The ailing medical technology manufacturer Philips wants to increase profitability significantly in the coming years through further massive job cuts. The Dutch group, which has its German headquarters in Hamburg, has been under pressure for some time due to expensive problems with certain ventilators and has to save. Last year, the competitor posted a loss in the billions due to high provisions and write-downs in this area. In addition to the around 4,000 job cuts announced in October, 6,000 more are now to be cut, as Philips announced on Monday in Amsterdam when presenting the figures for 2022. At the end of September last year, Philips employed just over 79,000 people.
It was not initially known whether the planned job cuts would also affect the company in Germany. With the austerity measures, the group’s recently low operating yield is to be driven back into the double-digit range. In addition to cost savings, Philips also wants to achieve this through stronger growth again. Half of the positions are to be eliminated in the current year. The company put the costs at around 300 million euros in the coming quarters. Like other companies, Philips is suffering from high inflation and supply chain problems.
In addition, the Dutch continue to fight with the recall and replacement of certain ventilators and have already made provisions of 885 million euros for this. In the final quarter, another 85 million euros were added. In addition, the group has now written off more than a billion on the problematic division. In June 2021, the US subsidiary Philips Respironics recalled certain sleep and ventilation devices because a part made of polyurethane foam could decompose. However, the medical technology manufacturer was at least able to close the pitch-black year with a conciliatory fourth quarter. In the last three months, sales and the operating result have been significantly better than experts had expected. However, costs for the announced job cuts and corporate restructuring as well as the recall pushed the group back into the red.
The bottom line was a minus of 105 million euros in the fourth quarter. Sales increased by almost ten percent to 5.4 billion euros. Analysts, on the other hand, had expected a slight drop in sales. In 2022 as a whole, sales increased by four percent to 17.8 billion euros. Here, Philips benefited from the weak euro, as a result of which the sales generated outside the euro zone were calculated to be higher. Because of the depreciation in the problematic sleep and ventilation division and the costs for the restructuring of the group, a loss of 1.6 billion euros was incurred after a surplus of 3.3 billion euros in 2021.