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Philips chops back US tariff bill / Photo: LEX VAN LIESHOUT - ANP/AFP/File
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Philips chops back US tariff bill
Dutch medical equipment manufacturer Philips said Tuesday that the impact of US tariffs would be much less than it initially estimated, sending its share price surging.
The company had originally estimated in April that US tariffs could cost it 250 to 300 million euros this year after President Donald Trump unveiled a 20 percent tariff rate for goods from the European Union.
Brussels and Washington reached a deal over the weekend that will see goods from the EU face a baseline 15 percent levy when imported into the United States.
It said Tuesday it now expects between 150 and 200 million euros impact from US tariffs this year.
Chief executive Roy Jakobs said Philips updated "the guidance because we have certainty now around what is happening between the EU and the US."
Shares in Philips jumped more than 10 percent during morning trading, while the Amsterdam market rose around 0.4 percent overall.
The trade deal has come under widespread criticism in Europe as having been lopsided, saddling its manufacturers with a costly 15 percent rate with little in return from the US as certainty is a relative concept given Trump's propensity to change positions.
Jakobs said that certainty "is what we value in" in the deal, while acknowledging "it's a painful additional cost we have to carry".
The company still targets a one to three percent increase in annual sales.
Second quarter net profit fell by 47 percent to 240 million euros, but last year's performance was boosted by exceptional income from insurance payouts linked to long-running issues with its sleep apnoea machines.
Sales slid by 2.8 percent to 4.3 billion euros, although they edged higher on a comparable basis that excludes currency changes. The company also noted orders rose by six percent on a comparable basis.
The appreciation of the euro relative to the dollar and other currencies has been crimping the results of European companies as their revenues abroad result in fewer euros on the balance sheet.
Long known for its light bulbs and television sets, the Dutch company has refocused its business towards medical equipment.
K.Grimaud--PS
