Weak Quarterly Earnings Leads Philps To Salsh 4000 Employees

Phillips on Monday said that it was going to lay off 4,000 people globally on its payroll. The move is part of company’s strategy to turn around the company. 

Making the announcement, Roy Jakobs, CEO of Royal Philips said that the move to bring into effect layoffs was a difficult but a necessary decision.

The layoffs come in the aftermath of Phillips’ Group sales of EUR 4.3 billion, which reflected a 5 per cent comparable sales decline, and an Adjusted EBITA of EUR 209 million, or 4.8 per cent of sales. Operating cash flow was an outflow of EUR 180 million, mainly due to lower cash earnings, increased inventories and higher consumption of provisions.

Phillips’ comparable order intake declined 6 per cent on the back of strong 47 per cent growth in Q3 2021. The book-to-bill ratio was 1.18 and the equipment order book grew further in the quarter.

“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”, said Roy Jakobs, CEO of Royal Philips.

He went on to brief about a step-process to initiate company turn around including strengthening Phillips’ patient safety and quality management and addressing the various facets of the Philips Respironics recall, improving supply chain operations and simplifying its way of working to improve productivity and increase agility.

“These initial actions are needed to start turning the company around in order to realize Philips’ profitable growth potential and create value for all our stakeholders”, Jakobs added.

Phillips’ anticipates prolonged operational and supply challenges, a worsening macro-economic environment and continued uncertainty related to COVID-19 measures in China, which will be partly offset by Philips’ productivity and pricing actions. 

The company also now expects a mid-single-digit comparable sales decline for the fourth quarter of 2022, with a high-single-to-double-digit Adjusted EBITA margin range.