Philips Says Supply Chain Issues May Get Resolved in Second Half of 2022

Philips CEO Frans van Houten said, “We expect to start the year with a comparable sales decline, followed by a recovery.”

By Reuters | Updated: 24 January 2022 14:50 IST

Philips Says Supply Chain Issues May Get Resolved in Second Half of 2022

Philips has set aside EUR 725 million (roughly Rs. 6,130 crore) to repair 5 million devices worldwide

Highlights

Overall growth will be held back by the sleep & respiratory care unit
Philip's comparable sales fell 10 percent in the fourth quarter of 2021
Growth, excluding this unit, is expected to reach 5 percent to 6 percent

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.

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 percent 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.

Samsung Wins Patent for a Tri-Fold Smartphone With Specialised Barrier Layer for Improved Durability

This should lead to between 3 percent and 5 percent growth in comparable sales in 2022, with a 40 to 90 basis points improvement in the adjusted earnings before interest, tax and amortisation (EBITA) 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.

Growth, excluding this unit, is expected to reach 5 percent to 6 percent, Van Houten said.

Philips TAH6506BK Affordable Wireless Headphones With ANC Debut in India

Philips has set aside EUR 725 million (roughly Rs. 6,130 crore) 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. Fears of a large claims bill already lopped around 15 billion euros off Philips' market value in the past nine months.

The Amsterdam-based company said its comparable sales fell 10 percent in the fourth quarter of 2021, while adjusted EBITA dropped 35 percent to EUR 647 million (roughly Rs. 5,470 crore), in line with provisional numbers released on January 12.

Looking to buy headphones? Listen to the experts on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.