Philips CEO: ‘We see a role for us’ 

AMSTERDAM – Philips remains committed to its Sleep & Respiratory Care business, despite a tough year and a half, says CEO Roy Jakobs. 

An analyst asked Jakobs whether Philips will retain the business as part of a new plan to restructure the company to create value, during a conference call to discuss fourth quarter and full year financial results on Jan. 30. 

“We have refocused the portfolio and the portfolio we have, I think, is a very strong and compelling portfolio and that is including the Sleep & Respiratory Care business,” he said. “If you look to the fundamentals of that business, we know that sleep apnea, as a disease, as something that needs to be treated, is still growing. Patients still are in need for more treatment, and we are, in that segment, the second player. We are still the second player. So, we see a role for us, when we work through remediation of the recall (and) work through the potential consequences that a (consent decree) might bring to restore our position. Because this is something that really fits. What we are good at is bringing innovation to patients in the home, but also in the hospital settings.” 

Philips reported an 11% comparable sales decline for its Connected Care businesses for 2022, mainly due to a double-digit decline in Sleep & Respiratory Care, though it reported a 5% comparable sales increase for the businesses in the fourth quarter, driven by double-digit growth in Hospital Patient Monitoring. 

The company also announced as part of its financial results that it has set aside an additional field action provision of EUR 85 million to expediate the completion of the remediation of the recall in the first quarter of 2023. It already set aside EUR 165 million in the first quarter of 2022. 

“We have also taken actions to ensure that the Sleep & Respiratory Care business can operate with full authority and end-to-end necessary competencies from the 1st of February to swiftly respond and deliver on the commitments to patients, regulators and customers,” Jakobs said. “It remains our clear intention to resolve all of these issues comprehensively and to restore Philips' position in this market.” 

Looking ahead, Philips provided guidance that assumes a compound sales growth rate of 10% for the Sleep & Respiratory Care business for the period 2023-25.  

“In that, we have a modest assumption of low, single-digit growth and a breakeven assumption for 2023,” Jakobs said. “So that's the grounding of the plan. Also, we don't know yet what the consent decree will have as a potential further impact to this.”  

• Read how the consent decree is a wild card in Philips’ “recovery trajectory”