Shares in Dutch company Philips rose more than 10.5% on Monday morning after it reported second-quarter earnings that beat analysts’ expectations.
As of 9.32am London time, the stock had seen a slight decline, up 10.45%.
Philips reported a 2% increase in group comparable sales to €4.5 billion ($4.88 billion), mainly driven by strong demand in North America, while sales in China declined.
The company, known for its medical devices and personal care products such as electronic toothbrushes, also saw a 9% increase in comparable orders during the quarter.
Philips attributed the muted demand in China to the country’s push for self-sufficiency in critical technologies, including healthcare, amid rising tensions with the United States. Nonetheless, the company said China remains a “fundamentally attractive growth market.”
CEO Roy Jakobs expressed optimism about the company’s solid second-quarter results and reiterated his confidence in achieving the company’s full-year forecast of 3-5% comparable sales growth.
“In a challenging macroeconomic environment, we achieved strong margin improvement, supported by our productivity program, solid operating cash flow due to improved working capital management and comparable sales growth in line with our plan,” Jakobs said.
Philips reported significant cost savings during the period, including €195 million in productivity savings, €57 million from operating model efficiencies, €71 million in purchasing savings and €67 million from other programs. From 2022, the company has undergone a reorganization that will result in a reduction of approximately 10,000 jobs, or 13% of its workforce as of January last year.
Additionally, Philips announced a $1.1 billion settlement in a personal injury and medical monitoring class action lawsuit in the United States, related to its defective sleep apnea devices that were recalled in June 2021 due to health concerns.
Jakobs noted that this settlement makes the U.S. case “final,” allowing the company to refocus on innovation, although other cases remain pending outside the United States.
