Healthcare giant Philips issues profit warning on US-China trade tariffs
Dutch healthcare-tech giant Philips has warned the trade war between the US and China will stop it hitting targets for profit margin improvement this year.
In an update ahead of its third-quarter report, the European firm said rising tariffs would hamper its earnings before interest, tax and amortisation (EBITA) margin.
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Shares fell around seven per cent as European markets opened this morning.
Philips’ directors now expect the EBITA margin, which is the measure of a firm’s operating profit as a percentage of its turnover, to improve by between 0.1 per cent and 0.2 per cent.
They had previously aimed for a one per cent increase.
Philips has hit that target for the last three years, but the effect of trade tariffs on goods going into China and the US has slashed performance.
The firm stuck to its target of improving comparable sales by between four and six per cent.
Overall sales for the quarter are expected to come to about €4.7bn (£4.23bn).
The firm’s so-called connected care business was hit by “ increasing headwinds from tariffs and a delay in the impact of the mitigating actions”.
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Philips chief executive Frans van Houten added: “We will drive further strong mitigating actions to accelerate the improvement in these businesses.”
He reassured investors: “We continue to see good growth momentum across our businesses.”