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ROUNDUP: Supply chain issues and provisioning are piling up Philips for the quarter

Wednesday, 01/12/2022 11:02 AM from

dpa-AFX

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Philips headphones connected to a smartphone. pixabay.com

AMSTERDAM (dpa-AFX) – The medical technology group Philips continues to struggle with global supply chain problems. In addition, there are increasing financial burdens due to a product recall. After a weak final quarter, Siemens’ competitor (Siemens share) Healthineers will therefore no longer meet its most recently lowered annual forecast. This caused long faces on the stock exchange, the share was beaten on Wednesday morning at the end of the EuroStoxx 50 .

Philips continues to register high demand, which resulted in a record order backlog, said CEO Frans van Houten, according to a statement on Wednesday in Amsterdam. “Nevertheless, we found ourselves confronted with considerably more severe problems in the global supply chain in all of our business areas.”

Above all, the lack of chips is a burden, but also the longer times in transport logistics. In addition, there are delays in the installation of hospital equipment, this is mainly due to the stresses caused by the pandemic in the hospitals, the manager added during a telephone analyst conference. The group is working closely with suppliers and clinics to eliminate these bottlenecks.

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Philips plans to publish the final figures for the past year on January 24th. Then there will also be statements about the year 2022, said van Houten. However, the manager was already getting ahead a little and stated that he was hoping for certain catch-up effects in the coming quarters.

Not only the supply chain difficulties, but also the problematic ventilators have been preoccupying Philips for months. In June last year, the US subsidiary Philips Respironics recalled certain sleep and ventilators because a part made of polyurethane foam could decompose and become toxic.

The group is now working closely with the FDA in the United States, tests are being carried out on both sides for possible health risks. The group announced the first encouraging interim results in December, but many more extensive studies of possible health risks are necessary, according to van Houten.

While the Group’s own studies are likely to continue into the second quarter, Philips increased its provisions for this by around 225 million euros in this context. Reason: More machines would have to be revised than previously thought. In coordination with the authorities, certain older devices are to be replaced.

Worldwide, a total of 5.2 million devices are likely to be affected. The appropriate capacities for this are available, said van Houten, and the entire recall program is expected to be completed in the fourth quarter of this year. The group is now not ruling out further provisions in this context or because of legal disputes./tav/mne/mis

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