Philips Shares Fall as US Order Delays, China Pressures Drag on Q2 Order Intake

Philips (PHG) saw its comparable order intake fall by 1% in the second quarter, a decline the company attributed to the postponement of large equipment orders in the United States and growing market pressure in China. The slowdown in new business overshadowed a better-than-expected quarterly profit margin, prompting a negative investor reaction.

Key Results and Outlook

Despite the dip in orders, the Dutch medical equipment maker reported a second-quarter core profit margin that exceeded analyst expectations, aided by U.S. tariff refunds. In light of this performance, Philips raised its margin outlook for the full year.

However, investors focused on the drop in order intake, a key indicator of future revenue. On Monday, Philips’ U.S.-listed shares fell 4.4% to $25.02, and traders indicated a potential 3% to 5% decline for its Amsterdam-listed shares ahead of the market open.

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Headwinds in Major Markets

CEO Roy Jakobs described the U.S. order situation as a "timing issue" rather than a miss. He explained to journalists that certain large, multi-year contracts were shifted into the third quarter. "Some of these deals are lumpy. They are very large in nature... and therefore you cannot exactly pinpoint when they will close," Jakobs said.

In China, the company is facing what Jakobs called a "more structurally challenging situation." Analysts at RBC noted this pressure affected second-quarter sales growth. The challenges stem from a new policy announced in July requiring public medical institutions to purchase equipment through centralized procurement programs, which Jakobs said has caused "market turmoil and degrowth."