Philips reports sales decline, lowers full-year outlook

AMSTERDAM, the Netherlands – Philips reported EUR 4.2 billion in group sales for the third quarter, a 7.6% comparable decline due to headwinds caused by global supply chain challenges and the recall of certain CPAP devices and ventilators. 

The company says comparable sales decreased 39% for its Connected Care business, following, in part, a double-digit decline in Sleep & Respiratory Care in the third quarter. 

“This quarter’s sales were impacted unfavorably by intensified global supply chain issues, such as the shortage of electronic components, and the anticipated revenue consequences of the sleep recall, as we are prioritizing the remediation of affected devices in use by patients,” said Frans van Houten, CEO. “The repair and replacement program related to the sleep recall notification is under way in the U.S. and several other markets. I am conscious of the impact this is having on patients and caregivers, and we are doing everything we can to deliver a solution as fast as possible.” 

To date, Philips says it has produced a total of about 750,000 repair kits and replacement devices, of which more than 250,000 have reached customers. 

The company now expects to deliver low-single-digit comparable sales growth with a modest adjusted EBITA margin improvement for the full year 2021. 

“Looking ahead, we continue to see uncertainly related to COVID-19,” van Houten said. “Supply chain volatility has intensified globally, which already led to longer lead times to convert our strong order book to revenue in the third quarter, and we expect this headwind to continue in the fourth quarter. Based on our strong customer demand and growing order book, we expect to resume our growth and margin expansion trajectory in 2022, as we work through headwinds.”