Philips shifting 'hundreds of millions' of production due to trade war

The trade war between Washington and Beijing is forcing Dutch health technology company Philips to make a move.

Continue Reading Below

That move involves taking "hundreds of millions" of euros worth of production from the United States to China, and vice versa, to avoid punitive tariffs, according to Reuters.

Philips, whose healthcare products range from high-tech toothbrushes to medical imaging systems, stuck to an earlier prediction that increased trade tariffs would cut around 60 million euros ($69 million) from core profits this year.

But the effects of the trade war go beyond tariffs, Chief Executive Frans van Houten said it is hitting consumer confidence in China, slowing demand for consumer healthcare products in the world's second-largest economy.

Strong demand for hospital equipment will outweigh the weakness of the consumer market in China where sales are still expected to grow.

Overall, Philips held on to its target for total comparable sales growth of 4 to 6 percent per year until 2020.

CLICK HERE TO GET THE FOX BUSINESS APP

Philips reported comparable sales growth of 3 to 5 percent for its two largest businesses, which make hospital equipment and personal healthcare products.

Philips expects rising life expectancy and associated chronic diseases to lead to growing demand for devices that allow patients to stay at home, while their data is monitored.