Philips cuts 6,000 jobs after sleep device recall

AMSTERDAM - Dutch health technology company Philips said on Monday it would scrap 6,000 jobs to restore its profitability following a recall of respiratory devices that knocked off 70 per cent of its market value.

Half of the job cuts will be made in 2023, the company said, adding that the other half will be realised by 2025.

The move comes on top of

a plan announced in October 2022 to reduce its workforce by 5 per cent,

or 4,000 jobs, as it grapples 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.

“Philips is not capitalising on the full potential of strong market positions as it faces a number of significant operational challenges,” said new chief executive officer Roy Jakobs.

The simplified organisation should also improve patient safety, quality and supply chain reliability, he added.

Philips also reported fourth-quarter adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of €651 million (S$931 million), close to €647 million from a year before.

Analysts in a company-compiled poll on average had predicted core profit would drop to €428 million.

The reduced workforce should lead to a low-teens profit margin (adjusted Ebitda) by 2025, and a mid-to-high-teens margin beyond that year, with mid-single-digit comparable sales growth throughout. REUTERS