Dutch health technology company Philips will scrap another 6,000 jobs worldwide as it tries to restore its profitability and improve the safety of its products following a recall of respiratory devices that knocked off 70% of its market value.
Half of the job cuts will be made this year, the company said on Monday, adding that the other half will be realised by 2025.
The new reorganisation brings the total amount of job cuts announced by new Chief Executive Roy Jakobs in recent months to 10,000, or around 13% of Philips’ current workforce.
It also adds to the string of technology-based firms to make layoffs, after companies including Alphabet’s Google, Microsoft, Amazon and German software maker SAP announced thousands of layoffs to cut costs as they brace for tougher economic conditions.
Philips shares traded up 5.5% at 0855 GMT, helped by fourth-quarter earnings, which were much better than expected.
“There is a significant beat on Q4 and the operational improvement measures are very large,” ING Analyst Marc Hesselink said in a note.
Jakobs took over the reins of the company last October, as Philips continued to grapple 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.
“What we present today I think is a very strong plan to secure the future of Philips. The challenges we have are serious and we are addressing them head on,” Jakobs told reporters.
Jakobs said patient safety would be put “squarely at the centre” of the new organisation.
To improve profitability while investing in safety, innovations will be targeted at “fewer, better resourced, and more impactful projects,” Jakobs said.
Published in The Express Tribune, January 31st, 2023.
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