Philips Clocks 4% Comparable Sales Decline In Q1 Amid Supply Chain Headwinds, Respironics Field Action

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  • Koninklijke Philips NV PHG reported a first-quarter FY22 sales growth of 2.6% year-on-year to €3.9 billion.
  • The comparable sales declined by 4% amid significant supply chain headwinds and the Respironics field action consequences. On April 8, Philips Respironics and certain of Philips' U.S. subsidiaries received a subpoena from the U.S. Department of Justice to provide information related to events leading to the Respironics recall.
  • The comparable order intake rose by 5%, driven by the Diagnosis & Treatment businesses and Hospital Patient Monitoring.
  • Comparable sales for Diagnosis & Treatment businesses declined 2%, with high-single-digit growth in Image-Guided Therapy, offset by declines in Ultrasound and Diagnostic Imaging due to electronic component shortages. The comparable order intake for the Diagnosis & Treatment businesses increased by 7%, with double-digit growth in Image-Guided Therapy and mid-single-digit growth in Ultrasound and Diagnostic Imaging. The adjusted EBITA margin contracted to 5.9% from 8.7% a year ago.
  • The comparable sales in the Connected Care businesses declined 21% Y/Y due to Respironics field action consequences. The Adjusted EBITA margin amounted to 0.4% versus 12.9% a year ago, mainly due to the decline in sales and supply chain headwinds, partly offset by cost savings.
  • The Personal Health businesses recorded a comparable sales growth of 8% Y/Y due to double-digit growth in Oral Healthcare. The adjusted EBITA expanded 130 bps to 15.3%, mainly due to increased sales.
  • Philips Respironics has more than tripled its weekly production output than 2020.
  • Philips Respironics raised the field action provision by €165 million, mainly due to the higher volume of registered devices eligible for remediation and higher communication costs.
  • Due to lower sales and supply chain headwinds, the adjusted EBITA contracted 330 bps to 6.2%. 
  • Philips reported €227 million in operating cash outflow. 
  • Price Action: PHG shares traded lower by 11.4% at $26.87 in the premarket session on the last check Monday.
  • Photo Via Wikimedia Commons
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