- Koninklijke Philips NV PHG would reduce its workforce by an additional 6,000 roles globally by 2025, of which 3,000 will be implemented in 2023 to restore its profitability following a recall of respiratory devices.
- The new reorganization comes in addition to a plan announced last October to reduce its workforce by 4,000 jobs.
- The reduced workforce should lead to a low-teens adjusted EBITA margin by 2025 and a mid-to-high-teens margin beyond that year, with mid-single-digit comparable sales growth.
- "Philips is not capitalizing on the full potential of strong market positions as it faces a number of significant operational challenges," new Chief Executive Officer Roy Jakobs said.
- He added that the simplified organization should also improve patient safety and quality and supply chain reliability.
- The company will continue to invest 9% of sales in research and development but will focus on "fewer, better resourced, and more impactful projects," Jakobs added.
- The company reported Q4 FY22 adjusted EBITA of €651 million compared to €647 million a year ago.
- Also Read: After Tests, Recalled DreamStation Sleep Devices Unlikely To Cause Harm, Philips Says.
- Comparable sales increased by 3% due to an improvement in component supply, with Q4 sales of $5.4 billion.
- Philips' supply chain situation remains challenging, and the company anticipates further improvements to be gradual.
- Guidance: Philips expects to deliver low-single-digit comparable sales growth on a high-single-digit margin in 2023.
- The outlook excludes the impact of ongoing discussions with the U.S. Department of Justice on a settlement following the recall of sleep devices and ongoing litigation & investigations.
- The company says around 90% of the production required for delivering replacement devices has been completed. To expedite the completion of the recall, Philips Respironics will increase the proportion of new replacement devices, increasing the field action provision by €85 million.
- Price Action: PHG shares are up 5.71% at $17.95 during the premarket session on the last check Monday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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