The supply problems Phillips had to deal with last year appear to be easing. Therefore, experts generally expect better financial performance for Dutch companies. But investors and analysts alike will want news on Monday, when Philips reports its second-quarter results, about the massive recall that has plagued the medical technology group for two years.
In the summer of 2021, it was announced that Philips had to recall millions of apnea devices worldwide because the sound absorbing foam could collapse. These problems have already cost the company a lot of money in repairs, but potential damage claims could also be costly. Earlier this year, the company set aside more than 500 million euros for claims from the United States.
Philips itself has repeatedly stressed that it is on track to replace or repair defective devices for sleep apnea patients. Still, there are some issues related to the recall that could still cause nasty surprises, ING analysts said in a preview. They are still awaiting completion of the recall, a settlement with the U.S. Department of Justice, and other agreements regarding damages.
Recalls aren’t the only problem with Philips. For example, in recent years chip supply issues have meant the company can produce fewer products than it can order. The group announced further job cuts and restructuring in October and earlier this year to cut costs. As a result, a total of 10,000 jobs will be lost over the next few years.
Meanwhile, things seem to be improving. When it released its first-quarter figures in April, Phillips said sales were up as it successfully produced more. Analysts believe sales should increase again on a comparative basis in the second quarter. At the same time, profits are expected to exceed the previous year.
https://nltimes.nl/2023/07/23/experts-expect-philips-financial-results-improve-burdened-apnea-device-recalls Experts expect Phillip’s performance to improve at burden of recall of apnea devices