The Dutch Philips, which produces medical and technological equipment, will cut 4,000 jobs globally to streamline its structure after chaining poor results, it announced on Monday. It will represent 5% of its 80,000 employees. The company seeks to reduce costs while fighting a million-dollar review and legal disputes over defects in its equipment to treat apnea.
According to the accounts revealed today, the company lost 1,330 million euros in the third quarter, far from the 2,970 million profit of a year ago. The main reason is a $1.3 billion review of the sleep and respiratory care goodwill.
The cut, "a difficult but necessary decision" it is said, will cost 300 million euros in the coming quarters, but in turn will generate some 300 million annual savings. With the new plans, investors reacted with purchases and the shares rose 1%, but they leave 60% this year. The decision cements the arrival of a new CEO this month: Roy Jakobs has replaced Frans van Houten, after 12 years in the role. Jakobs previously held the position that was responsible for responding to the covid-19 crisis.
The priority is "improving execution so we can begin to rebuild patient, consumer and customer trust," Jakobs said in a statement. This includes "urgently improving our supply chain." Sales have fallen 5% to 4.31 billion euros in the quarter.
The company has a problem with its machines for the treatment of apnea that forced it to make provisions for almost 900 million euros and for which it has several open cases. A foam used to dampen noise was found to disintegrate and enter the ventilation system, something that poses a cancer risk when inhaled. Now add another 1,300 million to the blow due to the deterioration in goodwill.
Looking ahead, the company anticipates protracted supply and operational challenges, a worsening macroeconomic environment, and persistent uncertainty related to COVID-19 measures in China.
