The Dutch health technology company has been hit with a loss of €1.5bn in Q3 2022, which was largely due to a €1.5bn non-cash goodwill related to its sleep and respiratory care business as well as impairment in R&D
Philips global headquarters in Amsterdam, Netherlands. (Credit: Koninklijke Philips N.V.)
Philips CEO Roy Jakobs has announced plans to immediately cut around 4,000 jobs globally across the organisation alongside other measures with an aim to reduce operating expenses and improve performance.
The plan was revealed as part of the Dutch health technology company’s third quarter 2022 results.
Philips has been hit with a loss of €1.5bn in Q3 2022, which was largely because of a €1.5bn non-cash goodwill related to its sleep and respiratory care business as well as impairment in research and development (R&D). This is in comparison to an income of €358m in the same quarter of the previous year.
The company witnessed falling sales and a recall of its Respironics sleep apnea device.
The announced layoffs will affect around 5% of Philips’ workforce, reported Reuters. They will be concentrated in the US and the Netherlands and will mainly impact business lines with falling sales.
According to Philips, the severance and termination-related costs are estimated to be around €300m in the upcoming quarters. The company expects a similar amount in annualised savings through the streamlining of its operations.
Philips stated that it will continue reviewing areas to further enhance its supply operations, invest in quality, optimise the manner of working, and remove organisational complexity. These are expected to lead to more restructuring and associated costs in the upcoming year, said the company.
Roy Jakobs was appointed as CEO and president of the company in late September 2022.
He said: “I am honoured to have been given the responsibility to lead Philips, a great company with a strong brand, leading product portfolio, strong customer base and talented employees. However, we face multiple challenges and our Q3 2022 performance reflects this. Although Philips’ strategy and solutions resonate with our stakeholders, we have not lived up to their expectations in recent years.
“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 our other stakeholders.”