A disastrous product recall and a fall in sales have led to Philips’ new CEO revealing 4,000 jobs will be lost in the company.
Reuters reported Roy Jakobs, CEO of Philips Royal, said the company has now had five quarters of falling sales and declining profits.
It has now become “loss-making, ” meaning jobs in the U.S. and the Netherlands must be slashed.
Jakobs, who has been in the job for just a week, said: “We have now had five quarters of declining sales, declining profit, and now… (in the third quarter) we also have become loss-making.”
He said the job cuts were “unfortunate, but necessary” and said the company is seeing a rapid decline in China.
It is also experiencing problems in Western Europe, but Jakobs said Western Europe is “holding strong.”
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Mass product recall
Net loss for the third quarter was €1.3 billion, primarily due to a write-down in the value of the company’s Sleep & Respiratory Care business.
The company had to recall 5.5 million ventilators used to treat sleep apnoea over fears the foam used in the machines could become toxic.
The recall led to the company losing around €30 billion.
Philips is in talks with the U.S. Department of Justice on a settlement following the recall.