Dutch medical device manufacturer Philips said Monday it will cut 4,000 jobs as another massive penalty for faulty sleep respirators pushed it into a loss.
The 1.3-billion-euro ($1.28 billion) charge for the defective machines pushed the firm into a net loss of the same amount, the company said in a statement.
Philips has been bedevilled by faulty devices that put users with sleep apnea at risk of inhaling toxic foam.
The firm’s previous CEO stepped down earlier this year after leading the company’s transition from a consumer electronics to a medical device manufacturer over the past 12 years.
Philips had already set aside 900 million euros over the faulty respirators and had warned two weeks ago it would take the 1.3-billion-euro charge this quarter.
New chief executive Roy Jakobs said his “immediate priority is… to improve execution so that we can start rebuilding the trust of patients, consumers and customers, as well as shareholders and our other stakeholders”.
Jakobs said Philips would double down on patient safety and quality management, improve supply chain operations so it can better fulfil orders, and carry out a restructuring of operations to improve productivity.
“This includes the difficult but necessary decision to immediately reduce our workforce by around 4,000 roles globally,” Jakobs said.
Philips currently employs nearly 80,000 people in 100 countries.
Philips expects to make another 300 million euros in charges in coming quarters as it proceeds with the restructuring, although it expects those measures will lead to savings of a similar amount.
“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 said.
The company posted a net profit of three billion euros in the third quarter last year, but that was boosted from the sale of its domestic appliances business.
Sales came in at 4.3 billion euros in the July-September period, a drop of five percent on a comparable basis from the same time last year due to supply chain problems.