Royal Philips says it will cut 6,000 more jobs

Jan. 30 (UPI) -- Dutch medical device maker Royal Philips announced Monday it will lay off 6,000 employees worldwide, half of those by the end of this year.

Philips said 3,000 of the cuts will be made through 2023 "in line with relevant local regulations," while it will take two more years to downsize the company by the other 3,000.

"The simplified operating model will make Philips more agile and competitive, enabling the company to deliver more impactful innovations for customers, patients and consumers, guided by a clear, but reduced number of [key performance indicators]," Philips said in a statement.

"Equally important, Philips' leaner and more focused organization will have a significantly reduced cost structure."

Roy Jakobs, the CEO of Philips said he has worked with teams in the company to intervene in urgent efforts to improve performance. Jakobs said those included improving accountability and strengthening its health technology talent and capabilities.

"Our strategy will focus on organic growth through patient and people-centric innovation at scale, with a strong improvement in execution as key value driver," Jakobs said in a statement. "This will be enabled by strengthening our patient safety and quality management and completing the Respironics recall."

Jakobs called the upcoming layoffs "difficult but necessary" to put Philips on a "progressive path" to sustainability and comparable sales growth.

The announcement comes on the heels of the business saying this past October that it was laying off 4,000 employees to offset losses following a large recall of its sleep apnea devices. Philips said those layoffs are currently "being implemented as planned."

Also Monday, Philips announced its group sales in the fourth quarter totaled $5.88 billion, a 3% comparable sales growth, driven by component supply improvements, but admitted its supply chain conditions remain challenging.

For 2022, group sales reached $19.4 billion, a 3% comparable sales decline caused by "operational and supply challenges," tumbling sales in China, the recall and the Russia-Ukraine war.

"We are taking firm actions to improve our execution and step up performance with urgency," Jakob said in a statement connected with the report. "This is a step-by-step improvement journey supported by our leading market positions, extended customer base, meaningful innovations, ecosystem partnerships, strong brand and talented employees."