Royal Philips NV announced on Monday that it will cut 4,000 jobs worldwide as it battles several economic headwinds including fallout related to the recall of its sleep apnea machines.
Roy Jakobs, who took over as CEO of the Dutch health care technology giant earlier this month, said in a statement that the company faces "multiple challenges" and its "Q3 2022 performance reflects this."
"My immediate priority is therefore to improve execution so that we can start rebuilding the trust of patients, consumers and customers, as well as shareholders and our other stakeholders," Jakobs continued, adding that "this includes the difficult, but necessary decision to immediately reduce our workforce."
The cuts amount to about 5% of the company's 80,000 jobs.
Jakobs said the cuts are necessary to help "start turning the company around in order to realize Philips’ profitable growth potential and create value for all our stakeholders," he added.
The company suffered huge losses after recalling sleep apnea machines last year because the foam inside the devices posed a health risk, including toxic and carcinogenic effects.
Philips sold millions of such machines worldwide and said it is taking a 1.3-billion euro hit in the third quarter for "the impairment of goodwill" of the subsidiary that makes them.
The company also expects to see "prolonged operational and supply challenges, a worsening macro-economic environment and continued uncertainty related to COVID-19 measures in China." Those challenges will be "partly offset by Philips’ productivity and pricing actions," the company said.
As a result, the company expects to see a "mid-single-digit comparable sales decline" throughout the last three months of the year.
The Associated Press contributed to this report.