Dutch health technology company Philips on Monday (January 30) said that it will lay off around 6,000 of its employees worldwide after its market value fell by over 70 per cent following the recall of faulty sleep respirators.
This is the second job cut by the company in a span of three months – Philips had laid off 4,000 of its employees in October last year.
Also read: Philips to cut 4,000 jobs globally; CEO says ‘difficult, but necessary decision’
The company has said that while half of the job cuts will be made in 2023, the other half will materialize by 2025.
In a statement posted on the company’s website, Philips chief executive Roy Jakobs described 2022 as a “very difficult year” for the company as well as stakeholders, while asserting that “firm actions to improve our execution and step up performance with urgency” are being taken.
The company, according to Jakobs has made losses of 1.6 billion euros in 2022 and 105 million euros ($114 million) alone in the fourth quarter of 2022 due to its decision to recall its ventilators to treat people suffering from sleep apnoea in 2021.
The machine was recalled from the market after concerns were raised over toxicity in the foam used in it.
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“The company has built leading market positions based on meaningful innovations and high customer intimacy, further supported by a compelling purpose, a strong brand, and clear ESG commitments. However, given our significant operational challenges, we are not fully extracting the full value of our businesses, as also reflected in our 2022 results,” Jakobs said.
The CEO said the way forward for the company would involve organic growth “through patient and people-centric innovation at scale, with a strong improvement in execution as key value driver.”
“This will be enabled by strengthening our patient safety and quality management and completing the Respironics recall. We will also urgently enhance the supply chain reliability to improve performance and simplify our way of working to improve our agility and productivity. This includes the difficult, but necessary further reduction of our workforce by around 6,000 roles globally by 2025,” he said.
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Jakobs hoped that the layoff would lead to mid-single digit comparable sales growth and a low-teens profit margin by 2025 and mid-to-high-teens margin post 2025.