After the Dutch gadget manufacturer Philips released better-than-expected second-quarter profits, its stock rose more than 10.5% in early trading on Monday.

By 9:32 a.m. London time, the stock had reduced gains marginally and was trading up 10.45%.

Similar group sales increased by 2% to 4.5 billion euros ($4.88 billion), driven by robust demand in North America despite a decline in sales in China.

The firm, which produces electronic toothbrushes and other personal care items as well as medical gadgets, reported a 9% increase in similar order intake throughout the course of the three months.

According to Philips, growing U.S.-China tensions and Beijing’s push for self-sufficiency in vital technology, particularly healthcare, are contributing factors to the declining demand in China. It did note, though, that the nation is still a “fundamentally attractive growth market.”

The “robust” second-quarter performance, according to CEO Roy Jakobs, gave him “strong confidence” that the business would achieve its full-year estimate of comparable sales growth of 3-5%, CNBC reported.

In a statement, Jakobs said, “We achieved strong margin improvement within a challenging macro environment, supported by our productivity program, solid operational cashflow due to improved working capital management, and comparable sales growth in line with our plan.”

Over the time, the business recorded a variety of cost reductions, including 195 million euros in productivity savings from operating model savings of 57 million euros, 71 million euros in procurement savings, and 67 million euros in savings from other initiatives.

According to Reuters at the time, Philips started a reorganisation in 2022 that would eliminate about 10,000 positions, or 13% of the company’s employment as of January of last year.

Simultaneously, Philips announced that it had reached a settlement of $1.1 billion for the personal injury lawsuits involving Respironics and the medical monitoring class action in the United States.

The business started recalling its defective sleep apnoea devices in June 2021 because of health concerns, and this settlement is related to those products.

According to Jakobs, the settlement gives the US lawsuit “finality” and will enable the business to concentrate once more on innovation. There are still unresolved cases outside of the US.

(Adapted from CNBC.com)

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