Philips to cut 4,000 jobs amid ‘immediate’ steps to improve performance

Philips said on Monday that severance and termination-related costs are expected to total around €300 million ($295 million) in the coming quarters. The restructuring comes as Roy Jacobs replaced Frans van Houten as chief executive officer this month, who had held the position for 12 years.

The priority of Philips is to “improve performance so that we can begin to rebuild the trust of patients, consumers and customers,” Jacobs said in a statement. These steps include “immediate improvements to our supply chain operations” as well as strengthening patient safety and quality management.

Jacobs was put in charge of the growing issues of rolling out the company’s connected care businesses in early 2020, managing the response to the COVID-19 crisis, and recalling medical devices to treat sleep apnea. Shares of the healthcare giant have fallen 60% this year.

Phillips facing court cases

The company is facing court cases over the noise-canceling foam that disintegrates inside ventilators, which allegedly pose a cancer risk when inhaled. Philips initiated the first recall of the equipment in June last year and made financial provisions of approximately €885 million.

Philips also incurred an impairment charge of €1.3 billion for its sleep and respiratory care business. The write-down reflects factors including changing projections of a proposed agreement with US officials on sleep apnea devices.

The company reported a net loss of €1.33 billion in the third quarter, compared to a profit of €2.97 billion in the same period a year ago. Earlier this month, the medical device maker cut its outlook on worse-than-expected supply-chain issues that are affecting deliveries and customer installations.

— With assistance from April Roach.

This story has been published without modification in text from a wire agency feed.