The parts supply problems that Philips faced last year seem to be less. Analysts generally believe the improvement in the Netherlands company’s financial results. But investors and analysts are equally focused on news of a major recall that has dogged the medical technology group for two years when Philips releases its second-quarter performance on Monday.
In the summer of 2021, it was announced that Philips had to recall millions of breathing devices worldwide because the sound-absorbing foam could crumble. These issues have already cost the company a lot of money in repairs, but potential damage claims can also be costly. Earlier this year, the company set aside more than half a billion euros for claims from the United States.
Phillips emphasized on several occasions that it is better to replace or repair defective devices in sleep apnea patients. However, several issues surrounding the recall could still cause unpleasant surprises, ING analysts wrote in the preview. They are still awaiting a final decision on the recall, a settlement with the US Department of Justice and other agreements on damages.
Recalls aren’t the only issue at Philips. In recent years, the company has been able to produce fewer products than ordered, for example, due to problems with supplying chips. The group announced further layoffs and restructuring in October and earlier this year to cut costs. As a result, a total of 10,000 jobs will disappear in the coming years.
Now the situation seems to be improving. In a presentation of first-quarter figures in April, Philips said it had already succeeded in increasing production, so turnover had increased. Analysts expect earnings to pick up again on a similar basis in the second quarter. They expect the profit to be higher than the previous year.
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