Koninklijke Philips Elect's comparable sales in the third quarter fell by 0.5% year-on-year, far below the expected year-on-year growth of 3%. Due to deteriorating demand, the group has significantly lowered its 2024 full-year comparable sales growth guidance from the previous 3%-5% to 0.5%-1.5%. Pre-market stock prices in the US plummeted by over 18%
After the collective "shutdown" of European and American car companies, due to weak demand, the household appliance giant Koninklijke Philips Electronics also significantly lowered its sales guidance.
On Monday, the Dutch health technology giant Royal Philips announced its financial report for the third quarter of the 2024 fiscal year.
1) Key Financial Data:
Revenue: The group's Q3 sales reached 4.4 billion euros, comparable sales decreased by 0.5% year-on-year, compared to an expected 3% increase year-on-year, comparable order volume decreased by 2%; the group's Q3 operating income was 337 million euros.
Profit: The group's Q3 adjusted operating profit was 516 million euros, basically in line with expectations, the adjusted EBITA profit margin increased by 160 basis points, from 10.2% to 11.8% of sales.
Cash Flow: The group's Q3 free cash flow reached 22 million euros, mainly driven by profit growth, but offset by outflow of operating capital.
2) Business Revenue Data:
Diagnosis & Treatment products: Comparable sales decreased by 1% year-on-year, significantly down from the 14% growth in the previous quarter.
Connected Care products: Comparable sales remained flat, compared to double-digit growth in the previous quarter, the adjusted EBITA margin increased from 3.7% to 7.3%.
Personal Health products: Comparable sales decreased by 5% year-on-year, with a double-digit decline in the Chinese market, offsetting growth in other regions.
Regarding profit prospects, the group stated that due to deteriorating demand, the full-year comparable sales growth guidance for 2024 has been significantly lowered from the previous 3%-5% to 0.5%-1.5%.
By region, comparable sales in the European and North American markets recorded growth of 3% and 1% respectively, but comparable sales in other mature markets decreased by 10% year-on-year. The financial report indicated that this was mainly due to the drag from the Chinese market.
Philips CEO Roy Jakobs stated in a declaration:
"In a challenging macro environment, we remain focused on executing our three-year plan to fully capture growth and expansion opportunities."
Before the U.S. stock market opened on Monday, Philips fell more than 18%.
