AMSTERDAM (Reuters – Dutch tech company Philips has said that its fourth quarter core profit will drop by around 40% at 650m euros, or $739.25 million. This was due to a shortage of electronic components worldwide and the fallout from a huge recall of ventilators.

Philips’ profit warning stated that sales were down 10% annually to 4.9 million euros. This was due to parts shortages, inadequate freight capacity and customer postponements.

The company expected sales to be around 350m euros higher than they actually were. This slowed down comparable sales for 2021 by 1%, whereas the company was expecting a slight increase.

In addition to concerns about the recall of ventilators Philips stated that it has taken a provision of 225 millions euros to cover the additional repairs required.

Philips set aside 500million euros last year for this operation. It estimated that it could replace as many as four million respiratory and ventilator devices around the world because it uses a part of polyurethane foam which might become toxic and degrade.

Philips shares are down around 33% since April, when the company announced its recall.

On January 24, the company will release its full quarterly and annual results.

($1 = 0.8793 euros)