Philips Cuts 2020 Outlook After Ventilator Contract With US Health Department Cancelled

By Cecilia Butini

Koninklijke Philips NV said Monday that it has cut its outlook on earnings before interest, taxes and amortization margin for the full year after the cancellation of a contract to provide 43,000 ventilators to the U.S. Department of Health and Human Services.

The Dutch medical-technology company said it now expects to post an adjusted Ebita margin around the level of last year, having previously guided for an improved margin compared with 2019.

The company said its April 2020 contract to provide 43,000 bundled EV300 ventilators to the U.S. Department of Health and Human Services until the end of the year was partly terminated by the department itself. The company will complete ventilator deliveries for the month of August, totaling a supply of 12,300 machines, but won't deliver the remaining 30,700 ventilators on the contract, it said.

Philips's ventilator production increased fourfold since March 2020 as it added production lines in the U.S, it said.

"The reduction in our ventilator deliveries to HHS will obviously impact Philips' financial performance, but we continue to expect to return to growth and improved profitability in the second half of the year, starting in the third quarter," Chief Executive Frans van Houten said.

Shares at 0824 GMT were down 1.2% at EUR40.59.

Write to Cecilia Butini at cecilia.butini@wsj.com

(END) Dow Jones Newswires

August 31, 2020 04:49 ET (08:49 GMT)

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