Philips has lowered its full-year sales forecast, citing a sharp decline in demand in China, which has been impacted by reduced consumer confidence and an ongoing anti-corruption drive affecting hospital orders. The Dutch medical technology firm now projects comparable sales growth of 0.5% to 1.5% for 2024, a decrease from the previous 3% to 5% forecast, leading to a 16% drop in Philips’ stock on Monday—the company’s biggest one-day loss in 26 years.
“We’ve seen a very material decline in China’s demand this quarter,” said Chief Executive Roy Jakobs, pointing to weaker orders and consumer market instability in the country. He explained that Philips’ performance in China has worsened beyond initial expectations from July, attributing this to compounded pressures on consumer spending and healthcare investment.
The company’s third-quarter financials revealed sales of 4.37 billion euros, down 2% compared to the same period last year, with a comparable order decrease of 2% largely driven by China. Despite the slowdown, Jakobs noted that Philips has witnessed solid growth in other regions: “Outside China, the rest of the world showed promising sales and order strength,” he stated, adding that Philips continues to see resilience in its diagnostics and treatments segments, especially in the United States.
Additionally, Philips now anticipates free cash flow at the lower end of its forecast, around 0.9 billion euros, as part of a conservative financial outlook for the year. The company, which recently settled U.S. lawsuits over faulty sleep devices, is currently refocusing its portfolio on high-tech healthcare products. “Our productivity measures and AI-driven innovations have helped stabilize our margins,” said Jakobs, though he stressed the company’s outlook reflects continued challenges in China.
The share slump follows Philips’ significant stock recovery this year after addressing prior quality issues, yet the recent announcement has reignited investor concerns over China’s volatile economic conditions impacting global business.
