Dutch health technology company Philips said on Monday it expects sales to recover strongly in the second half of the year, while a steep decline due to global shortage of parts is likely to persist in the coming months.
The logo of Dutch technology company Philips is seen at the company headquarters in Amsterdam, Netherlands, January 29, 2019. REUTERS/Eva Plevier/File Photosaid on Monday it expects sales to recover strongly in the second half of the year, while a steep decline due to global shortage of parts is likely to persist in the coming months.
Philips earlier this month warned that supply chain woes would hit profit and a ventilator recall needed to be expanded, sending its shares down over 15% on their worst day on the financial markets in decades. "We expect to start the year with a comparable sales decline, followed by a recovery and strong second half of the year," Chief Executive Officer Frans van Houten said in a statement.This should lead to between 3% and 5% growth in comparable sales in 2022, with a 40 to 90 basis points improvement in the adjusted earnings before interest, tax and amortisation margin, he added.
Overall growth will be held back by the sleep & respiratory care unit, which is still working on the massive recall of breathing-aid machines launched last year, amid concerns that a type of foam used in the devices could degrade and become toxic.Philips has set aside 725 million euros to repair and replace some 5 million devices worldwide, but that sum does not cover the possible costs of litigation, with the company facing more than a hundred class action suits.
The Amsterdam-based company said its comparable sales fell 10% in the fourth quarter of 2021, while adjusted EBITA dropped 35% to 647 million euros, in line with provisional numbers released on Jan. 12.Reporting by Bart Meijer; Editing by Kim Coghill and Sherry Jacob-PhillipsSubscribe to our daily curated newsletter to receive the latest exclusive Reuters coverage delivered to your inbox.
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