The need for hospital technology, which had skyrocketed at the beginning of the Corona crisis, is already falling again – and is getting the company into difficulties.
Major problems in the supply chain and the consequences of a product recall make it difficult for the medical technology company Philips. In the third quarter, sales and operating profit fell significantly, as the company announced on Monday. In addition, the group lowered its expectations for this year. For example, the competitor from Siemens Healthineers is only expecting an increase in sales in the low single-digit percentage range without the effects of takeovers or changes in exchange rates.
In the third quarter, sales fell on a comparable basis by 7.6 percent to 4.2 billion euros. The operating profit fell by a quarter to 512 million euros. The company thus disappointed the experts’ expectations. The share gave way on Monday morning.
The Connected Care segment in particular fell significantly short of expectations in the third quarter. Compared to the same period of the previous year, sales there collapsed by almost 40 percent after adjusting for special items and exchange rate effects. The management explained the rapid decline mainly with the high Corona demand in the same quarter of the previous year. Because at the beginning of the pandemic many of the company’s products were needed significantly more and now less again, the number for hospital devices for patient monitoring, for example, has decreased.
In addition, a recall of certain ventilators burdened the group. Philips had indicated possible health risks related to acoustic insulation foam in some of its devices. A total of around 3.5 million devices are said to be affected by the potential problem. CEO Frans van Houten said that the provisions of around 500 million euros did not include the possible costs of future legal disputes.
On the other hand, things were better for the company’s largest division, “Diagnosis and Treatments”, which grew by ten percent on a comparable basis. Among other things, the group benefited from strong demand for image-accompanying therapies, which posted a double-digit increase. Diagnostics with ultrasound has grown in the high single-digit range, it said.