Philips shares dropped significantly following a downward revision in its sales forecast for 2024. The Dutch healthcare technology company attributed the reduced outlook to weaker-than-expected demand from China. The company now expects sales growth to reach only 1.5% this year, down from its previous forecast of up to 5%. This news led to a 17.1% decline in Philips’ stock value, marking its most significant market drop since 1998.
The disappointing performance was driven largely by reduced demand from both Chinese hospitals and consumers, according to CEO Roy Jakobs. Philips did, however, experience growth across other global markets during the third quarter.
In response to uncertainty in China, Philips is shifting some focus to other high-demand regions like Indonesia and the United States. Jakobs noted strong growth in North America, where the healthcare sector’s demand for advanced technology has been heightened by workforce shortages.
Despite current challenges, Philips continues to view China as a core long-term growth market, though the company acknowledges ongoing volatility. Stricter regulations in China on medical technology to address corruption, along with lingering post-pandemic economic challenges, have impacted consumer and business confidence.
Philips is also working to rebuild consumer and investor trust following its recent sleep apnea device recall, estimated to have cost the company €4.6 billion. The U.S. Department of Justice is still investigating the matter, with potential fines pending. Philips indicated that the remainder of the year’s outlook does not account for any new developments related to this case.
