This announcement, which should materialize by 2025, comes after the loss of 4,000 jobs decided by the group in October.
Philips and its employees are paying a heavy price for the scandal of defective breathing apparatus used in the treatment of sleep apnea. The Dutch giant has seen its accounts turn bright red in 2022 and is undergoing further severe cuts in its workforce.
The former consumer electronics giant, refocused on health and well-being (scanners, MRIs, defibrillators… but also razors and electric toothbrushes) announced on Monday the elimination of 6,000 additional jobs. in the world. They are in addition to the 4,000 jobs cut last October. That is 10,000 in total within the group, which employs 80,000 people. A decision “difficult, but necessary”, commented Roy Jakobs, the CEO who arrived in October to rectify the situation and restore confidence with patients and doctors. The job cuts will be spread out between 2023 and 2025.
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“ 2022 has been a very difficult year for Philips and its shareholders. We are taking firm action to improve our performance urgently.”, said the CEO. Philips has seen its market value drop by some 30 billion euros since the recall, in June 2021, of 5.5 million respiratory devices. And it suffered a net loss of 1.6 billion in 2022, against a profit of 3.3 billion a year earlier.
heavy provisions
But Philips is not yet out of the crisis. This loss does not take into account the compensation it may be required to pay to patients who used the Philips Respironics machine to combat their sleep apnea. In particular in the United States, where the group is in discussions with the Department of Justice (DoJ) in order to settle the case. The company has indeed been the subject of collective complaints, investigations and multiple legal actions since the summer of 2021. To its credit, it itself discovered a safety defect in its machines, in the form of a toxic sound-deadening foam that patients were at risk of inhaling or swallowing. However, this foam can cause irritation, headaches, but also “potential risk” long-term cancers, by Philips’ own admission.
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Since then, despite tests ensuring that the device was “within safe limits”, the group maintained its advice to patients and doctors not to use it anymore and to turn to an alternative treatment. Philips has also manufactured nearly 90% of the replacement devices it must supply to patients. This resulted in heavy provisions (more than 2 billion). The group reiterated on Monday its desire to “strengthen patient safety and the quality of management following the recall”. “What we are presenting today is a very solid plan to secure the future of Philips”assured Roy Jakobs.
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