Philips is Cutting Another 6,000 Jobs
Philips is cutting another 6,000 jobs worldwide. The Dutch electronics group announced this on Monday morning.
In October, Philips announced it would reduce its global workforce by 4,000. The new job cuts are on top of that. In 2023, the group, which has focused on medical equipment since 2021, wants to cut 3,000 additional jobs and the same number by 2025. The operation is estimated to cost 300 million euros.
At the end of December, Philips had more than 77,000 employees. Three months earlier, it was about 79,000. Philips employs approximately 300 people in Belgium. The impact here is not clear. In the Netherlands, 1,100 jobs will disappear, on top of the 400 lost in the previous reorganization. Altogether, Philips currently has about 11,000 employees in its home country.
Philips wants to become leaner in its central services by reducing the number of management steps. For example, the group seeks to “simplify” its way of working and “improve agility and productivity”, explains brand new CEO Roy Jakobs. In addition, Philips is transferring more development activities to its business lines. Now they are almost entirely centralized around Eindhoven.
Jakobs wants savings to offset the costs Philips incurs because of its faulty sleep apnea treatment devices, which could cause an insulating foam to crumble or release chemicals. In mid-2021, the company started recalls, which it wants to complete this year, and has already made a total of 885 million euros in provisions. It announced on Monday that Philips is now increasing that amount by 85 million euros.
Philips also reported that its turnover on a comparable basis fell by 3 percent in 2022 to 17.8 billion euros. The Dutch company points to problems in the supply chain and reduced sales in China, among other things. As a result, adjusted operating cash flow (EBITDA) plummeted from nearly 2.1 billion in 2021 to over 1.3 billion last year. In 2023, Philips expects sales growth of 1 to 3 percent, with “a slow start” to the year followed by a steady improvement. As a result, the profit margin would also improve.