The Dutch group Philips announced on Monday, January 30, the loss of 6,000 jobs by 2025, following losses linked to a recall of defective breathing apparatus for sleep apnea which has plagued it for months.
This further downsizing, “difficult but necessary”, is in addition to the loss of 5% of its workforce, or 4,000 jobs, announced by the group in October, said Philips CEO Roy Jakobs.
Half of the job cuts will be made this year, the Dutch health-tech company said, adding that the other half will be made by 2025. The company is dealing with fallout from the recall of millions of used ventilators to treat sleep apnea, due to suspected toxicity of the foam used in these devices. This recall caused its stock market value to fall by 70%.
The group, which currently employs nearly 80,000 people worldwide, suffered a net loss of 105 million euros in the fourth quarter of 2022, compared to a net profit of 151 million in the last quarter of 2021. Over the year 2022, the net loss is 1.6 billion euros, compared to a net profit of 3.3 billion in 2021. It is largely related to the recall of respirators.
The downsizing should generate an Ebita margin (earnings before interest, taxes, depreciation, and amortization, in French “earnings before interest, taxes and amortization”) of around 10-14% (« low teens ») by 2025, and regarding 15-19% (« mid to high teens ») beyond that, with single-digit like-for-like sales growth, Philips said.
Philips recalled the respirators in June 2021 following announcing that users were at risk of inhaling or swallowing pieces of toxic sound-deadening foam that might cause irritation or headaches. The group then also mentioned a risk ” potential “ long-term cancers.
The group has since recently assured that, according to extensive testing, the devices were “within safe limits” while specifying that his advice to patients and doctors remained unchanged: stop using the respirator and consider other treatments. Philips is focusing on its desire to “reinforcing patient safety and the quality of management” following the recall, Jakobs said on Monday.