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Philips slashes sales

by on18 October 2021

Global supply chain issues

Dutch health technology company Philips cut its outlook for sales and profit growth this year and said the global supply chain problems that added to its growing list of worries in the third quarter would likely intensify.

Philips said comparable sales dropped 7.6 percent in the July-September period to 4.2 billion euros as a shortage of electronic components such as memory chips and a lack of shipping containers hampered production and delivery.

Chief Executive Frans van Houten said that memory chip producers could not keep up with Philips’ increased demand. Orders for its products ranging from electric toothbrushes to patient monitoring systems rising 17 percent last quarter.

Ships transporting Philips’ products were also backed up in ports worldwide as international trade rapidly recovered from the COVID-19 induced slump.

“We expect the port congestion to be temporary, while it could take until the second half of next year to get the shortage of chips under control”, Van Houten said.

The impact of the supply chain problems will likely increase to 200 million euros in missed sales in the final quarter of 2021. The CEO said, up from 150 million euros in the third quarter.

Although the issues will probably still hit sales into 2022, Van Houten said he expected growth to return next year.

Adjusted earnings before interest, taxes and amortisation (EBITA) down 25 percent in the third quarter to 512 million euros, slightly above analysts’ expectations.

Last modified on 18 October 2021
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