Philips Cuts 2020 Outlook After Ventilator Contract With US Health Department Cancelled
August 31 2020 - 5:04AM
Dow Jones News
By Cecilia Butini
Koninklijke Philips NV said Monday that it has cut its outlook
on earnings before interest, taxes and amortization margin for the
full year after the cancellation of a contract to provide 43,000
ventilators to the U.S. Department of Health and Human
Services.
The Dutch medical-technology company said it now expects to post
an adjusted Ebita margin around the level of last year, having
previously guided for an improved margin compared with 2019.
The company said its April 2020 contract to provide 43,000
bundled EV300 ventilators to the U.S. Department of Health and
Human Services until the end of the year was partly terminated by
the department itself. The company will complete ventilator
deliveries for the month of August, totaling a supply of 12,300
machines, but won't deliver the remaining 30,700 ventilators on the
contract, it said.
Philips's ventilator production increased fourfold since March
2020 as it added production lines in the U.S, it said.
"The reduction in our ventilator deliveries to HHS will
obviously impact Philips' financial performance, but we continue to
expect to return to growth and improved profitability in the second
half of the year, starting in the third quarter," Chief Executive
Frans van Houten said.
Shares at 0824 GMT were down 1.2% at EUR40.59.
Write to Cecilia Butini at cecilia.butini@wsj.com
(END) Dow Jones Newswires
August 31, 2020 04:49 ET (08:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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