Philips is heading for a billion-dollar burden from its problems with certain ventilators.

The Dutch medical technology group and competitor to Siemens Healthineers is setting aside a further 165 million euros for the repair and replacement of devices, as it announced on Monday when explaining quarterly figures.

So far, 725 million euros in provisions had accumulated in connection with the topic.

The share price had fallen more than 40 percent in the past twelve months.

On Monday it fell again – by a tenth to 25.25 euros.

Klaus Max Smolka

Editor in Business.

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This is an ever-expanding problem that first became publicly visible in 2020.

It's about devices that are used in patients with sleep apnea - i.e. patients who stop breathing from time to time during their sleep.

Philips recalled devices because a foam used in them could come loose and then be harmful if inhaled.

The company is now replacing or repairing the devices.

The action binds a lot of staff: According to CEO Frans van Houten, more than 1000 colleagues are involved in one way or another.

Philips also speaks of "organizational changes" in the unit concerned and quality assurance and the monitoring of regulations.

The staff and the expertise

The provisions for the apnea devices have been increased further and further.

Of the newly added amount, 65 million euros are attributable to the fact that more devices than previously expected have to be replaced or repaired, as well as "higher communication costs", according to the quarterly report.

A block of 100 million is for "potentially higher costs and to ensure the pace of the program in a volatile environment".

Philips expects that 90 percent of the affected devices will be repaired by the end of the year - previously the company had expected the campaign to be completed this year.

Philips is also dealing with an industry-wide problem, namely difficulties with suppliers.

Many industrial groups complain about a lack of electronic components, as well as rising costs.

The group, which comes from Eindhoven but is now based in Amsterdam, also announced a savings program on Monday: it wants to permanently reduce costs by 150 to 200 million euros this year.

Revenue fell 4 percent on a like-for-like basis to 3.9 billion euros in the first quarter.

The bottom line was a deficit of 151 million euros, compared to 40 million euros net profit in the first quarter of 2021.