Philips, a Dutch health technology company, announced another round of layoffs in which it decided to lay off 6000 employees, contributing to its 5% of a global workforce. A few months after its first round of layoffs, this news raised a lot of questions about Philips current financials. Due to the recession and weak economic growth, the biggest companies like Microsoft, Meta, and Amazon also cut down thousands of jobs to reduce the operation cost.
In the statement, the company also stated that the decision to sack 6,000 employees was difficult but needed for the moment. This blog will discuss this mass layoff in detail and shed light on Philips’s future outlook.
Philips Decision To Cut Down 6,000 Job Positions
The layoff decision is difficult for any company and hard to digest for the employees who work tirelessly to support the company’s goal. Philips has been in the news since last October when it laid off 4,000 employees. Recently, it announced the second layoff round in which it will cut down 6,000 job positions. This layoff round will reduce Philips’s global workforce by 5%.
In the statement, the company said, “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 in line with the relevant local regulations and processes.
According to the sources, the decision to mass layoff is taken to restore the company’s profitability and reduce employees’ expenses. Today, Philips is a prominent player in respiratory device manufacturing, contributing 75% of its market value.
Right now, Philips has been facing significant operational challenges and is unable to capitalise on full market potential. The decision to layoff the employees will support the company in overcoming the various challenges and working towards its future plans.
Roy Jacob, Chief Executive Of Philips, said a “difficult but necessary” decision had been taken to enhance the supply chain reliability to improve performance. He further added that this decision will put Phillips on a progressive path and allow making a sustainable impact to achieve sales growth and EBITDA margin by 2025.
The performance of Philips in the last quarter was impacted due to the supply chain and operational challenges. Overall sales and profit of the company reduced due to the ongoing Ukraine-Russia War and recession. The major reason behind the decision to sack 6000 employees is to reduce the business expenses.
Future Outlook Of Philips After This Decision
Undoubtedly, Philips has been going through a financial crisis and ongoing business challenges. In the last few years, the company’s growth has been limited, resulting in a decline in the price of Philips unlisted shares. Due to the pandemic, Philips also faced challenges in the supply chain that resulted in lower revenue and profit. The company’s operating cash flow was 180 million euros due to the lower cash earning and higher inventory and employee expenses.
Focus On Respiratory Products
The decision for the layoff is to save the extra employees’ expenses and streamline the manufacturing process. Philips’s major focus in the future will be to recapture its market position as a respiratory products manufacturer. Due to the ongoing challenges, Philips cannot fulfil the market’s demands. In the future, we can expect new innovative products from Philips.
Resolve Supply Chain Issues
One of the major challenges for Philips is the disrupted supply chain. The lower profit and net income revenue bring various issues that affect its operations globally. After hitting a pandemic, the company seeks new ways to cope with ongoing supply chain challenges. After cutting down the 6,000 jobs globally, Philips will look to resolve these issues and streamline its business operations.
The performance of Philips in the Pre-IPO market has not been expected to scare investors to put more money in Philips unlisted shares. In future, the company is expected to focus on improving its financials and building trust among its investors. It is also expected that Phillips may also plan its IPO, which will support the company in raising new funds for business operations. We can expect an improvement in Philips Pre-IPO shares performance in the future.
Invest In Unlisted Shares To Mitigate Risk
The news of the massive layoff by Philips might scare you and make you question the company’s current financial status. As an investor, you need to explore investment options that involve less risk, and that’s why buying unlisted shares of companies is recommended to diversify an investment portfolio.
At Stockify, you can invest in Philips unlisted shares online after analysing the company’s performance in the past. On this platform, you will get assistance from qualified financial advisors that will help you invest in top-performing unlisted shares.