Philips’ shares plummet amid supply chain woes and mass recall of ventilators
Shares in Dutch conglomerate Philips plummeted 14.2 per cent on the Euronext Amsterdam Stock Exchange, after it warned earnings would suffer amid supply chain chaos.
The health technology giant, which supplies hospital equipment and healthcare devices, has also hiked the cost of its mass recall of ventilators.
In a market statement, Philips said it now expects its fourth-quarter core profits to drop almost 40 per cent to €650m as it scrambles for semiconductor chips and key materials amid trading volatility.
Comparable sales fell 10 per cent on a yearly basis to €4.9bn euros, with hospitals having to postpone the installation of equipment due to a lack of parts.
Commenting on supply chain issues, chief executive Frans van Houten told reporters: “It’s a difficult situation. We had shortages of several components and saw port congestion, sometimes up to two or three weeks. All of this meant our manufactured goods couldn’t reach customers in time.”
He also gloomily revealed supply chain problems had intensified over the fourth quarter, and were not expected to disappear in the first months of 2022.
However, the chief executive maintained guidance that growth would resume over the course of the year, despite quarterly sales dipping around €350m, taking comparable sales over 2021 down one per cent.
The supply chain problems have worsened investor sentiment, with potential backers already spooked over the recall of ventilators, which has reduced the Amsterdam-based company’s market value by €18bn over the past nine months.
Recall costs have since risen to €725m, with Philips expected to recollect and repair over one million more devices than previously anticipated
The amount does not cover the possible costs of litigation, with the company facing more than a hundred class action suits from worried patients, some of which have alleged degrading foam in the devices could cause serious health issues such as cancer.
Philips will publish full quarterly and yearly results on January 24.