Philips to Eliminate 5% of its Workforce

The Amsterdam, Netherlands-based company is facing a net loss of $1.31 billion compared to a year-ago profit of $2.93 billion.

Omar Ford

October 24, 2022

2 Min Read
Image courtesy of Zoonar GmbH / Alamy Stock Photo

Final 3Q22 results paint a grim picture for Philips.

The Amsterdam, Netherlands-based company said it is cutting about 5% of its workforce, or about 4,000 jobs, amid declining sales, supply chain issues, and a massive recall of its sleep apnea and ventilator machines. The situation with Philips is dire because it is now facing a net loss of $1.31 billion compared with a year-ago profit of $2.93 billion. The company said the layoffs would save about $296 million a year.

The announcement of the layoffs comes a little more than a week after Roy Jakobs took over as CEO of the embattled company. Jakobs succeeds Frans van Houten, who stepped down amid the recall controversy.

Jakobs said his main objectives were repairing the company’s reputation by making sure the recall is completed quickly, according to a report from Reuters. He said he also wanted to resolve many of the supply chain problems.

In a 3Q22 report, Jakobs addressed the challenges the company faced and a plan to turn things around.

“We will do this by first further strengthening our patient safety and quality management and addressing the various facets of the Philips Respironics recall; second, by urgently improving our supply chain operations so that we can deliver on our strong order book and improve performance; and third, by simplifying our way of working to improve productivity and increase agility,” Jakobs said in prepared remarks. “This includes the difficult, but necessary decision to immediately reduce our workforce by around 4,000 roles globally, which we do not take lightly and will implement with respect towards impacted colleagues.”

Earlier this month, Philips shares fell 9% reaching lows not seen since 2012. The company has seen 70% of its market value drop in the past year.

The fallout from the massive recall continues to mount up.  

Philips first announced it voluntarily withdrew some of its ventilators in June of 2021. In July 2021, the safety alert was designated as a recall class 1.

In June of this year, Philips faced another major recall. It was also recently revealed the company was facing a preliminary investigation of the recall from French prosecutors.


About the Author(s)

Omar Ford

Omar Ford is MD+DI's Editor-in-Chief. You can reach him at [email protected].


Sign up for the QMED & MD+DI Daily newsletter.

You May Also Like