former industrial conglomerate that now focuses on medical technology, reported adjusted earnings before interest, taxes and amortisation (EBITA) of 453 million euros ($503.78 million) for the April-June period, above the 394 million euros seen in a company-compiled poll.

Philips stressed that it expects global market conditions to remain highly uncertain, and that it had "a particular concern" over the development of relationships between the United States, China and the European Union, as well as China's drive to become self-sufficient in critical technologies, including health-related ones

For the full year, the group expects comparable sales growth in the mid-single digits versus previous guidance of low-single-digit growth while its adjusted EBITA margin is now seen at the upper end of the previously forecast high-single-digit range.

Philips shares fell 5% in early trade.

Analysts at ING said the new guidance was not too challenging given the strong first-half figures, but Jefferies noted that order intake fell for a fourth quarter in a row.

Dutch technology company Philips' logo is seen at company headquarters in Amsterdam, Netherlands, January 29, 2019. REUTERS/Eva Plevier/File Photo

Philips has been grappling with the fallout from the global recall of millions of respirators used to treat sleep apnoea since it was announced in June 2021, setting aside 575 million euros for lawsuits launched by patients who claim to have suffered economic losses from using the devices.

The company said it had produced approximately 99% of the replacement devices and repair kits required for remediation of the registered affected respirators.

"Completing the Philips Respironics field action remains our highest priority," Chief Executive Roy Jakobs said in a statement.

($1 = 0.8992 euros)

(Reporting by Diana Mandiá, editing by Kirsti Knolle, Kirsten Donovan)

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