Philips, a Dutch manufacturer of medical devices, announced on Monday that it will eliminate 4,000 positions as a result of huge financial damage from the recall of malfunctioning sleep respirators that forced the company into the red. The company, which has roughly 80,000 people worldwide, suffered a net loss due to the faulty equipment's 1.3 billion euro ($1.28 billion) write-down.
With numerous cases pending against it, Philips is attempting to reach an agreement with US authorities on the defective products which put customers with sleep apnea in danger of inhaling harmful foam. "We do face multiple challenges" but the organization must take "immediate steps" to reduce costs, according to Roy Jakobs, the new chief executive who only entered management this month.
In a conference call with investors, he stated, "This includes the difficult but necessary decision to immediately reduce our workforce by around 4,000 roles globally ... a decision we do not take lightly.” According to him, the United States, the Netherlands, India, and China would endure job losses.
Image source: Bloomberg
Frans van Houten, the business's former CEO, left his position earlier this month after 12 years of managing the firm through its transformation from a manufacturer of consumer electronics to medical equipment. Jakobs acknowledged that Philips, a company based in Amsterdam, had to "rebuild trust" since it had not lately "lived up to ... expectations" of its stakeholders. "These initial actions are needed to start turning the company around in order to realize Philips' profitable growth potential and create value for all our stakeholders," Jakobs stated.
Philips first announced a recalling in June 2021 after sound-dampening foam on some of its sleep respirators was found to degrade under certain conditions. The recall of these machines has led to inspections from the Food and Drug Administration that finds Philips not taking adequate action in response to complaints relating to foam degradation. The issue put users at risk of inhaling or swallowing pieces of debris with what the firm called "possible toxic and carcinogenic effects".
Philips also said sales had been hit by persistent supply issues stemming from the pandemic and even the Russia-Ukraine war.
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