Philips, a Dutch company that makes medical equipment, said on Monday that it planned to cut around 4,000 jobs as part of an effort to streamline its business. This comes after a massive recall cut its market value by about 70% in the past year.
The move was the first thing that the company’s new CEO, Roy Jakobs, said after he took over earlier this month. At the time, the company was still dealing with the effects of its expensive recall of breathing machines and with ongoing supply chain problems that led to a profit warning last month.
In a statement, Jakobs said, “My top priority right now is to improve execution so that we can start to win back the trust of patients, consumers, and customers.”
Related: The media: Dutch shareholders are threatening to sue Philips over the recall.
“This includes the hard but necessary decision to cut our global workforce by about 4,000 jobs right away. We don’t take this decision lightly. ”
Based on last year’s total of 78,000 employees, this is just over 5% of the company’s workforce.
The company said it expected the reorganisation to cost around 300 million euros ($295.41 million) over the next three quarters.
Philips said that its adjusted earnings before interest, taxes, and amortisation (EBITA) fell 60% in the third quarter, to 209 million euros. This was foreseen in a profit warning earlier this month.
Comparable sales fell by 6% to 4.3 billion euros, and Philips said that problems with supply shortages were much worse than expected and would continue to hurt sales in the last few months of 2022.
Related: France Info says that French prosecutors are looking into the recall of Philips respirators.
Philips’ market value has dropped by about 30 billion euros since June of last year, when it shocked investors by recalling 5.5 million ventilators used to treat sleep apnea because of fears that the foam used in the machines could become toxic.
($1 = 1.0155 euros)
