Dutch health technology company Philips will scrap another 6,000 jobs worldwide as it tries to restore its profitability and improve the safety of its products following a recall of respiratory devices that knocked off 70 per cent of its market value.
Half of the job cuts will be made this year, the company said on Monday, adding that the other half will be realised by 2025.
The new reorganisation brings the total amount of job cuts announced by new chief executive Roy Jakobs in recent months to 10,000, or about 13 per cent of Philips’ workforce.
It also adds to the string of technology-based firms making lay-offs, after companies including Alphabet’s Google, Microsoft, Amazon and German software maker SAP announced thousands of lay-offs to cut costs as they brace for tougher economic conditions.
Philips shares traded up 5.5 per cent on Monday, helped by fourth-quarter earnings which were much better than expected.
Mr Jakobs took over the company’s reins last October, as Philips continued to grapple with the fallout from the recall of millions of ventilators used to treat sleep apnoea over worries that foam used in the machines could become toxic.
“What we present today I think is a very strong plan to secure the future of Philips. The challenges we have are serious and we are addressing them head on,” Mr Jakobs told reporters.
Mr Jakobs said patient safety would be put “squarely at the centre” of the new organisation.
To improve profitability while investing in safety, innovations will be targeted at “fewer, better resourced, and more impactful projects”, Mr Jakobs said.
Together this should lead to a low-teens profit margin, as measured by adjusted earnings before interest, taxes and amortisation (EBITA), by 2025, and a mid-to-high-teens margin beyond that year, with mid-single-digit comparable sales growth throughout. – Reuters