Philips’ recovery continues in the third quarter

This article was last updated on October 23, 2023

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Growing Turnover and Cost Savings

Philips, a leading company in the field of medical technology, has reported a successful recovery in the third quarter. With a turnover of 4.5 billion euros, an 11 percent increase compared to the same period last year, the company has shown significant growth. This can be attributed to improved supply of devices to hospitals and consumers, according to Philips CEO Jakobs.

In addition to increased turnover, Philips has also made progress in achieving planned cost savings. Out of the projected 10,000 job cuts, 7,500 employees have already been dismissed or relocated. The company has also successfully reduced costs for research and innovation, resulting in savings of 258 million euros over the past three months.

Challenges in China

Despite the positive results, Philips has experienced a shrinkage in its order book with 9 percent fewer new orders compared to the same quarter last year. This decline is primarily due to a decrease in orders from China. Chairman Jakobs explains that the Chinese government has implemented measures leading to a market contraction.

Despite the challenges in China, Philips remains optimistic about the market’s recovery. With a population of 1.3 billion people and a growing aging population, the demand for healthcare and technology is expected to increase in the future. Philips recently celebrated 100 years of trade relations with China, highlighting its long-standing commitment to the country.

Addressing Apnea Device Recall

Addressing the ongoing issue of the apnea device recall, Philips emphasizes that it remains a top priority. The company is currently involved in legal battles as users of the devices have allegedly suffered health damage due to loose pieces of foam. Lengthy lawsuits in America and Europe may potentially result in billion-dollar claims against the company.

However, Philips maintains that there is no conclusive evidence of health damage caused by their products. CEO Jakobs states that their tests have shown no safety risks to patients who have used their sleep apnea devices. The American regulatory authority, FDA, expresses concerns that Philips has not conducted a thorough investigation.

In response to allegations that Philips concealed complaints about its sleep apnea devices, Jakobs denies these claims. He asserts that the company promptly reported and addressed the complaints, leading to the product recall.

Investment from the Agnelli Family

In a significant development, the Italian billionaire family Agnelli, known for their involvement with Fiat, recently acquired a 15 percent stake in Philips. The company views this investment as strong support and a vote of confidence, as the Agnelli family has invested 3 billion euros in Philips.