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Dutch maker Philips has become the latest company to slash its outlook for annual profits due to supply chain issues, adding to concerns from investors awaiting more information on fallout from the massive respirator recall defective.

“Intensified” supply chain problems, from a semiconductor shortage to a chaotic global shipping network, have made it more difficult to deliver orders. Sales fell 7.6 percent in the third quarter from a year earlier. This pressure should continue at least until the end of the year.

A recall of devices used by patients with sleep apnea that have faulty noise-canceling foam that can degrade and become toxic also hampered earnings. The group produced 750,000 repair and replacement kits out of an estimated total of around 3.5 million affected devices worldwide.

As a result, Philips expects single-digit sales growth and a “modest” improvement in profit margin this year, lowering its previous forecast.

The medical device recall has reduced the Dutch group’s market capitalization by around € 10 billion after shares have fallen by about a quarter since April, when the problem was first discovered.

The group had previously said it expected a € 500 million depreciation charge for the replacement process, but investors are concerned about legal settlements related to possible carcinogenic effects from the machines. Philips said it was “unable to reliably estimate” any legal liability.

“We continue to see uncertainty related to Covid-19,” Frans van Houten said in a statement on Monday. “Supply chain volatility has intensified globally, which has already resulted in longer lead times to convert our strong backlog to revenue in the third quarter, and we expect this headwind to continue. in the fourth quarter. ”

Current income before interest, taxes and depreciation fell to € 512m, against € 684m in the third quarter of 2020. Its sales of its household appliance unit, from which it has concluded its major disposals, have been finalized to give to the Dutch group € 2.5 billion. gain after taxes and other charges.

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