Amsterdam (AFP) – Philips on Wednesday posted worse-than-expected losses in 2024, as the Dutch medical device maker bids to turn the page on a damaging recall of faulty sleep machines. The firm reported a net loss of 698 million euros for the full year 2024, compared to the 463-million-euro loss it posted in 2023. Chief executive Roy Jakobs noted “double-digit declines in demand in both consumer and health systems in China” as well as “a persistently challenging macro environment” as reasons for the losses. Analysts polled by the company were expecting a full-year loss of 65 million euros and sales of 18.0 billion euros. Total sales for 2024 came in as forecast at 18.0 billion euros, compared to the 18.1 billion euros gained in 2023. The losses were aggravated by a number of one-off items, such as a negative tax impact and restructuring charges, the firm explained.
Philips shares dropped sharply at the open of the Amsterdam stock exchange, falling more than seven percent in an overall flat market. In November, Philips had lowered its full-year sales target, blaming a drop in demand from Chinese hospitals. That caused stocks to plunge by more than 11 percent. Jakobs said a slowing Chinese economy was hurting consumer demand for Philips products and the government’s anti-corruption drive was hitting procurement. He said the firm expected the drag from China to be especially severe in the first half of this year, before easing towards the end of 2025. “China will…be a long-term attractive market,” he told reporters. “The question is when it comes back.” “It’s not an if question for us, because there’s a big underlying demand, an aging population. And also on the consumer side, of course, a very big population,” he added.
– ‘Long-term plan’ –
Once famous for making lightbulbs and televisions among other products, Amsterdam-based Philips in recent years has sold off subsidiaries to focus on medical care technology. Since 2021, the company has been battling a series of crises over its DreamStation machines for sleep apnoea, a disorder in which breathing stops and starts during sleep. Millions of devices were recalled over concerns that users were at risk of inhaling pieces of noise-cancelling foams and fears it could potentially cause cancer. In April, it announced it had reached a $1.1 billion deal to settle US lawsuits from the faulty machines. Philips got a boost the day before the results when the French agency for medical safety said it could sell its respirators in the country again.
“We strengthened our fundamentals and resolved significant US litigation relating to the Respironics recall,” said Jakobs. Looking ahead, the firm said it expected sales growth of between one and three percent for 2025. These results would be hit by a “mid-to high-single-digit decline in China,” the company warned. “We remain confident in our long-term plan,” said Jakobs. Philips pointed to a one-percent increase in orders over 2024, with a two-percent growth in the fourth quarter. For the fourth quarter overall, Philips posted a net loss of 333 million euros on sales of 5.0 billion euros. Analysts had forecast fourth-quarter profits of 302 million euros and sales of 5.1 billion euros. The firm has continued to shed jobs. It employed 67,823 people at the end of 2024, compared to 69,656 at the end of 2023.
© 2024 AFP
