Philips previews Q3 performance  

AMSTERDAM – Philips expects to record a EUR 1.3 billion non-cash charge in the third quarter for the impairment of goodwill of its Sleep & Respiratory Care business due to revisions to the financial forecast of the business. 

The company says the drivers for the revised forecast include current assumptions regarding the estimated impact of the proposed consent decree and changes to the pre-tax discount rate. 

Philips announced in July that it had begun discussions with the U.S. Department of Justice, acting on behalf of the U.S. Food and Drug Administration, on the terms of a proposed consent decree to resolve identified issues related to its recall of certain CPAP devices. 

Other updates: 

• Philips says its performance in the third quarter was largely impacted by continued supply chain challenges that were more significant than anticipated, impacting deliveries and customer installations. As a result, it expects Group sales to be about EUR 4.3 billion with a comparable sales decline of about 5%. The company expects the Connected Care business, which includes the Sleep & Respiratory Care business, to show a mid-teen decline in sales. 
• As a consequence of lower sales, Philips expects Group adjusted EBITDA for the quarter to be about EUR 210 million or about 5% of sales. 
• It expects comparable order intake in the quarter to decline about 6% on the back of strong 47% growth in the quarter last year. 
• Philips expects to record a non-cash charge in the quarter of approximately EUR 165 million, as a consequence of the earlier announced initiative to enhance productivity in R&D by shifting the focus to fewer and better resourced projects in the innovation pipeline. 

Looking ahead to the fourth quarter, Philips still expects a better second half of the year, compared to the first half of 2022. However, the company sees prolonged supply chain disruptions and a worsening macro-environment. Consequently, Philips now expects a mid-single-digit comparable sales decline for the fourth quarter with a high-single-to-double-digit adjusted EBITA margin range.