Philips Stock Falls As China Weakness Drags Q4 Earnings, 2025 Outlook

Dutch healthcare technology group Koninklijke Philips NV PHG stock is trading lower on Wednesday after the fourth quarter earnings missed expectations.

Philips reported fourth-quarter sales of 5.04 billion euros (around $5.26 billion), slightly higher than 5.0 billion euros a year ago, missing the consensus of 5.10 billion euros.

The company reported adjusted EPS of 51 cents, up from 40 cents a year ago, but it missed the consensus of 57 cents.

Comparable order intake increased 2% in the quarter, with strong performance in the North America and Growth geographies, partly offset by a double-digit decline in demand in China.

Group comparable sales increased 1% in the quarter, with a growth of 5% in the rest of the world, largely offset by a double-digit decline in China, where market conditions are expected to remain uncertain. For the full year, comparable order intake and sales increased 1%, up 4% excluding China (within management guidance of 0.5%-1.5%).

Diagnosis & Treatment and Personal Health comparable sales decreased 1% and 2%, respectively, in the quarter due to a double-digit decline in China.

The fourth-quarter net loss was 334 million euros, compared with a profit of 39 million euros a year ago. The loss mainly reflects a tax charge of 449 million euros against a credit of 132 million euros.

Adjusted EBITA was 679 million euros compared with 653 million euros, while its adjusted EBITA margin was 13.5%.

Guidance: Philips expects 2025 comparable sales growth of 1%—3%, including a mid-to-high single-digit decline in China. The company forecasts that the adjusted EBITA margin will increase 30-80 bps to 11.8%—12.3%.

The Dutch medical technology company anticipates comparable sales growth to be back-end-loaded in the year, with a mid-single-digit decline in Q1 mainly due to lower demand in China and royalties phasing, with correspondingly lower Adjusted EBITA margin.

Philips is raising its productivity savings target for the 2023-2025 period from 2 billion euros to 2.5 billion euros, driven by cost efficiencies and further simplification of its operating model. 800 million euros will be delivered in 2025.

Philips has also provided guidance on free cash flow post-settlements, expecting between 400-600 million euros in 2025.

Price Action: PHG stock is down 11.6% at $25.03 at the last check on Wednesday.

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