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Philips blamed supply chain problems, including freight capacity, for lower sales.
Dan Kitwood/Getty Images
Supply chain disruptions are still causing real problems for some stocks, despite evidence that the worst is over. For proof, look no further than Koninklijke Philips, the Dutch health conglomerate that makes, among other things, Sonicare toothbrushes and Norelco shavers.
Philips
(ticker: PHG) stock plunged 16% in the U.S. premarket Wednesday. Its shares trading in Amsterdam (PHIA.Netherlands), where the company has a primary listing, were down 15%.
Why? Supply chain issues, for the most part.
Philips reported preliminarily fourth-quarter financials that missed expectations Wednesday. Sales for the last three months of the year are expected to be €4.9 billion ($5.6 billion), some €350 million below the company’s own guidance and short of the €5.3 billion expected by analysts as recently as last month, according to Factset data.
This represents a comparable sales decline of 10% from the year prior, the company said, and is primarily due to intensified global supply chain issues—namely, a shortage of electronics components and limited freight capacity.
Consequently, quarterly profits—measured by adjusted earnings before interest, taxes, and amortization (EBITA)—will come in at €650 million. Analysts were looking for a figure closer to €780 million as recently as the end of last month, with earnings estimates steadily declining in the run up to the financial release.
The supply chain issues may not signal a wider problem with the company’s recent performance. Philips, which is similar to health conglomerate
Danaher
(DHR) and elements of
Johnson & Johnson
‘s (JNJ) business, saw comparable order intake growth of 4% in the last quarter, largely driven by its diagnostics and treatments division. Full-year order growth was 4%.
“We continue to see good demand for our innovative products and solutions, resulting in an all-time high order book,” group CEO Frans van Houten said. “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,” he added.
Write to Jack Denton at [email protected]
