Koninklijke Philips Stock: Shares Plunge on Weak China Outlook

Philips experienced a dramatic stock decline of over 12% on Wednesday, with shares falling to €23.60 on the Euronext Amsterdam exchange. The steep drop was triggered by disappointing financial projections and challenging market conditions, particularly in China. The company reported total revenue of €18 billion for fiscal year 2024, representing merely 1% growth, while the fourth quarter resulted in a substantial net loss of €333 million. This downturn was primarily attributed to a double-digit revenue decline in the Chinese market, where ongoing anti-corruption measures have significantly delayed order processing and hampered operational activities.

Future Performance Concerns

Looking ahead, Philips projects a further deterioration in business conditions, forecasting a mid-single-digit revenue decline for the first quarter of 2025. The company's annual outlook remains conservative, with expected revenue growth of just 1-3% for 2025. While the adjusted EBITA margin is anticipated to improve to 11.8-12.3%, persistent challenges in the crucial Chinese market continue to weigh on performance, with predictions of sustained mid-to-high single-digit declines in the region. This cautious outlook has significantly impacted investor confidence, leading to a breach of key technical support levels in the stock's performance.