AMSTERDAM, Oct 24 (Reuters) – Philips said on Monday it plans to cut around 4,000 jobs, just over 5% of the workforce, as it restructures its organization after a massive recall of medical ventilators dropped its valuation by around 70% last year.
This is the first announcement from new chief executive Roy Jakobs, who took over the helm of the company earlier this month as it continues to grapple with the fallout from its costly respirator recall and the ongoing supply chain issues that led to a profit warning last month.
“My immediate priority is to improve execution so that we can begin to restore patient, consumer and customer confidence,” Roy Jakobs said in a statement.
“This includes the difficult but necessary decision to immediately reduce our workforce by approximately 4,000 positions globally, which we do not take lightly.”
The cuts represent just over 5% of the company’s workforce based on last year’s total of 78,000.
The company said it expects the reorganization to cost around 300 million euros over the next few quarters.
As noted in a profit warning earlier this month, Philips said its adjusted earnings before interest, tax, depreciation and amortization (EBITA) fell 60% in the third quarter to 209 million euros.
Like-for-like sales fell 6% to 4.3 billion euros as Philips said supply chain issues had been much bigger than expected and would continue to weigh on sales during the last months of 2022.
Philips has lost around 30 billion euros of its stock market value since recalling 5.5 million ventilators used for sleep apnea in June last year over fears the foam used in the machines could become toxic . (Bart Meijer and Charlotte Van Campenhout report; French version Federica Mileo, edited by Kate Entringer)