Philips Sacks 6,000 Workers In Latest Round Of Layoffs After Sleep Device Recall: Report

Philips in October last year terminated 4,000 jobs as the company was struck by a massive financial crunch after faulty sleep respirators pushed it into a loss

Philips said that half of the job cuts will be made this year and the other half will be realised by 2025.

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Dutch multinational conglomerate Philips on Monday said that it will lay off 6,000 jobs worldwide to recover its profitability after a recall of respiratory products reduced its market value by 70 per cent, reported Reuters. 

This round of layoffs comes after in October last year the firm terminated 4,000 jobs as a massive financial crunch for faulty sleep respirators pushed it into a loss. 

The company’s Chief Executive Roy Jakobs said, “2022 has been a very difficult year for Philips and our stakeholders, and we are taking firm actions to improve our execution and step up performance with urgency.”

He said that previously announced workforce reduction by 4,000 roles globally and other actions are being implemented as planned.

He noted that the organization's simplification should boost patient quality, safety, and supply chain dependability.

In addition, Philips, based in Amsterdam, announced fourth-quarter adjusted earnings before interest, taxes, and amortisation (EBITA) of 651 million euros ($707.18 million), which was essentially unchanged from 647 million euros a year earlier, the report said. 

The company said that half of the job cuts will be made this year and the other half will be realised by 2025. The reduced workforce should lead to a low-teens profit margin (adjusted EBITA) by 2025, and a mid-to-high-teens margin beyond that year, with mid-single-digit comparable sales growth throughout, the report said. 

Roy Jakobs said, “When I took over as CEO in October 2022, I said that our priorities are first to further strengthen our patient safety and quality management and address the Philips Respironics recall; second, to improve our supply chain reliability to convert our order book to sales and improve performance; and third, to simplify how we work to increase agility and productivity.”

“We provided an important and encouraging update on the complete set of test results for the first-generation DreamStation sleep therapy devices and have completed around 90 per cent of the production for the remediation. We were able to secure more components to convert our order book into sales, although the supply chain situation remains challenging,” he added.