Philips is expanding the job cuts under its new CEO: the medical technology group is cutting another 6,000 jobs – in addition to the 4,000 jobs that CEO Roy Jakobs named shortly after he took office.

This means that every eighth job will be lost at Siemens Healthineers’ Dutch competitor.

Klaus Max Smolka

Editor in Business.

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Jakobs followed Frans van Houten in mid-October, who resigned early after eleven and a half years - around six months before the regular end of his contract term.

The fact that the company didn't wait these few months was seen as a sign of the urgency it attaches to the current main topic: a product issue with certain ventilators used in sleep apnea patients, i.e. patients who experience occasional pauses in breathing during their sleep.

Noise-dampening foam is installed in the affected devices, which can come loose and be harmful to health if inhaled.

Philips began a recall in 2021 and is now replacing or repairing 5.5 million devices.

So far, this has led to almost 885 million euros in provisions for recall costs.

On Monday, the company announced that it would increase it by 85 million euros.

The consequences of possible legal consequences are not included.

Half of the jobs will be eliminated by 2023

The job cuts program announced in October is proceeding as planned, Philips said.

The 6,000 jobs in the second step are to be eliminated by 2025, half of them in the current year.

The measures are intended to drive the operating return back into the double-digit range.

Philips announced some structural steps: research and development are moving more from the corporate level to the divisions and are to be positioned there at 90 percent in the future, instead of 70 percent recently.

This should make tinkering with new things closer to the customer.

"Also, the company will focus on fewer, better-resourced projects, with patient safety, quality and customer needs at the heart of innovation design," it said in a statement.

Philips will continue to invest 9 percent of sales in research and development.

Last year sales increased by 4 percent to 17.8 billion euros.

Philips is benefiting here from the weak euro, which means that the turnover generated outside the euro zone is arithmetically higher.

On a like-for-like basis, revenue would have fallen 3 percent, which the company attributed to "operational and supply chain challenges."

Order intake also shrank by 3 percent.

Operating profit fell by a good third to 1.3 billion euros.

Because of the depreciation in the problematic sleep and ventilation division and the costs of restructuring the group, a loss of more than 15 billion euros was incurred after a surplus of 3.3 billion euros in 2021.