Dutch medical device maker Philips said Monday it will
scrap around 4,000 jobs as it tries to reduce operating expenses while
struggling with a costly recall of its sleep-apnea treatment devices. The
massive recall slashed around 70% off its market value in the past year.

The severance and termination-related costs are expected to
be approximately 300 million euros ($295 million) in the coming quarters,
Philips said in a statement. The restructuring comes as Roy Jakobs replaced
Frans van Houten as chief executive officer (CEO) this month, who had held the
position for 12 years.

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“My immediate priority is to improve execution so that
we can start rebuilding the trust of patients, consumers, and customers,”
Jakobs said in a statement.

“This includes the difficult, but necessary decision
to immediately reduce our workforce by around 4,000 roles globally, which we do
not take lightly,” he added.

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“These initial actions are needed to start turning the
company around in order to realize Philips’ profitable growth potential and
create value for all our stakeholders,” Jakobs said.

The cut represents over 5% of the company’s workforce based
on last year’s total of 78,000 in 100 countries.

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The healthcare giant continues to face lawsuits over
noise-dampening foam prone to disintegrating inside the ventilators that pose a
cancer risk when inhaled. Philips started its first recall of the devices in
June 2021 and has made financial provisions of around Euro 885 million.

The Euro 1.3 billion charges for the defective machines
pushed the firm into a net loss of the same amount, the company said in a
statement.

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Philips reported a net loss of Euro 1.33 billion in the
third quarter, compared with a profit of Euro 2.97 billion in the corresponding
quarter of the last financial year. Profit in the third quarter of last year
was boosted by the sale of its domestic appliances business.

Earlier this month, the company slashed its outlook on the
back of worse-than-expected supply-chain issues that are affecting deliveries
and customer installations.

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Sales were at Euro 4.3 billion in the July-September
period, a drop of 5% on a comparable basis from the same period last year due
to supply chain problems.