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Philips: Negative profit warning due to product recall

The Dutch health technology group Philips said it expects key earnings for the fourth quarter to fall by about 40% to 650 million euros due to the global shortage of electronic components and the effects of the mass recall of respirators.

Comparable sales fell 10% year-on-year to 4.9 billion euros, Philips said in its profit warning, due to a lack of components, a lack of transport capacity and the fact that customers are postponing their orders.

Sales were around € 350 million lower than Philips expected, with comparable sales in 2021 falling 1% from an initial estimate for a small increase.

Supply chain problems add to the concerns about the recall of the respirators, for which Philips said it has made a new provision of 225 million euros, as more devices had to be repaired, compared to initial estimates.

Philips had saved € 500 million last year on these activities, and estimated that it would replace up to 4 million ventilators and related devices worldwide due to a foam component that could deteriorate and become toxic.

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Source From: Capital

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