Dutch health technology company Philips lowered its outlook on Monday for sales and profit growth in 2021, as a massive recall of respiratory devices and a global shortage of electronic components hit its third-quarter earnings.
Comparable sales in the July-September period fell 7.6% from last year as Philips started the recall of up to four million of its respiratory devices and ventilators, as parts might degrade and become toxic.
Revenue was also lower due to global supply chain problems, as a shortage of electronic components and parts meant it took Philips longer than expected to turn orders into sales.
"Supply chain volatility has intensified globally," Chief Executive Frans van Houten said. "We expect this headwind to continue in the fourth quarter."
As a consequence, the Amsterdam-based company now expects "low single-digit" growth in comparable sales for this year, which is the lower end of its previous guidance, with only a "modest" improvement of its profit margin.
Adjusted earnings before interest, taxes and amortization (EBITA) fell 25% in the third quarter to 512 million euros ($592.7 million), while analysts in a company-compiled poll on average had predicted a drop to 490 million euros.