Koninklijke Philips NV's shares slumped after the company said it will miss profit targets due to higher trade tariffs and the underperformance of its connected care businesses.
The medical device company's stocks were down 8.88% to €37.90 as of 4:42 a.m. ET following the announcement.
The Dutch company now expects full-year adjusted EBITA margin to improve by around 10 to 20 basis points, breaking its streak of delivering at least 100 basis points in annual adjusted EBITA improvements for the past three consecutive years.
Philips said adjusted EBITA for the period will be about €583 million, or 12.4% of sales, down from 13.2% in the same year-ago period.
Meanwhile, Philips forecasts third-quarter group sales to reach about €4.7 billion, reflecting 6% comparable growth, in line with its goal of 4% to 6% comparable growth for 2017 to 2020. Net income from continuing operations will be about €210 million, the company added. According to S&P Global Market Intelligence data, analysts estimate the company's third-quarter EBIT to amount to €628.5 million.
The company noted operational improvements in the performance of its diagnosis and treatment segment, along with its personal health division. However, these improvements were offset by a "disappointing" decline in margins in the company's connected care businesses as a result of increasing setbacks from tariffs, a delay in the impact of mitigating actions, factory under-coverage and effects of unfavorable product mix, Philips CEO Frans van Houten said.
Amsterdam-based Philips is scheduled to release its third-quarter earnings report Oct. 28.
