Philips provides update on its financial performance in Q4 2021
January 12 2022 - 1:00AM
Philips provides update on its financial performance in Q4 2021
January 12, 2022
Amsterdam, the Netherlands – Royal Philips
(NYSE: PHG, AEX: PHIA), a global leader in health technology, today
provided an update on the fourth-quarter 2021 and full-year 2021
financial results.
Group sales for the quarter are expected to be approximately EUR
4.9 billion, which is around EUR 350 million lower than Philips’
earlier expectations. This is mainly due to intensified global
supply chain shortages (primarily related to electronic components
and freight capacity), as well as the postponement of customer
equipment installations. The comparable sales [1] decline was
approximately 10%, mainly due to these effects and the impact of
the earlier announced Philips Respironics recall.* Group Adjusted
EBITA [2] for the quarter is expected to be approximately EUR 650
million, which is approximately 13% of sales, impacted by the
decline in sales and higher supply costs.
Consequently, Group sales for the full year 2021 are now
expected to be approximately EUR 17.2 billion, resulting in an
expected Group comparable sales decline of approximately 1% for the
year. The supply chain headwinds combined with the impact related
to the Philips Respironics recall* amounted to an impact of
approximately 5 percentage points on the Group’s full year
comparable sales. Group Adjusted EBITA for the full year is
expected to be around EUR 2.1 billion, or approximately 12% of
sales.
Group comparable order intake growth in the fourth quarter has
remained robust with 4% growth driven by double-digit-growth in the
Diagnosis & Treatment businesses, resulting in 4% growth for
the full year 2021. This further builds on the high-single-digit
comparable order intake growth in Q4 2020 and full-year 2020.
“We continue to see good demand for our innovative products and
solutions, resulting in an all-time high order book,” said Frans
van Houten, CEO of Royal Philips. “However, we faced significantly
intensified global supply chain issues across our businesses, in
addition to customer postponement of equipment installations in
hospitals. We are closely working with suppliers and governments to
address the shortages in the healthcare supply chain and ensure
they recognize the importance of prioritizing life-saving medical
equipment.”
Group restructuring, acquisition-related and other charges in
the fourth quarter are expected to amount to EUR 420 million, which
is EUR 315 million above the previously guided charges due to a
further increase of the field action provision related to the
voluntary Philips Respironics recall notification* (see below) and
a provision for quality actions and other matters in the Connected
Care businesses.
Update on
voluntary Philips
Respironics recall
notification*Philips Respironics is
increasing the field action provision by around EUR 225 million,
mainly due to the higher volume of devices now requiring
remediation and increased supply costs. Philips Respironics
expanded the scope to certain older devices in the interest of
patients and in alignment with the relevant competent authorities
and now expects to remediate a total of approximately 5.2 million
registered devices globally.
“Patient well-being is at the heart of everything we do at
Philips, and we aim to get a solution to patients as fast as
possible,” said Frans van Houten. “To date, Philips Respironics has
produced a total of approximately 1.5 million repair kits and
replacement devices, of which approximately 700,000 have reached
customers. I am also encouraged by the positive VOC test results to
date for the first-generation DreamStation devices, which we
published in December 2021 [3].”
Philips will discuss today’s announcement in a conference call
from 09.00 to 09:30 am CET, January 12, 2022. The fourth-quarter
and full-year 2021 financial results will be reported on January
24, 2022.
* Recall notification in the
US/field safety notice outside the US.
[1] Comparable sales exclude the effect of
currency movements and acquisitions and divestments (changes in
consolidation). Philips believes that comparable sales information
enhances understanding of sales performance.[2]
Adjusted EBITA is defined as Income from operations (EBIT)
excluding amortization of acquired intangible assets, impairment of
goodwill and other intangible assets, restructuring charges,
acquisition-related costs and other one-time charges and
gains.[3] Philips Respironics continuous to make good
progress with the comprehensive test and research program to better
assess and scope potential patient health risks related to possible
emission of particulates from degraded foam and certain volatile
organic compounds (VOCs). In December 2021, Philips provided an
update on the positive VOC test results to date for the
first-generation DreamStation devices. The first-generation
DreamStation devices represent the majority of the registered
affected devices. Further testing is ongoing.
For further information, please
contact:
Steve KlinkPhilips Global Press OfficeTel.: +31 6
10888824E-mail: steve.klink@philips.com
Derya GuzelPhilips Investor RelationsTel.: +31 20 59
77055E-mail: derya.guzel@philips.com
About Royal PhilipsRoyal Philips (NYSE: PHG,
AEX: PHIA) is a leading health technology company focused on
improving people's health and well-being, and enabling better
outcomes across the health continuum – from healthy living and
prevention, to diagnosis, treatment and home care. Philips
leverages advanced technology and deep clinical and consumer
insights to deliver integrated solutions. Headquartered in the
Netherlands, the company is a leader in diagnostic imaging,
image-guided therapy, patient monitoring and health informatics, as
well as in consumer health and home care. Philips generated 2020
sales of EUR 17.3 billion and employs approximately 78,000
employees with sales and services in more than 100 countries. News
about Philips can be found at www.philips.com/newscenter.
Forward-looking statements This release
contains certain forward-looking statements with respect to the
financial condition, results of operations and business of Philips
and certain of the plans and objectives of Philips with respect to
these items. Examples of forward-looking statements include
statements made about the strategy, estimates of sales growth,
future EBITA, future developments in Philips’ organic business and
the completion of acquisitions and divestments. By their nature,
these statements involve risk and uncertainty because they relate
to future events and circumstances and there are many factors that
could cause actual results and developments to differ materially
from those expressed or implied by these statements.
This press release contains inside information within the
meaning of Article 7(1) of the EU Market Abuse Regulation.
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