Investing.com — Philips (AS:) reported third-quarter results with lower revenue and revised outlook, primarily due to weak demand in China.
Revenue missed consensus by 3%, and orders were down 2% from the strong prior quarter. Adjusted EBITA was in line with expectations, but UBS analysts said the figure was boosted by unusually high royalty income.
Without this benefit, adjusted EBITA would have been 8% lower. The overall revenue shortfall has heightened concerns about Philips’ growth, with management lowering its full-year revenue growth forecast to a range of 0.5-1.5% from the expected 3-5%.
The revisions reflect heightened uncertainty, particularly in China, where demand challenges are becoming more acute.
Analysts at UBS pointed to poor performance in several segments of Philips. Diagnostics and Therapeutics sales were 3% below consensus, with an underlying decline of only 1%, falling short of the 2% growth expected.
Connected Care and Personal Health sales were both lower than expected, by 3% and 7%, respectively, but each did not record any substantive growth or decline compared to expected increases.
UBS noted that underlying profitability remains under pressure despite steady growth in royalty income.
Management guidance cuts and widespread earnings shortfalls weighed on investor sentiment, with UBS analysts saying the company’s order book had been disappointing, especially following an already weak comparative period last year. suggests that this may lead to further scrutiny.
“I think there was some hope for higher margin guidance, but the trade-off is likely to be a 2-3% reduction in sales and adjusted EBITA. ,” JPMorgan analysts said in a note.
