Status: October 18, 2021 12:12 p.m.
Problems with supply chains and a ventilator recall are causing problems for the medical technology company Philips. Sales and profits fell significantly – and the outlook is also clouded.
The Dutch company Philips is no longer so optimistic about business this year. The company lowered its forecast today when it released its latest quarterly results. Sales growth in the low single digits and a “modest” improvement in the adjusted profit margin are now expected. This corresponds to the lower end of the range previously forecast.
Earnings and sales fell significantly for the third quarter, sales fell by 7.6 percent to 4.2 billion euros, and operating profit collapsed by a quarter. The company thus disappointed the experts’ expectations.
Problems with the foam
In addition to delivery bottlenecks, the Amsterdam-based company is also concerned with a recall campaign for ventilators. In June, Philips had to recall up to four million devices designed to prevent breathing pauses in sleep (sleep apnea) because a foam used in them could become carcinogenic over time. CEO Frans van Houten had already announced in July that it could take up to twelve months for all defective devices to be replaced or repaired.
However, the recall only applies to the USA, for the rest of the world Philips only issued a safety notice. The group has set aside a total of around half a billion euros for the costs incurred, which also has an impact on profits.
The group specializes primarily in medical technology products, particularly in the areas of cardiology, emergency medicine and health care. The company recently sold its household appliances business such as vacuum cleaners and coffee machines to the Hillhouse Capital investment fund from China for around 3.7 billion euros.