Tue, Jul 23, 2019 - Page 10 News List

Philips’ Q2 results prove supply chain revamping pays off

Bloomberg

Royal Philips NV’s efforts to revamp supply chains to avoid tariffs from the US-China trade dispute are paying off, with the Dutch healthcare company reporting better-than-estimated profit.

Chinese demand for the latest diagnostic equipment and image-guided therapy devices drove a double-digit percentage increase in orders in the second quarter, the Amsterdam-based company said yesterday.

Philips hit the top end of its sales growth target range, with an increase of about 6 percent, beating the 4.5 percent uptick expected by analysts.

While chief executive officer Frans van Houten signaled the ongoing trade dispute remains at the top of his concerns this year, results show Philips is containing the fall out for now.

The company has created local production hubs to serve the Chinese and US markets to avoid tariffs on such products as ultrasound gear and electric toothbrushes.

Philips predicted a stronger second half of the year.

“We are moving towards a regional manufacturing hub strategy as we manufacture in each of these large continents, making us more responsive than we might have been before,” Van Houten said in a Bloomberg interview.

The CEO is betting investment in innovation and an efficiency drive will see the company through any economic slowdown.

Quarterly earnings before interest, taxes, and amortization of 549 million euros (US$615 million) beat the 542 million euro estimate of analysts in a company compiled consensus.

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