Philips to cut 4,000 jobs after millions of devices were recalled over safety concerns

CEO Roy Jacobs, who became CEO on 15^thousand in October, said the move was part of a drive to improve patient safety and quality management after the firm shocked investors when it was forced to recall millions of devices due to health concerns last June.

The Amsterdam business posted a whopping €1.5bn (£1.3bn) loss as third-quarter sales fell 5% to €4.3bn. The firm said it expects further declines in sales next quarter.

The job loss this is a reduction of around 5% of the workforce and will be part of a €300 million restructuring program in an attempt to cut costs and improve productivity.

Jacobs said: “My immediate priority is to improve execution so that we can begin to restore the trust of patients, consumers and customers.

“This involves the difficult but necessary decision to immediately reduce our workforce by around 4,000 roles worldwide, which we are not taking lightly and will do with respect for our colleagues affected. These initial steps are necessary to start turning the company around.”

Philips shares fell 2.4% to €13.08 this morning. The stock has fallen nearly 70% in the past twelve months after the firm revealed it had to recall around 5.5 million ventilators last June due to potential health risks.

Ventilators used to treat respiratory conditions such as sleep apnea contained polyester-based foam that could break down over time and be inhaled or swallowed, potentially causing permanent injury. Philips said side effects included “headache, irritation, inflammation, breathing problems and possible toxic and carcinogenic effects.”

The company remains under investigation by the US Department of Justice and faces a number of class-action lawsuits over personal injury claims.

Former CEO Frans van Houten said: “We deeply regret any problems or inconvenience that patients using the affected devices will experience due to the proactive measures we are announcing to ensure patient safety.”