Philips to axe 6,000 workers amid profitability issues
AMSTERDAM, NETHERLANDS — Health technology company Philips intends to close 6,000 jobs to restore profitability following a massive recall of respiratory devices created by the firm.
In a press release, Philips explained that half of the job cuts will be made this year, while the other half will be concluded by 2025.
The new reorganization comes on top of a plan announced last October to reduce its workforce by five per cent, or 40,000 jobs.
The firm is currently grappling with the fallout from the recall of millions of ventilators used to treat sleep apnea over worries that foam used in the machines could become toxic. The recall knocked 70% of Philip’s market value.
“Philips is not capitalizing on the full potential of strong market positions as it faces a number of significant operational challenges,” explained Philips CEO Roy Jakobs.
The reduced workforce is expected to lead to a low-teens profit margin by 2025, and a mid-to-high-teens margin beyond that year, with mid-single-digit comparable sales growth throughout.
The simplified organization should also boost patient safety, quality, and supply chain reliability.
“The company will continue to invest 9% of sales in research and development but will focus on “fewer, better resourced, and more impactful projects,” Jakobs added.
