Philips is feeling the consequences of the trade war between the United States and China. Higher rates between these two countries are putting pressure on the profit margins of its Connected Care division, the company reports in a financial update. These margins will be 4.5 percent lower than expected.
According to Philips CEO Frans van Houten, “It’s disappointing that margins declined in the Connected Care businesses. This was due to increasing headwinds from tariffs and a delay in the impact of the mitigating actions, factory under-coverage as production levels were lowered to reduce inventory, and an adverse product mix impact. We will drive further strong mitigating actions to accelerate the improvement in these businesses.”
The total turnover in the third quarter is expected to be 4.7 billion euros, a year-on-year growth of 6 percent. The company result is expected to be 583 million euros. Philips will publish its final Q3 report on 28 October.