New Delhi: Dutch health technology company Philips (PHG.AS) will eliminate another 6,000 jobs worldwide as it tries to restore its profitability and improve the safety of its products after a recall of respiratory devices that has dented its market value. reduced by 70%. The company said on Monday that half the jobs would be cut this year and the remaining half would be completed by 2025.
The new restructuring brings the total amount of job cuts announced by new chief executive officer Roy Jacobs in recent months to 10,000, or about 13% of Philips’ current workforce. It follows a string of technology-based firms to make layoffs, following the announcement by companies including Alphabet’s Google (GOOGL.O), Microsoft (MSFT.O), Amazon (AMZN.O) and German software maker SAP (SAPG.DE). also connects. Thousands laying off to cut costs as they prepare for tough economic conditions.
Philips shares were up 5.5% by 0855 GMT, helped by fourth-quarter earnings that were much better than expected.
“There is a significant beat to Q4 and operational improvement measures abound,” ING analyst Mark Hesselink said in a note.
Jacobs took the company’s reins last October as Philips continued to grapple with the fallout from a recall of millions of ventilators used to treat sleep apnea over concerns that the foam used in the machines could be toxic .
“What we’re presenting today, I think, is a very strong plan to secure the future of Philips. We have serious challenges ahead and we’re tackling them,” Jacobs told reporters.
Jacobs said patient safety will be placed “absolutely at the center” of the new organization. Jacobs said that to improve profitability while investing in security, the innovations will be targeted at “fewer, smarter resources and more impactful projects.” Together this should lead to low-teens profit margins by 2025, with adjusted earnings before interest, taxes and amortization (EBITA) and mid-single digits to mid-to-high-teens margins in that year. Comparable sales growth across.
Improving results, with a cautious approach
Amsterdam-based Philips remained cautious in its outlook for the year despite fourth-quarter results that were much better than expected. Adjusted EBITA for the last three months of 2022 came in at 651 million euros ($707.18 million), roughly steady from 647 million euros a year earlier, while an average of 428 million euros polled by analysts in a company-compiled survey was forecast. Will fall till
Comparable sales rose 3% instead of the 5% decline analysts had predicted, as supply chain problems eased. But despite improvements in the components shortage that has troubled Philips for more than a year, Philips said the supply chain remains challenging and will only gradually improve further.
This was expected to lead to low-single-digit comparable sales growth in 2023 at high-single-digit margins. The outlook does not include ongoing discussions with the US Department of Justice on a settlement and the impact of ongoing lawsuits and investigations following the recall.