Philips says supply chains recovering in China, but sees H1 risks

Credit: REUTERS/Piroschka Van De Wouw

By Bart H. Meijer

AMSTERDAM, March 4 (Reuters) - Philips' PHG.AS supply lines in China are recovering from shutdowns caused by the coronavirus outbreak, but the disruption will hit first quarter and potentially second quarter results, the CEO of the healthcare equipment maker said on Wednesday.

Frans van Houten said Philips had seen demand for its CT scanners and respiratory devices rise as a result of the outbreak, and its factories in China were operating at 80% of capacity.

"In China, we have received dozens of extra orders for CT scanners", he told reporters at the company's Amsterdam headquarters. "We also see an increase in demand for other diagnostic equipment and respiratory devices."

Philips has six factories in China, producing a range of products including ultrasound machines, respiratory masks, and CT scanners, as well as electric shavers.

The Dutch company in February warned disruption caused by the virus outbreak would hurt first quarter earnings, without indicating how badly. L5N2AP27R

Van Houten repeated that warning on Wednesday.

Chinese consumers are "at home and don't go to the store, while online sales in China were hurt in February as purchases could not be delivered," he said.

"This situation has improved, but it's too early to say how March will develop."

"If our factories stay at 80%, instead of going to full capacity, we will have a problem in the second quarter as our stocks will dry up."

Philips does not release separate sales figures for China. It has 8,000 employees there.

(Reporting by Bart Meijer; Writing by Toby Sterling; Editing by Louise Heavens and Mark Potter)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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