Philips, immediate cut of four thousand employees worldwide – Corriere.it

A cut of four thousand jobs. The Dutch colossus Philips, one of the largest global manufacturers of healthcare technologyhas announced that it will reduce its workforce globally by about four thousand people after recording a net loss of 1.3 billion euros, already disclosed to the financial community in the past few weeks, in the third quarter of the year, mainly due to a charge for a major recall of defective sleep apnea breathing machines. The machines were also used in Italy and a class action action against the multinational had started from Turin.
The employee cut will cost 300 million euros, the note reads, and the reorganization should generate annual savings of 300 million euros. In the same quarter of 2021, the group recorded a net profit of 3 billion euros, mainly due to the sale, in March, of the household appliances business.

Commenting on the transaction, the new president and CEO Roy Jakobs, who took over from Frans van Houten – in office since October 15 – acknowledges that “in recent years we have not lived up to the expectations of stakeholders” and announces “the a difficult but necessary decision to immediately reduce our workforce by around 4,000 roles globally, which we do not take lightly and will implement with respect for the colleagues involved ».
The stock market welcomed with a decline but without tears (the stock loses 1.2% to 13.1 euros in Amsterdam) the announcement of the restructuring, started immediately, and the quarterly. The note released by the company still reads that “Philips will continue to improve its supply operations, invest in quality, simplify the way it works and remove organizational complexity, which should lead to further restructuring and associated costs in 2023”.

The accounts and the reasons

Based in the Netherlands, Philips is one of the global leaders in diagnostic imaging, image-guided therapy, patient monitoring and healthcare informatics. Philips generated sales of 17.2 billion euros in 2021 and employs around 78,000 employees with sales and services in more than one hundred countries.
In 2022, the group’s performance was affected by operational and supply challenges, inflationary pressures, the Covid emergency that continued in China and the Russia-Ukraine war, bringing third-quarter revenues to 4.3 billion, down by 5%, while new orders, again on a comparable basis, fell by 6% against the growth of 47% recorded in the third quarter of 2021.
The adjusted gross operating margin therefore more than halved to 209 million (equal to 4.8% of revenues) compared to 512 million (12.3% of revenues) in the same period last year. Operating cash flow was negative for 180 million while it was positive for 256 million in the quarter of 2021.
“My immediate priority is therefore to improve execution so that we can start rebuilding the trust of patients, consumers and customers, as well as shareholders and other stakeholders. – Jakobs said -. We will do this first and foremost by further strengthening our patient safety and quality management and addressing the various facets of the Philips Respironics recall. ‘ The reference is precisely to the withdrawal of apnea equipment. Among other announced operations, Philips is implementing performance and productivity in the supply chain (such as dual sourcing, supplier consolidation, warehouse footprint rationalization), research and development (e.g. shifting focus to a fewer high-impact projects in the innovation pipeline).

Forecasts

Looking to the future – concludes the note -, the company sees “protracted operational and supply challenges, a worsening macroeconomic context and continuing uncertainty linked to the Covid-19 measures in China, which will be partially offset by Philips’ actions in terms productivity and prices. As a result, Philips now expects a comparable average-digit decline in sales for the fourth quarter of 2022, with an adjusted single-digit to double-digit EBITA margin range. ‘