Employees' jobs taken by respiratory ventilators
The company was forced to recall millions of ventilators used to treat sleep apnoea. The reason was the foam used in the devices. The company fears it could be toxic to patients. The original layoffs planned back in October last year affected only 5% of the workforce, or 4,000 employees, but that number has now been increased by another 2,000 jobs.
"Phillips is not realizing the full potential of its strong market position as it is currently facing several significant operational challenges," said Roy Jacobs, the company's chief executive officer. He believes such a streamlined organization will bring greater safety and quality of service to patients. The company also plans to improve supply chain reliability in the coming months.
Philips' performance over the last 5 years (Source: Google) *
2022 was a problematic year
The company reported an EBITA of $651 million for the last three months of 2022, compared to 647 million euros in the same period of the previous year. Analysts in the company's research had predicted a drop in profit to €428 million. The year 2022 brought Philips problems with parts shortages, which fortunately eased in the last three months and the company posted a three percent increase in sales. For the full year 2022, however, component shortages caused a 3% decline. According to Philips, the supplier market is therefore still challenging and will only improve very slowly.
Other big tech companies such as Meta, Microsoft, and Amazon are also planning massive layoffs. In addition to the reduction in sales and the increasing use of artificial intelligence, they also cite the high labour supply during the pandemic as a reason. In all cases, these measures are intended to increase profitability and are generally seen by companies as a step in the right direction.
Olivia Lacenova, analyst at Wonderinterest Trading Ltd.
Last performance is no guarantee of future results
