KEY TAKEAWAYS
- Philips projects lower sales in China as its consumer appetite remains weak.
- U.S.-listed shares in the Dutch conglomerate are tumbling more than 11% in premarket trading Wednesday.
- The Dutch maker of medical equipment and consumer electronics like electric toothbrushes projected 1%-3% 2025 year-over-year sales growth, a forecast that includes a “mid- to high-single-digit” drop in China.
Worries about the strength of the Chinese market are weighing on international companies, with Koninklijke Philips (PHG) projecting lower sales in the country as its consumer appetite remains weak.
U.S.-listed shares in the Dutch conglomerate are tumbling more than 11% in premarket trading Wednesday. The company had swung into a loss in the fourth quarter, a period when its sales in China recorded a “double-digit decline.”
The Dutch maker of medical equipment and consumer electronics such as electric toothbrushes cited a “challenging macro environment” for its 2025 projection of 1%-3% year-over-year sales growth. That forecast includes a “mid- to high-single-digit” drop in China.
Sales Forecast by Philips Includes Effect of US-China Tariffs
The modest sales growth forecast also includes the effect of the recent U.S.-China tariffs, the company said. Earlier this month, the U.S. increased tariffs on imports from China by 10% and Beijing retaliated with a much more limited set of levies aimed at imports of commodities including coal and liquified natural gas.
“We believe [Chinese demand] will come back, long term it’s attractive, but we just are not certain when it’s going to happen and when it’s going to have that inflection point,” Chief Executive Officer (CEO) Roy Jakobs said in an interview with CNBC Wednesday, noting the company sees the Chinese consumer as continuing to be “subdued” in 2025.
Philips shares are up almost 40% over the last 12 months through Tuesday.