Philips shares hit 9-year low
AMSTERDAM: Dutch company Philips posted a bigger-than-expected drop in second-quarter core earnings on Monday, saying supply shortages and lockdowns in China had dented sales.
Shares fell 6.9 per cent to 20.24 euros at 0726 GMT, a nine-year low, and are down 38 per cent in the year to date.
The company cut its estimate for full-year sales growth to between 1 per cent and 3 per cent, from 3 per cent to 5 per cent, while forecasting secondhalf growth of 6 per cent to 9 per cent on a strong order backlog.
Chief Executive Officer Frans van Houten said supply chain issues and inflationary pressures had played a role, but singled out Chinese COVID-19 lockdowns as the biggest cause of the shorfall.
In China, “comparable sales and order intake declined almost 30 per cent in the quarter”, van Houten said in a statement. “Production in several of our factories, as well as those of our suppliers in China,wassuspendedfortwomonths,whichexacerbated the global supply chain and cost challenges.”
Adjusted earnings before interest, taxes and amortisation (EBITA) reached 216 million euros ($220 million) for the three months ended June 30, missing an average forecast of 324 million according to a company-compiled poll.
In the same period a year earlier, Philips had achieved adjusted EBITA of 532 million euros.
Sales fell 7 per cent to 4.17 billion euros, also missing analyst forecasts of 4.23 billion.
“Thequarterwassignificantlybelowexpectations and Philips has lowered both annual and mid-term guidance,” said Jefferies analysts in a note.
“While investors had somewhat expected top-line guidance was too high, the magnitude of the EBITA margin cut is likely to disappoint... (and) revised guidance also leaves limited room for execution error.”
Philips, once known as a consumer electronics company, now does most of its business making medical imaging, monitoring and diagnostic equipment.