your current location is：Home > investHomeinvest

　　At the close of European stocks on October 12, local time, the share price of Dutch multinational electronics giant Philips (PHG.AS, stock price of 13.58 euros, market value of 13.401 billion euros) plunged 12.27%, hitting a new low in 11 years. The company previously issued a profit warning that core profit in the third quarter could fall by 60% year-on-year, while the sleep and respiratory care business would take a 1.3 billion euro impairment.

Image source: Screenshot from CNBC

　　Philips issued its second profit warning this year on the 12th, saying that due to ongoing supply chain problems, the company's third -quarter comparable revenue will fall by about 5%, and third-quarter earnings before interest, tax, depreciation and amortization (EBITA) are expected. It was 210 million euros, down about 60% from 512 million euros in the same period last year. The full third-quarter earnings report will be released on October 24.

　　Philips said supply chain shortages over the past few months have been more severe than expected and will continue to impact fourth-quarter revenue. The company also expects comparable revenue to decline by around 5% in the fourth quarter.

　　In addition, the company is expected to record a non-cash charge of 1.3 billion euros in the third quarter for the impairment of goodwill in the sleep and respiratory care business due to a massive recall of problematic sleep respirators. 

　　Last year, Philips recalled 5.5 million sleep respirators over concerns that users could be at risk of inhaling toxic foam. Since Forbes magazine reported the recall on June 14, 2021, to the close of trading on October 12, Philips’ stock price has fallen by more than 70%.

　　Philips CEO Frans van Houten, who is due to step down next week, said the 1.3 billion euro impairment was the "best estimate" of a solution proposed by the U.S. Food and Drug Administration (FDA), but it was not yet final. Discussion, no further details can be given at this time.

　　ING's analyst Marc Hesselink said in a research report that Philips' weakness may extend into 2023, and the market consensus is that adjusted EBITA will fall by at least 10%. The company's 2025 performance targets are also challenging, as the sleep and respiratory care business may not fully recover after the recall.