Philips to slash 4,000 jobs as respirator recall slump sales


HQ team

Koninklijke Philips N.V., an Amsterdam-based healthcare technology company, plans to slash 4,000 jobs after sales fell following a vast recall of respirators.

“We face multiple challenges, and our Q3 2022 performance reflects this,” said Roy Jakobs, appointed as President and CEO of Royal Philips on October 15, 2022.

“Although Philips’ strategy and solutions resonate with our stakeholders, we have not lived up to their expectations in recent years,” he said.

Net income in the third quarter ended September amounted to a loss of 1.3 billion euros, mainly due to a charge of 1.3 billion euros related to an “impairment of goodwill” in the Sleep & Respiratory Care business.

Sales fall

Group sales fell to 4.3 billion euros in the third quarter, reflecting a 5% comparable sales decline during the same quarter last year.

Philips’ performance got hit by operational and supply challenges, inflationary pressures, the COVID situation in China and the Russia-Ukraine war.

Jakobs said his priority was improving execution so the company could start rebuilding the trust of patients, consumers and customers, shareholders and other stakeholders.

“We will do this by strengthening our patient safety and quality management and addressing the various facets of the Philips Respironics recall.

Supply chain

“Secondly, by urgently improving our supply chain operations to deliver on our strong order book and improve performance; and third, by simplifying our way of working to improve productivity and increase agility. 

“This includes the difficult but necessary decision to immediately reduce our workforce by around 4,000 globally, which we do not take lightly and will implement with respect towards impacted colleagues.”

Operating cash flow was an outflow of 180 million euros, compared to an inflow of 256 million euros in Q3 2021.

Philips Respironics is progressing with the repair and replacement program and the comprehensive test and research program for the CPAP, BiPAP and mechanical ventilator devices affected by the June 2021 field safety notice, according to a statement published on the company’s website. 

Talks with FDA

Following the FDA’s inspection of certain Philips Respironics facilities in the US in 2021, the US Department of Justice, acting on behalf of the FDA, began discussions with Philips in July 2022 regarding the terms of a proposed consent decree to resolve the identified issues.

 Philips Respironics is subject to an investigation by the US Department of Justice, is a defendant in several class-action lawsuits and individual personal injury claims, and is in ongoing discussions with the FDA regarding the proposed consent decree.

The 4,000 positions globally across the organization are subject to consultation with the relevant workers’ councils and social partners, with severance and termination-related costs expected to be approximately 300 million euros in the coming quarters.

The company sees “prolonged operational and supply challenges,” a worsening macro-economic environment and continued uncertainty related to COVID-19 measures in China, partly offset by Philips’ productivity and pricing actions.


“Consequently, Philips 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.”

To strengthen its liquidity position, Philips is set to secure a one billion euros credit facility and execute the settlement of the forward contracts – entered into as part of the share repurchase program announced on July 26, 2021 – at the original settlement dates in 2023 and 2024, instead of 2022.

Leave a Reply

Your email address will not be published. Required fields are marked *