As China's Skies Clear, Philips Sales of Air Purifiers Decline

(Bloomberg) -- China’s battle to cut notorious air-pollution levels is hurting sales of air purifiers by Royal Philips NV.

Revenue from the machines that capture harmful fine particles in homes dropped by a high-single-digit amount in China, in the second quarter, the Dutch maker of hospital scanners and medical gear said in a statement on Monday. That left distributors scrambling to adjust inventories.

“Air quality has improved faster than anticipated. It’s a good thing for the people of China so I don’t want to complain about that,” Frans van Houten said on a call. Besides, there’s always allergens and harmful pollution from furniture containing formaldehyde resin, he added.

Philips stock fell 4 percent to 35.23 euros as of 9:15 a.m. in Amsterdam. Sales growth at the personal-health division, which includes purifiers, fell short of analysts’ estimates.

While air-quality is noticeably improved in Beijing, the same can’t be said for cities across all of China, according to the CEO. Greenpeace analysis published in January showed PM2.5 concentration -- measuring harmful fine particulate matter -- fell by 54 percent in Beijing, although nationally it declined by 4.5 percent, the lowest rate since the start of China’s war on pollution.

Air-purification units for homes is just a 200 million-euro ($234 million) business for Philips, and sales of diagnostic equipment and medical-gear jumped by a “strong double-digit” amount, van Houten said on a call. He predicted an improvement in the personal-health business over the remainder of 2018.

Philips’ overall second-quarter earnings before interest, taxes and amortization increased to 482 million euros from 439 million euros a year earlier. Sales advanced on a comparable basis to 4.29 billion euros, below the company-compiled estimate of 4.32 billion euros.

©2018 Bloomberg L.P.