Wednesday January 12, 2022
More and more problems
Jet-black day for Philips
An increasingly expensive recall and a significantly reduced business weigh on the medical technician Philips. And the consequences cannot yet be fully understood. Investors throw the papers out of their depots in droves.
Problems are mounting at the Dutch medical technology group Philips. Recalling millions of defective ventilators will be more expensive than expected, and now the company is also struggling with procurement problems. “We were missing components and the ports were sometimes overcrowded for two to three weeks,” admitted CEO Frans van Houten. “Our goods therefore did not reach the customers on time.” Hospitals had to postpone the installation of new equipment because parts were missing. The bottlenecks are likely to persist in the first few months of the new year, warned van Houten.
Philips’ sales fell in the fourth quarter of 2021 on a like-for-like basis by ten percent to 4.9 billion euros and were thus 350 million below its own expectations. For the year as a whole, Philips recorded falling revenues. The operating result even collapsed in the quarter by 40 percent to 650 million euros, which also means a lower Ebitda for the year as a whole.
This was also due to the increasing costs for the recall of ventilators: Philips set aside another 225 million euros for this, because the management board now assumes that it will have to repair 5.2 million instead of 4 million devices. A foam is built into the ventilators that could become toxic over time. Overall, the recall now costs the group 725 million euros – not including patient complaints. More than 100 class actions have already been filed. At the end of the year, Philips said that long-term effects were not to be expected.
Stock marketers reacted in horror to the numbers: The Philips share collapsed by 14 percent, making it the weakest value in the European Stoxx 600 index. JP Morgan analysts spoke of “another blow to the company’s credibility”. ING experts warned that the greater the number of recalled devices, the greater the risk of legal action.