(AOF) – Philips posted by far the biggest drop in the Dutch AEX index, sagging 15.22% to 28.655 euros. Electronics group specializing in health and personal care products issued a new warning on its 2021 results; again penalized by supply problems. Last year was also marked by the costly recall of sleep apnea treatment devices due to the risks they posed to the health of their owners. The associated provisions are ultimately even higher.
Philips has warned that its sales for the fourth quarter are expected to be around 4.9 billion euros, about 350 million euros lower than its earlier forecast. He had already issued a warning in October.
The Dutch firm blamed intensifying shortages in the global supply chain (mainly related to electronic components and transport capacity), as well as the postponement of customer equipment installations. Like-for-like revenue will be down 10%.
The group’s adjusted EBITDA for the quarter is expected to be around 650 million euros, or around 13% of revenue, affected by lower sales and higher supply costs.
As a result, sales for the full year 2021 are expected to be around 17.2 billion euros, down around 1% on a like-for-like basis. Adjusted EBIT is expected to amount to around 2.1 billion euros, or approximately 12% of sales. It previously targeted organic growth of less than 5% and a modest improvement in its adjusted EBITDA margin. It had reached 13.2% in 2020.
The bad news doesn’t end there. Restructuring charges in the fourth quarter are expected to amount to 420 million euros, or 225 million euros more than previously announced charges, due to a further increase in the provision for treatment device recalls sleep apnea. 5.2 million devices are now affected by fixes. The group had already recorded 500 million euros in provisions for these recalls.
The risks of these devices are as follows: the foam can degrade into particles which can enter the air circuit of the device and be ingested or inhaled by the user, and the foam can give off certain chemical gases.
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