The ailing medical technology manufacturer Philips plans to fire a total of 6,000 employees in the coming years. The Dutch company hopes to increase profitability significantly.
After problems with its ventilators, the Dutch medical technology manufacturer Philips is tightening its austerity course and cutting thousands of jobs again. 6,000 jobs are to be cut by the end of 2025, half of them this year, as the group announced.
“Philips is not exploiting the full potential of a strong market position,” said new Philips boss Roy Jakobs. The aim is to achieve an operating return on sales (Ebitda margin) in the mid to high double-digit percentage range by 2025. Jakobs added that the company would continue to invest nine percent of sales in research and development, while focusing on higher-yielding projects.
In October, Philips had already cut 4,000 jobs, five percent of the workforce at the time, because of the billions in costs associated with the recall of ventilators. Together with the new announcements, the group is now cutting a total of 13 percent of its jobs. The group had replaced more than four million ventilators in the past 18 months because of concerns that the insulating foam used could emit toxins. Independent tests have shown that there is no health impairment for patients as long as the devices are not cleaned with ozone-based agents, Philips said in December. The US Food and Drug Administration has yet to review the results.
In the past quarter, the feared slump in operating profit did not materialize. According to the information, this was even slightly higher than the previous year at 651 million euros. Analysts had expected a decline to 428 million euros. Comparable sales rose 3 percent in the fourth quarter as supply chain problems receded.
However, the delivery bottlenecks in 2022 as a whole caused sales to drop by three percent. The Management Board is preparing for further problems in the supply chains and is therefore expecting an increase in sales in the low single-digit percentage range and a margin in the high single-digit percentage range in 2023. However, the forecast does not include the impact of ongoing talks with the US Department of Justice to settle after the ventilator recall and ongoing litigation.
