“To date, we have delivered on our commitments to HHS,” said Frans van Houten, CEO of Royal Philips. “I am proud that with great urgency and under intense pressure, we achieved a fourfold ventilator production expansion with substantial investments: we hired hundreds of new colleagues for our factories in the U.S. and called upon our supply chain partners to massively step up, all in response to the COVID-19 pandemic. While we are disappointed in light of these vast efforts, we will adjust our plans and work with HHS to effectuate the partial termination of this contract.”
Frans van Houten added: “The COVID-19 pandemic is far from over, and we will continue to focus on our triple duty of care: meeting critical customer needs, ensuring business continuity, and safeguarding the health and safety of our employees. In the U.S., Philips is committed to work with the government and several of its agencies to support healthcare providers with the diagnosis, treatment, monitoring and management of COVID-19 patients, as well as the provision of regular health care.”
As the epicenter of the pandemic started to shift to the West in February 2020, Philips reached out to various governments around the world to discuss how to collaboratively combat COVID-19. From March 2020 onwards, Philips achieved a massive fourfold increase in ventilator production in just five months, adding production lines in the U.S. as well as creating hundreds of new jobs. Employees in Philips’ factories in Western Pennsylvania and California have been working around the clock to produce these ventilators.
Frans van Houten ended: “While we continue to see uncertainty and volatility related to the impact of COVID-19 across the world, our order book remains solid. The reduction in our ventilator deliveries to HHS will obviously impact Philips’ financial performance, but we continue to expect to return to growth and improved profitability in the second half of the year, starting in the third quarter. For the full year 2020, we now expect to deliver modest comparable sales growth with an Adjusted EBITA margin of around the level of last year.”
Philips has a comprehensive portfolio of products, services and solutions to support the delivery of high-quality care to COVID-19 patients worldwide. Solutions include secure, connected and intelligent approaches to diagnosis, treatment and predictive monitoring in the hospital, plus screening, remote patient monitoring and care at home. Philips’ telehealth and AI-enabled data analytics can help support workflows, facilitate remote collaboration and optimize resources. Philips’ COVID-19-related solutions are designed for rapid deployment and scalability.
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