Philips issues Q3 profit warning, takes further €1.3 billion charge

Philips HQ in Amsterdam. Photo: Philips via Wikimedia Commons

Dutch medical technology company Philips is taking a further €1.3 billion charge to offset the impact of problems with its sleep apnea equipment, the company said in a trading update on Wednesday.

Inflation and falling orders are also having an impact on the company, which now says sales will decline 5% in the third quarter of the year to €4.3 billion.

The profit warning, the first under new chief executive Roy Jakobs, sent Philips shares down 10% in early trading on the Amsterdam stock exchange to around €14. Six months ago, the company’s shares were more than €50.

Philips said it will give more details about plans to tackle the decline later this month.

‘Looking ahead, Philips still expects a better second half of the year, compared to the first half of 2022,’ the update said.

‘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 of 2022.’

Last month, a group of investors in Philips launched a claim for €16 billion for allegedly being misinformed about the extent of problems with the company’s devices to treat sleep apnea.

Philips has recalled 5.5 million machines and 17 million sleep masks worldwide after it emerged that tiny foam particles could be released during cleaning and then inhaled, while magnetic clips in the masks potentially interfere with heart pacemakers.

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