Tuesday 21 March 2023

Philips issues profit warning, as China trade war tariffs bite

Photo: Philips.com

Dutch medical technology company Philips said on Thursday that it is revising down a key profit indicator this year because of ‘increasing headwinds from tariffs’.

The company now expects its Ebita margin – operating profit as a percentage of turnover – to rise by no more than 0.2% this year.

For the past three years Philips has hit its target of a 1% increase and that had been the target for 2019.

But now the trade war and high import tariffs have hit performance at the company’s ‘connected care’ division, which makes sleep aids and breathing apparatus, among others.

The company expects net income from continuing operations will amount to approximately €210m in the quarter, which will include a charge of €78m related to a goodwill impairment in the connected care unit.

‘We will drive further strong mitigating actions to accelerate the improvement in these businesses,’ chief executive Frank van Houten said in a press statement.

The firm has maintained its target of improving comparable sales by between 4% and 6% next year.

The finalised figures will be published on October 28.

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