Philips Cuts Guidance as Inflation and Supply Disruptions Hit Earnings

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Shares of

Philips

fell sharply after the Dutch maker of Sonicare toothbrushes and Norelco shavers lowered its sales forecast for the year after second-quarter earnings took a hit from supply-chain disruptions, inflation and Covid lockdowns in China.

American depositary receipts of

Philips

(ticker: PHG) dropped more than 10% in premarket trading Monday after the company said it expects full-year sales growth of 1% to 3%, down from its previous forecast of 3% to 5%.

Philips reported second-quarter adjusted earnings before interest, taxes and amortization of €216 million, down from €532 million a year earlier. The net loss in the quarter was €20 million. Sales fell to €4.18 billion from €4.23 billion.

The company said Covid lockdowns in China “significantly affected” its business there in the second quarter, where comparable sales and order intake declined almost 30%.

Chief Executive Frans van Houten said in a statement that Philips has “stepped up our actions on productivity, pricing, and strengthening supply chain resilience to mitigate the ongoing headwinds and associated risks,” adding he was confident the company will resume growth from the third quarter, “resulting in 6%-9%comparable sales growth and improved profitability in the second half of the year.”

Write to Joe Woelfel at [email protected]