Philips Is Considering Local Production Because Of Global Trade Strains
Philips is Considering local Production because of Global trade Strains. Philips is likely to produce more locally to counterbalance global trade strains. For example, by making products in China itself, the health technology group is circumventing high trade tariffs.
Philips CEO Frans van Houten stated this in a statement on the quarterly figures.
Philips suffered a lot from adverse currency impacts in the third quarter,
partly due to the sharp reduction of the Turkish lira and the Argentine peso.
The company continued to increase its revenues, but turnover did not rise as much as analysts had expected.
According to Van Houten, the impact of the trade war is so far “modest”.
But that is mainly because the levies have only just started.
In addition to additional local production, targeted price increases in particular markets must help offset the adverse consequences.
The group adheres to its previously set financial targets.
Another concern for Philips is the Brexit because there is still no deal about the exit and the future relationship between the UK and the EU.
Van Houten is worried that his company will soon have to remove production from the United Kingdom.
New contracts with hospitals
Philips recently managed to win many new agreements with, for example, hospitals.
In the area of diagnosis and treatment, robust growth was also achieved last quarter.
The sales at the personal care division also went significantly better than earlier this year,
but Van Houten notes that he had counted on a vigorous recovery here.
Philips suffered a headwind earlier this year in China,
due to lower demand for air purification systems and inventory problems.
The total turnover amounted to 3.8 billion pounds, against 3.6 billion pounds a year ago.
The adjusted operating result went from 470 million pounds to 502 million pounds.
Under the line, Philips held 258 million pounds, with a net profit of 373 million pounds in the third quarter of 2017.
This reduction was due to the loss of the interest in the former lighting division Signify.