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Philips expecting a profitable summer amid receding supply chain woes

Author : Pankaj Singh | Published Date : 2022-01-25 

Dutch multinational health tech corporation, Philips announced that it is banking on a strong recovery of its sales volumes during the second half of the year, despite acceding to a sharp decline caused by the global shortage of parts in the upcoming months.

Earlier in January, Phillips had warned that supply chain issues would result in a drop in profits, after which it had to expand a ventilator recall. This chain of events sent its shares spiraling over 15%, making it the company’s worst day on stock markets in decades.

Philips’ CEO Frans van Houten was quoted saying that the company will start the year on a low note, with a substantial sales decline, but this will be followed by a recovery, consequently resulting in a strong upward trend during the second half of 2022.

He further stated that Phillips should see a 3-5% growth in same-store sales in 2022, with a 40-90 basis points increase in the EBITA (adjusted earnings before interest, tax, and amortization) margin.

However, the company’s overall growth will be limited on account of the sleep & respiratory care department, which is dealing with an enormous recall of breathing-aid machines that were launched in 2021, amid fears that the foam installed in the devices could become toxic as it degrades.

Excluding costs from the sleep & respiratory care department,  growth is expected to be between 5% to 6% this year, Van Houten claimed.

Notably, Philips has set aside USD 820.41 million for repairing and replacing 5 million devices across the world, but this sum does not cover costs of litigation, as the company currently faces over a hundred class action suits.

As per provisional records released in January, the company’s comparable sales fell by 10% during the last quarter of 2021, while adjusted EBITA plunged 35% to USD 731 million.

Source Credits –

https://www.investing.com/news/stock-market-news/philips-expects-sales-to-recover-from-supply-chain-woes-after-the-summer-2745915

About Author

Pankaj Singh

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

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