January 12, 2022

Amsterdam, the Netherlands – Royal Philips (NYSE: PHG, AEX: PHIA), a global leader in health technology, today provided an update on the fourth-quarter 2021 and full-year 2021 financial results.

Group sales for the quarter are expected to be approximately EUR 4.9 billion, which is around EUR 350 million lower than Philips’ earlier expectations. This is mainly due to intensified global supply chain shortages (primarily related to electronic components and freight capacity), as well as the postponement of customer equipment installations. The comparable sales [1] decline was approximately 10%, mainly due to these effects and the impact of the earlier announced Philips Respironics recall.* Group Adjusted EBITA [2] for the quarter is expected to be approximately EUR 650 million, which is approximately 13% of sales, impacted by the decline in sales and higher supply costs.

Consequently, Group sales for the full year 2021 are now expected to be approximately EUR 17.2 billion, resulting in an expected Group comparable sales decline of approximately 1% for the year. The supply chain headwinds combined with the impact related to the Philips Respironics recall* amounted to an impact of approximately 5 percentage points on the Group’s full year comparable sales. Group Adjusted EBITA for the full year is expected to be around EUR 2.1 billion, or approximately 12% of sales.

Group comparable order intake growth in the fourth quarter has remained robust with 4% growth driven by double-digit-growth in the Diagnosis & Treatment businesses, resulting in 4% growth for the full year 2021. This further builds on the high-single-digit comparable order intake growth in Q4 2020 and full-year 2020.

“We continue to see good demand for our innovative products and solutions, resulting in an all-time high order book,” said Frans van Houten, CEO of Royal Philips. “However, we faced significantly intensified global supply chain issues across our businesses, in addition to customer postponement of equipment installations in hospitals. We are closely working with suppliers and governments to address the shortages in the healthcare supply chain and ensure they recognize the importance of prioritizing life-saving medical equipment.”

Group restructuring, acquisition-related and other charges in the fourth quarter are expected to amount to EUR 420 million, which is EUR 315 million above the previously guided charges due to a further increase of the field action provision related to the voluntary Philips Respironics recall notification* (see below) and a provision for quality actions and other matters in the Connected Care businesses.

Update on voluntary Philips Respironics recall notification*
Philips Respironics is increasing the field action provision by around EUR 225 million, mainly due to the higher volume of devices now requiring remediation and increased supply costs. Philips Respironics expanded the scope to certain older devices in the interest of patients and in alignment with the relevant competent authorities and now expects to remediate a total of approximately 5.2 million registered devices globally.

“Patient well-being is at the heart of everything we do at Philips, and we aim to get a solution to patients as fast as possible,” said Frans van Houten. “To date, Philips Respironics has produced a total of approximately 1.5 million repair kits and replacement devices, of which approximately 700,000 have reached customers. I am also encouraged by the positive VOC test results to date for the first-generation DreamStation devices, which we published in December 2021 [3].”

Philips will discuss today’s announcement in a conference call from 09.00 to 09:30 am CET, January 12, 2022. The fourth-quarter and full-year 2021 financial results will be reported on January 24, 2022.

*       Recall notification in the US/field safety notice outside the US.

[1]    Comparable sales exclude the effect of currency movements and acquisitions and divestments (changes in consolidation). Philips believes that comparable sales information enhances understanding of sales performance.
[2]    Adjusted EBITA is defined as Income from operations (EBIT) excluding amortization of acquired intangible assets, impairment of goodwill and other intangible assets, restructuring charges, acquisition-related costs and other one-time charges and gains.
[3]   Philips Respironics continuous to make good progress with the comprehensive test and research program to better assess and scope potential patient health risks related to possible emission of particulates from degraded foam and certain volatile organic compounds (VOCs). In December 2021, Philips provided an update on the positive VOC test results to date for the first-generation DreamStation devices. The first-generation DreamStation devices represent the majority of the registered affected devices. Further testing is ongoing.

For further information, please contact:

Steve Klink
Philips Global Press Office
Tel.: +31 6 10888824
E-mail: steve.klink@philips.com

Derya Guzel
Philips Investor Relations
Tel.: +31 20 59 77055
E-mail: derya.guzel@philips.com

About Royal Philips
Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health technology company focused on improving people’s health and well-being, and enabling better outcomes across the health continuum – from healthy living and prevention, to diagnosis, treatment and home care. Philips leverages advanced technology and deep clinical and consumer insights to deliver integrated solutions. Headquartered in the Netherlands, the company is a leader in diagnostic imaging, image-guided therapy, patient monitoring and health informatics, as well as in consumer health and home care. Philips generated 2020 sales of EUR 17.3 billion and employs approximately 78,000 employees with sales and services in more than 100 countries. News about Philips can be found at www.philips.com/newscenter.

