Shares of Philips dropped 8% to their lowest level since 2012 after the Dutch tech company issued its second profit warning this year, forewarning that supply chain problems will impact sales and third-quarter profits.
In a financial update to investors posted on Wednesday, the Amsterdam-headquartered firm
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explained that continued supply chain challenges were “more significant than anticipated in the quarter,” and have hit expected sales for the third quarter.
The group pushed down its expected adjusted earnings before interest, taxes and amortisation (EBITA) to €210 million ($203.8 million) or approximately 5% of sales.
The stock dropped to lows of €14.60 on Wednesday.
Philips has also written down €1.3 billion in value of its sleep apnoea business, which was the “best estimate” according to Chief Executive Officer Frans van Houten in a call with analysts on Wednesday morning.
Last year, the firm recalled millions of ventilators for those struggling with sleep apnoea over fears that sound-reducing foam in the machines could disintegrate and enter users’ airways.
The company said the reasons for the write down “include current assumptions regarding the estimated impact of the proposed consent decree and changes to the pre-tax discount rate.”
“Next step will be the 2025 targets which became very challenging especially now that the Sleep & Respiratory care business is not expected to fully recover post the recall,” said ING analyst Marc Hesselink, in a note to clients:
The group also dampened its outlook for the fourth quarter, saying it expects a mid-single-digit comparable sales decline from “prolonged supply chain disruptions and a worsening macro-environment.”
The company will report its final results on Oct. 24.
Van Houten will step down early at the end of this week after over 11 years at the helm. He will be replaced by Roy Jakobs, who is currently overseeing the fallout from the faulty respirators.