Philips NYSE:PHG, a Dutch healthcare-technology company producing medical equipment and consumer-health products, fell 9% in Tuesday's European trading after reporting weaker-than-expected orders and warning about increasingly difficult conditions in China. The decline pushed the shares to their lowest level in one year and placed them on course for their steepest daily loss in 17 months. Investors looked beyond Philips' improved full-year profitability forecast as concerns increased about uneven order growth and whether the company could maintain its operational turnaround.
Comparable order intake declined 1%, which Philips attributed primarily to delays in closing several large U.S. contracts. Chief Executive Roy Jakobs described the weakness as a timing issue, explaining that some of the contracts were large, multiyear transactions whose closing dates could not be predicted precisely. Philips had raised its profitability guidance after its second-quarter core margin exceeded analysts' expectations, partly because of U.S. tariff refunds. However, excluding those refunds, margins in the Diagnosis & Treatment business were pressured by inflation, tariffs and an unfavorable sales mix.
Chief Financial Officer Charlotte Hanneman said the company's third-quarter adjusted EBITDA margin would be below the previous year's level. RBC analysts described the improved annual outlook as encouraging but warned that the margin expansion needed during the second half, particularly in the fourth quarter, could be difficult to achieve. Philips also continued facing pressure in China, especially across its Diagnosis & Treatment operations. Investors may now focus on whether delayed U.S. contracts convert into confirmed orders and whether the company can produce the required fourth-quarter margin improvement without relying on further tariff-related benefits.