Philips' Third Quarter Weak, as Anticipated Last Week

As already announced last week in a profit warning, Philips' results for the third quarter were weak. Supply chain issues are affecting product deliveries and installations, which has resulted in an organic mid-single-digit decline in sales. Management also downgraded its previous 2022 adjusted EBITA margin guidance of 10%, which would indicate a margin in the midsingle digits for the full year. Last week, we reduced our fair value estimate to EUR 25 per share from EUR 33, as we have trimmed our midterm revenue growth and margin expansion forecasts. Philips also announced Oct. 24 it will cut 4,000 jobs worldwide (the employee base is around 80,000), a measure we look favorably upon given the poor performance seen recently.