Experts expect Philip's financial results to improve, burdened by apnea device recalls

The component supply problems that Philips had to deal with last year seem to be easing. Experts therefore generally expect the Dutch company's financial results to improve. But investors and analysts will be equally eager on Monday, when Philips releases its second-quarter results, for news on the major recall that has dogged the medical technology group for two years.

In the summer of 2021, it was announced that Philips had to recall millions of apnea devices worldwide because the sound-absorbing foam could crumble. Those problems have already cost the company a lot of money in repairs, but potential damage claims could also prove costly. Earlier this year, the company set aside more than half a billion euros for claims from the United States.

Philips itself has repeatedly stressed that it is well on its way to replacing or repairing defective devices for sleep apnea patients. Still, there are several issues related to the recall that could still cause nasty surprises, ING analysts wrote in a preview. They are still waiting for the recall to be finalized, a settlement with the U.S. Department of Justice, as well as other agreements on damages.

The recall is not the only issue at Philips. In recent years, for example, problems in the supply of chips have meant that the company has been able to produce fewer products than ordered. The group announced further rounds of layoffs and restructuring in October and earlier this year to cut costs. As a result, a total of 10,000 jobs will be lost over the next few years.

In the meantime, the situation seems to be improving. Back when it presented its first-quarter figures in April, Philips said it had managed to produce more, so sales had also increased. In the second quarter, sales should rise again on a comparable basis, analysts believe. At the same time, they expect profits to be higher than in the previous year.