Philips Warns Weaker Quarterly Sales, Profit Hit By Sleep Device Write-down

  • Koninklijke Philips NV PHG said it expects third-quarter group sales to be approximately €4.3 billion with a comparable sales decline of approximately 5%.
  • Due to the lower sales, Group Adjusted EBITA for the quarter is expected to be around €210 million or around 5% of sales.
  • In its trading update, the company said the Q3 financial performance was primarily impacted by continued supply chain challenges that were more significant than anticipated, impacting deliveries and customer installations.
  • Related: Philips Recalls Some Masks Used With Respiratory Devices Over Potential Injury Risk.
  • The company expects a mid-single-digit comparable sales decline for Q4 of 2022 with a high-single-to-double-digit adjusted EBITA margin range.
  • Philips' Diagnosis & Treatment businesses are expected to show a low-single-digit comparable sales decline, and the Connected Care businesses a mid-teen decline. The Personal Health businesses would show mid-single-digit comparable sales growth.
  • Philips' comparable order intake declined by around 6% in the third quarter, compared to strong 47% comparable order intake growth in the third quarter of last year.
  • The company expects to record a €1.3 billion non-cash charge for the goodwill impairment of its Sleep & Respiratory Care business.
  • The company also sees a non-cash charge of around €165 million in the quarter related to the earlier announced initiative to enhance productivity in R&D.
  • Looking ahead, Philips still expects a better second half of the year than the first half of 2022. However, prolonged supply chain disruptions and a worsening macro-environment will be present.
  • Price Action: PHG shares are down 8.05% at $13.71 during the premarket session on the last check Wednesday.
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