By Dhirendra Tripathi
Investing.com – Philips ADRs (NYSE:PHG) tumbled 14% in premarket trading Wednesday after the Dutch company warned of a hit to its fourth-quarter profit, blaming supply chain shortages and customers choosing to delay installation of equipment for its gloomy outlook.
Philips' decision over six months ago to recall certain breathing devices and ventilators on concerns they could harm patients also continues to weigh on earnings.
The maker of medical equipment said its fourth-quarter adjusted EBITDA is expected to be 650 million euro ($741 million), down around 43% from 1.13 billion euro a year earlier. The company attributed this to falling sales and higher supply costs. As a percentage of sales, profit is down 6 percentage points on the year.
Group sales for the quarter are expected to be around 4.9 billion euro, around 350 million euro lower than its own expectations, the company said. Sales for the full year are seen at around 17.2 billion euro, down 12% from last year’s 19.5 billion euro.
The company had to make an even higher provision for the recall of ventilators, and that, coupled with supply chain headwinds, dealt a blow of 5 percentage points to the group’s full-year comparable sales.
Attempting to assuage investor concerns, the company said incoming orders grew 4% in the quarter, driven by demand for diagnosis and treatment businesses.
The company will reveal its final numbers on January 24.