Layoff wave: Philips to cut 6,000 more jobs after recall of faulty sleep device

Layoff wave: Philips to cut 6,000 more jobs after recall of faulty sleep device

The company dealt with the repercussions from the recall of millions of ventilators used to treat sleep apnea due to concerns that the foam used in the devices could become hazardous

FPJ Web DeskUpdated: Monday, January 30, 2023, 01:38 PM IST
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Layoff wave: Philips to cut 6,000 more jobs after recall of faulty sleep device | Image: Philips (Representative)

Philips, Dutch health technology company, said on Monday it would cut 6,000 jobs to restore its profitability following a recall of respiratory devices that knocked off 70% of its market value.

The corporation stated that half of the employment losses will be implemented this year and the other half by 2025.

The new restructuring follows a plan to cut 5%, or 4,000 jobs, from its workforce that was revealed in October as the company dealt with the repercussions from the recall of millions of ventilators used to treat sleep apnea due to concerns that the foam used in the devices could become hazardous.

Profit margin by 2025

By 2025, the reduced workforce should result in a profit margin (adjusted EBITA) in the low teens, rising to the mid- to high teens thereafter, and maintaining consistent comparative sales growth in the mid-single digits.

"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 noted that the organization's simplification should boost patient quality, safety, and supply chain dependability.

In addition, Philips, based in Amsterdam, announced fourth-quarter adjusted earnings before interest, taxes, and amortisation (EBITA) of 651 million euros ($707.18 million), which was essentially unchanged from 647 million euros a year earlier.

In a survey conducted by the company, analysts expected that core earnings would fall to 428 million euros on average.

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