Embattled Dutch medical tech maker Royal Philips NV yesterday said it would slash 6,000 more jobs worldwide after fresh losses caused by a massive recall of faulty sleep respirators.
CEO Roy Jakobs announced the “difficult, but necessary further reduction of our workforce” by 2025, which came just three months after it announced another 4,000 cuts.
Last year was “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,” Jakobs said in a statement.
Photo: Reuters
The Amsterdam-based firm unveiled net losses of 105 million euros (US$114.33 million) for the fourth quarter of last year and 1.6 billion euros for last year as a whole, largely due to the recall.
Philips announced a global recall in 2021 of its appliances to treat people suffering from sleep apnea.
This followed concerns users risked “possible toxic and carcinogenic effects” if they inhaled or swallowed pieces of degraded sound-dampening foam on the machines.
Jakobs, who took over in October last year, said that Philips needed to “improve performance and simplify our way of working to improve our agility and productivity.”
“This includes the difficult, but necessary further reduction of our workforce by around 6,000 roles globally by 2025,” he added.
A total of 3,000 of the new job cuts would be made this year.
Starting off as a lighting company more than 130 years ago, Philips has undergone major changes in the past few years, selling off assets to focus on making high-end electronic healthcare products.
That shift has been called into question by the massive recall that has pushed it into loss and seen the previous CEO step down.
The company is under investigation by the US Department of Justice, is negotiating with US authorities over a financial settlement and is the defendant in several class-action lawsuits in the US.
Jakobs said Philips would focus on “strengthening our patient safety and quality management and completing the Respironics recall.”
The firm has produced about 90 percent of the replacement devices it needs to shop for patients, the company said.
It is also increasing the number of replacements, requiring the company to set aside an additional 85 million euros.
Philips said it had not yet included possibly US payouts in its accounts due to the “uncertain nature” of the eventual amounts.
Last month, Jakobs said that testing on the recalled respirators showed they were “within safety limits” for use, but that a final verdict rested with global regulatory authorities.
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