Philips plans to cut 5% of its global workforce following a recall of medical equipment

As part of its effort to streamline its organisation, Philips says it expects to cut 4,000 jobs. In recent months, the company's market value was slashed by around 70% because of a massive recall.

As the company continued to deal with the fallout of the costly recall of respiratory machines and the ongoing supply chain problems that resulted in last month's profit warning, Roy Jakobs, who took over the reins earlier this month, announced the move.

"My immediate priority is to improve execution so that we can start rebuilding the trust of patients, consumers and customers," Jakobs said in a statement.

"This includes the difficult, but necessary decision to immediately reduce our workforce by around 4,000 roles globally, which we do not take lightly."

Based on last year's total of 78,000 employees, the cuts represent just over 5%.

During the coming quarters, the company expects to spend around 300 million euros ($295.41 million) on the reorganisation.

As a result of supply shortages, comparable sales fell 6% to 4.3 billion euros, Philips said, and sales will continue to be impacted in 2022.

Due to the recall of 5.5 million ventilators for treating sleep apnea in June last year the company has lost about 30 billion euros of its market value since. Philips' performance in the quarter was also impacted by inflationary pressures, the Russia-Ukraine war and the COVID situation in China.

Published on: Monday, October 24, 2022, 08:08 PM IST