Investing.com — Philips (AS:PHG) reported third-quarter results that posted a revenue miss and a revised outlook, primarily due to weaker demand in China.
Revenues missed consensus by 3%, and order intake fell by 2% after a strong prior quarter. While adjusted EBITA was in line with expectations, analysts at UBS said that this figure was boosted by unusually high royalty income.
Without this benefit, the adjusted EBITA would have missed by 8%. The overall revenue shortfall has raised concerns about Philips’ growth, with management revising its full-year revenue growth forecast downward from an anticipated 3%-5% to a range of 0.5-1.5%.
This revision reflects heightened uncertainties, particularly in China, where demand challenges have deepened.
UBS analysts flagged underperformance across several Philips segments. Diagnosis & Treatment sales were 3% below consensus, showing only a 1% organic fall, which fell short of the expected 2% growth.
Connected Care sales and Personal Health both trailed expectations, missing forecasts by 3% and 7%, respectively, and each recorded no organic growth or declines compared to anticipated increases.
UBS noted that even with a favorable income boost from royalties, underlying profitability remains under strain.
Management’s guidance cut and the broader revenue miss have weighed on investor sentiment, with UBS analysts suggesting this could lead to further scrutiny, especially given the company’s disappointing order intake following an already soft comparison period last year.
“We believe there had been some hopes for a margin guidance raise, but instead we’re likely to get 2-3% cuts to sales and adj EBITA. We see the shares off MSD, maybe a little more,” said analysts at J.P. Morgan in a note.