Forward-looking statements
This release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. Examples of forward-looking statements include statements made about the strategy, estimates of sales growth, future EBITA, future developments in Philips’ organic business and the completion of acquisitions and divestments. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these statements.

This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

By tladmin

You missed

Once known as a “financial wizard”, Indian-born Rakesh Saxena now faces decades in jail for a Thai banking scandal that triggered the 1997 Asian financial crisis. Following a legal battle that dragged on for 26 years, the Supreme Court on September 12 finally sentenced Saxena to 335 years in jail over three lawsuits stemming from the Bangkok Bank of Commerce (BBC) embezzlement scandal. Although the jail sentence of over three centuries was upheld, the 70-year-old will serve only 20 years behind bars, the maximum term under the Thai Penal Code. Working his way up the ladder From 1974 to 1985, Saxena worked as a foreign exchange dealer and money market broker in India, Singapore, Hong Kong, and London. He later moved to Thailand to work as a newspaper financial columnist and consultant to financial institutions. In 1989, while living in Bangkok, he met and befriended Krirkkiat Jalichandra, who had just been appointed as the BBC’s senior vice-president. In 1992, Saxena became a personal advisor to Krirkkiat, who had since been promoted to BBC president. The bank at that time was owned by the family of Krirkkiat’s mother. In his book “BBC Truth”, Krirkkiat wrote that his maternal grandfather, the late former prime minister MR Kukrit Pramoj, had told him: “You have to help with Granddad’s work at the bank.” Krirkkiat had earlier worked at the Bank of Thailand for over a decade. How the scandal unfolded Between 1993 and 1994, the bank spent over 36 billion baht on business takeovers and leveraged buyouts linked with Saxena. The BBC also granted loans with insufficient or overpriced collateral to companies controlled by Saxena, senior bank executives including Krirkkiat, and their associates – many of whom were politicians. The BBC scandal was linked to a clique of young politicians known as the “Group of 16”, many of whom went on to become political heavyweights. Regulators estimated the bank’s bad loans at over 50 billion baht or roughly 40 percent of its assets. Saxena claimed years later that in 1995, BBC officials concealed the number of non-performing loans by lending money to bank-owned shell companies so they could repay debts owed by other borrowers. After the scheme was uncovered, the central bank in February 1996 ordered Krirkkiat to not renew Saxena’s consulting contract. A bank’s collapse Just a month later, the Bank of Thailand took control of the BBC. During a censure debate in early May 1996, opposition MPs from the Democrat Party accused unnamed government politicians of colluding with Saxena and Krirkkiat to “embezzle at least 50 billion baht from the bank’s deposits”. The accusation, coupled with reports of the bank’s deteriorating condition, led to a run on BBC deposits of more than 30 billion baht. That prompted a takeover by the Finance Ministry, which allowed the bank to go bust in August 1998 after discovering an unmanageable level of insolvency. Krirkkiat, Saxena and several others faced 17 court cases on charges of embezzlement and fraud causing damage of over 50 billion baht. The disgraced BBC president was sentenced to 20 years in jail and fined 3.1 billion baht. Krirkkiat died in October 2012 while still serving his prison sentence. Fallout for the economy The BBC scandal led to the closure of a Thai bank that had been operating for over 50 years. Its collapse undermined confidence in the Thai financial system, leading to a domino effect that toppled 56 financial institutions and saw many Thai commercial banks taken over by foreign investors. In July 1997, the Thai government gave in to speculative pressure against the baht and devalued the currency. The move forced neighboring countries to follow suit with their currencies, triggering a financial crisis that swept across Asia. Long legal battle In June 1996, Saxena was in Canada when Thai authorities charged him and others in connection with the BBC scandal. He was arrested a month later but resisted extradition from Canada, claiming he would be killed if he was sent back to Thailand. The extradition battle began in June 1997. More than a decade later, in October 2009, the Supreme Court of Canada ruled against Saxena and he was turned over to Thai authorities. In Thailand, Saxena waged a three-decade legal battle that came to an end this month with a final Supreme Court ruling that sealed his fate. Source: Thai Public Broadcasting Service