Philips stock tumbles as firm sees losses grow on weak Chinese demand

Philips saw a slump in demand for its stock on Wednesday after the firm announced disappointing earnings results.

Shares in the Dutch giant were down almost 12% in daily trading as of around 11h30 CET.

Philips' full-year net loss came in at €698 million, compared with a loss of €463m seen in 2023.

In the final three months of the year, the loss totalled €333m, compared with a profit of €38m seen in the same period a year earlier.

Higher taxes partly to blame

Philips blamed the result on higher tax expenses, partly offset by a higher gross margin and lower costs in areas such as restructuring and acquisitions.

The firm also shared a double-digit decline in quarterly sales in China, a country whose economy has been battered by the pandemic and a protracted property crisis.

"Market conditions are expected to remain uncertain" in this region, added Philips, not least because of US-China tariffs.

In part, the loss is also linked to a $1.1 billion (€1.1bn) settlement in the US, agreed upon last April.

Philips paid out the provision after its sleep apnea devices were recalled over potential cancer risks.

Sales growth

For the full year and the final quarter of 2024, comparable sales growth increased by 1%.

Comparable order intake increased 1% over the full year, while it was up 2% in the fourth quarter.

Annual adjusted earnings before interest, tax, and amortisation (EBITA) totalled €2.1bn, which Philips said was driven by operational improvements and productivity measures. 

That's compared to €1.9bn in 2023.

Adjusted EBITA for the fourth quarter was recorded at €679m, compared to €653m in the prior three months.

The EBITA margin improved to 11.5% over the full year and to 13.5% in the fourth quarter.

Cost cuts coming

"Within a persistently challenging macro environment, our focus remains on executing our value creation plan, bringing industry-leading innovations to the market and driving a simplified, more agile operating model," Roy Jakobs, CEO of Philips, said in the earnings statement.

"Looking ahead, we remain confident in our long-term plan and will continue to work closely with customers," he added.

Philips raised its productivity savings target for the 2023 to 2025 period from €2bn to €2.5bn, noting it will push ahead with cost efficiencies.

The firm forecast 1% to 3% of comparable sales growth in 2025, and it predicted that its adjusted EBITA margin will be in the range of 11.8% to 12.3%.