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Author: Bart H. Meijer
AMSTERDAM (Reuters) – Philips shares fell 15% on Wednesday, the worst day-to-day decline in more than 20 years, after the Dutch health technology team warned that supply chain problems would cause gains and spread fan reminders.
Philips recalled 4 million machines for its breathing apparatus last year, believing it could degrade a type of foam used in devices and become toxic. It has now increased its estimate by one million and increased its recovery provision by 45% to 725 million euros.
“The extended delay is a big negative, because it also expands the risk of litigation,” said ING analyst Marc Hesselink.
The current provision does not cover the possible costs of litigation, with Philip facing more than a hundred lawsuits. Fears of a large claims bill have already depreciated Philips ’market value by around € 15 billion in the last nine months.
In addition to the extended memory, Philips also reduced its pre-interest, tax and amortization (EBITA) earnings estimate by almost 40% in the fourth quarter to around € 650 million ($ 739 million) as it continued to look for memory chips. and other parts.
The double whammy of bad news lost more than 4.5 billion euros ($ 5.1 billion) in market value, the worst day of the stock market since 1998, when it was still a large conglomerate selling light bulbs, TVs and CD players.
Today, specializing in medical equipment and other health care products, Philips initially saw an increase in demand in the COVID-19 pandemic, but the global shortage of semiconductors and other electronic components has revealed it.
CEO Frans van Houten said these shortages have put a heavy brake on sales in recent months.
“We had a shortage of various components and saw port congestion, sometimes up to 2 or 3 weeks. All this meant that our manufactures were unable to reach customers on time,” he said.
Comparable sales fell by 10% a year to € 4.9 billion, Philips said, as hospitals had to delay the installation of equipment due to a lack of parts.
($ 1 = $ 0.8765)
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