Philips, specialized in medical technology, loses more than a billion euros

Dutch medical technology company Philips is spending €1.3 billion in profit and loss for the business unit responsible for sleep apnea devices, millions of which need to be recalled. This is what Philips said Wednesday in an update of its results for the third quarter. Shares were down more than 10% on Wednesday morning on the Amsterdam stock exchange. The impairment is related to a possible settlement of the apnea case in the United States. Philips expects this to significantly reduce the value of its subsidiary Respironics. In July, it was learned that negotiations were underway with the US Department of Justice for a settlement.

Sales are expected to be down for the 3rd and 4th quarter

Philips also said the company continues to suffer from parts shortages. Supply chain bottlenecks are more severe than expected and third quarter sales will be about 5% lower than the same period last year. Philipps even expects the decline to continue in the 4th quarter. Full third quarter results will be announced on October 24.

Manufacturing defects penalize the company

Problems with Philips apnea devices were revealed last year. Foam insulation on devices could crumble and be potentially dangerous to users. 5.5 million devices need to be replaced.

These problems had already cost Philips 719 million euros, not including legal costs related, for example, to complaints from angry patients. Investors are also unhappy with the turn of events. Last month, the association of private investors VEB held Philips responsible for the losses suffered by shareholders. The VEB estimates the damage caused by the share price losses at 16 billion euros.

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