The recall of defective machinery has cost the company, which currently employs 80,000 employees worldwide, 1.3 billion euros in a net loss of the same value.
Philips is negotiating with US authorities a final settlement of defective devices that put users with sleep apnea at risk of inhaling toxic foam, while facing several lawsuits.
“We face several challenges,” said the company’s new chief executive, Roy Jacobs, who took office earlier this month, adding that the company should take “immediate steps” to cut costs.
“This includes the difficult but necessary decision to immediately reduce our workforce to about four thousand employees worldwide…” he explained in a call with investors.
He indicated that job cuts will be mainly in the United States, the Netherlands, India and China.
Philips shares fell 0.75% on the Amsterdam Stock Exchange in morning trading.
The company’s former CEO, Frans van Houten, resigned earlier this month after leading the company’s transition from consumer electronics to a manufacturer of medical devices over the past 12 years.
Jacobs acknowledged that Amsterdam-based Philips had to “rebuild confidence” and had not “lived up to…the expectations” of its shareholders in recent years.
“These initial actions are necessary to start changing the course of the company in order to realize profitable growth potential,” he added.
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