Philips to cut 4,000 jobs as company faces multiple challenges: CEO

Tech firm Philips on Monday announced to slash 4,000 jobs as the company faces "multiple challenges" which was reflected in its Q3 earnings.

New Philips CEO Roy Jakobs said the move to improve productivity and agility "includes the difficult, but necessary decision to immediately reduce our workforce by around 4,000 roles globally, which we do not take lightly and will implement with respect towards impacted colleagues."

The job cuts represent over 5 per cent of the company's workforce.

"These initial actions are needed to start turning the company around in order to realise Philips' profitable growth potential and create value for all our stakeholders," Jakobs added.

Jakobs, who took over as CEO last week, is cutting R&D, consolidating suppliers and warehouses as well as adding dual sourcing of components.

"We face multiple challenges and our Q3 2022 performance reflects this. Although Philips' strategy and solutions resonate with our stakeholders, we have not lived up to their expectations in recent years," said Jakobs.

"My immediate priority is therefore to improve execution so that we can start rebuilding the trust of patients, consumers and customers, as well as shareholders and our other stakeholders," he said in a statement.

Jakobs says the company will continue to review areas to further improve its supply operations and simplify the way of working and remove organisational complexity.

"We will elaborate further on our plans for Philips at our fourth quarter and annual results publication in January 2023," he added.

The company reported a net loss of 1.33 billion euros ($1.31 billion) compared with a year-ago profit of 2.97 billion euros.

Operating cash flow was an outflow of 180 million euros, mainly due to lower cash earnings, increased inventories and higher consumption of provisions, reported NDTV.

Comparable order intake declined 6 per cent on the back of strong 47 per cent growth in Q3 2021. The book-to-bill ratio was 1.18, and the equipment order book grew further in the quarter.