The Dutch multinational electronics and electrical devices conglomerate Philips announced this week that it will cut jobs in its organisation, following a fifth consecutive quarter of declining sales and profitability in the September 2022 ending quarter.
The Dutch medical equipment manufacturer’s market valuation was slashed by almost 70% in 2021, tanking for the fifth straight quarter in Q3 of 2022.
The Amsterdam-headquartered equipment manufacturer said that it will have to resort to laying off about 4,000 job holders of the company due to declining sales and a massive recall.
The company’s CEO Roy Jakobs also informed during the Q3 announcements telephone call that it is not just the company’s sales and profit that have been on a downhill curve since the past 5 quarters, Philips has also now become a loss- making company.
“You really need to work your cost base to stay competitive and to support your profit. I am also looking at simplifying the organization,” said the company’s newly-appointed CEO.
It has been only a week since Roy Jakobs took over the position of Philips’ CEO.
According to Jakobs, the US and Netherlands will see the most number of layoffs, which he terms as ‘unfortunate, but necessary.’ In China, the demand for the company’s products is reducing at a rapid rate too, followed by Western Europe, majorly due to rising inflation.
However, North America, as pointed out by Jakobs, is ‘still holding strong.’
The company will fire 5% of its workforce, which stood at 78,000 last year, and has projected the reorganisation cost to be around 300 million euros or $295.41 million in the upcoming quarters.
According to a Reuters report, the company is in conversations with the U.S. Department of Justice on a settlement issue after the recall. To shed some light on it, Philips posted a net loss of 1.3 billion euros in the Sept 2022 quarter, following a write-down in the value of its Sleep & Respiratory Care business.
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