Dutch health technology company Philips said that it expects sales to recover strongly in the second half of the year. In the coming months, a steep decline due to global shortage of parts is likely to persist. Earlier this month they had warned that supply chain woes would hit their profit. A ventilator recall needed to be expanded.
Chief Executive Officer Frans van Houten said that they expect to start the year with a comparable sales decline. This is followed by a recovery in the second half of the year. This should lead to between 3% and 5% growth in comparable sales in 2022. There is a 40 to 90 basis points improvement in the adjusted earnings before interest, tax and amortisation (EBITA) margin. Overall growth will be held back by the sleep & respiratory care unit. Amid concerns that a type of foam used in the devices could degrade and become toxic. He also added that the growth, excluding this unit, is expected to reach 5% to 6%.
Philips has set aside 725 million euros for repairing and replacing some 5 million devices worldwide. Fears of a large claims bill already lopped around 15 billion euros off Philips’ market value, and that too in the past nine months. The Amsterdam-based company said its comparable sales fell 10% in the fourth quarter of 2021. Adjusted EBITA dropped 35% to 647 million euros, in line with provisional numbers released on Jan. 12.