Philips sales hit by Covid, respirator recall

Dutch health technology firm Philips posted big drops in fourth quarter sales and profit Monday, as a faulty respirator recall and supply chain issues weighed on the company.

The Amsterdam-based firm, which last year sold off its domestic appliance arm to focus on medical equipment, said sales came in at 4.9 billion euros ($5.5 billion) in October through December, a 10 percent drop compared to a year earlier.

Fourth quarter profits fell from 607 million euros to 151 million euros.

“Sales were impacted by several headwinds,” Philips chief executive Frans van Houten said in a statement.

These were “supply chain challenges, postponement of equipment installations in hospitals related to Covid-19, and the consequences of the Respironics field action,” Van Houten said.

Philips has set aside a further 725 million euros for a recall of faulty respiratory equipment that puts users at risk of inhaling toxic foam.

“Patient well-being is at the heart of everything we do at Philips,” Van Houten said.

“We remain extremely focused on repairing and replacing the devices related to the Philips Respironics recall notification.”

The devices are mainly for use in the home for patients with problems such as sleep apnoea, a disorder in which breathing stops and starts.

Philips recalled them in June after announcing that users were at risk of inhaling or swallowing pieces of degraded sound-dampening foam.

The company said full-year sales fell from 19.5 billion euros in 2020 to 17.2 billion in 2021.

Philips expects to resume growth this year, though in the short term it expects “significant volatility and headwinds” due to the pandemic and supply chain issues, Van Houten said.

Businesses worldwide have struggled with supply chain issues, with shortages in key components such as microchips.