Philips to cut an additional 6,000 jobs
The Dutch electronics company just released its fourth-quarter and annual results 2022 report, in conjunction with the report the company released a "plan to create value with sustainable impact" in which it announced that it will add to the previously announced reduction of its workforce.
Group sales amounted to EUR 17.8 billion, with a 3% comparable sales decline due to operational and supply challenges, lower sales in China, the consequences of the Respironics field action, and the Russia-Ukraine war, the company states in its annual results report.
Income from operations amounted to a loss of EUR 1,529 million, largely due to the previously disclosed EUR 1.5 billion non-cash goodwill and R&D impairment charges, compared to income of EUR 553 million in 2021. Adjusted EBITA of EUR 1,318 million, or 7.4% of sales, compared to EUR 2,054 million, or 12.0% of sales, in 2021.
Together with the fourth-quarter and annual results 2022 report, Philips presented its "plan to create value with sustainable impact", with which the company aims to improve performance via a strategy of focused organic growth.
A result of this is that Philips will change its operating model to end-to-end businesses with single accountability. The businesses will be supported by what the company describes as lean central functions and strong customer facing organisations in the countries and regions. With this strategy, Philips says it will "right-size" the central functions, which will include organisational delayering and reallocating part of its corporate innovation activities to the businesses.
In clearer terms, this means that in addition to the reduction of its workforce by 4,000 roles announced in October 2022, which is being implemented as planned, Philips will reduce its workforce by an additional 6,000 roles globally by 2025, of which 3,000 will be implemented in 2023.
"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 KPIs. Equally important, Philips’ leaner and more focused organisation will have a significantly reduced cost structure," the company writes in the presentation of the plan.