(Bloomberg) — Royal Philips NV’s quarterly operating profit missed analyst estimates as the Dutch maker of respiratory gear and body scanners warned of rising supply-chain challenges, inflation and the impact of the war in Ukraine.
Philips said Monday its first-quarter adjusted earnings before interest, taxes and amortization fell to 243 million euros ($262 million), from 362 million euros a year ago. The figure fell short of an estimate of 274 million euros in a Bloomberg survey of analysts.
“We are implementing additional cost measures, as well as price increases, to mitigate the inflationary headwinds,” Chief Executive Officer Frans van Houten said in a statement.
The supply-chain issues and rising costs are adding to the company’s product woes. Philips said last week it’s investigating whether there is a link between a patient’s death and a potential malfunctioning of two of the company’s ventilators. Philips also has had to recall some of its sleep apnea devices after it was found that some of them use sound-abatement foam that can degrade and be ingested or inhaled, potentially having toxic or carcinogenic effects.
Product Woes
The company said provisions for the recall rose by 165 million euros in the quarter and the total expected units to be remediated have increased by approximately 300,000, primarily in the U.S.
The company is replacing or repairing the devices “as fast as possible,” the CEO said.
Philips recorded revenue of 3.9 billion euros in the three months through March, slightly better than expected. While the company said it’s seeing robust order growth, it warned that the supply issues, Covid in China and the war in Ukraine “may potentially impact our ability to convert our strong order book to sales.”
(Updates with CEO statement in third paragraph.)
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