Trade war worries Philips as it banks on China growth

CEO sees negative knock-on effects of US-China trade war

File photograph

File photograph

 

Philips is worried about rising trade tensions between the US and China, said the Dutch health-technology company that is banking on continuing Chinese demand for its high-end medical equipment.

Strong demand from Chinese hospitals for its ultrasound machines, medical scanners and other equipment helped Philips’ first-quarter results beat analyst expectations on Monday, but the simmering trade dispute between the US and China could threaten future earnings.

“So far the effects are modest, but we are worried about the trade tensions,” chief executive Frans van Houten said.

“We don’t expect any tariffs to be imposed on medical equipment, but we see indirect effects through the rising cost of commodities such as aluminium and steel. We can’t isolate ourselves from that, nor from the effects on economic confidence overall.”

Growth in the diagnosis and treatment division was especially strong in China, where Philips achieved double-digit growth. “We expect to maintain this growth rate for the rest of the year,” van Houten said. “All signals are positive and we have no reason to expect a slowdown.”

Overall, core profit in the first three months of the year rose 15 per cent to €344 million on comparable sales growth of 5 per cent. – Reuters