Philips to cut further 2,200 jobs
Royal Philips Electronics, the world's largest lighting company and inventor of the compact disc, said it will deepen an efficiency drive and eliminate 2,200 more jobs to get an extra €300 million in savings.
The new measures, designed to address inefficiency in the healthcare and lighting divisions, bring the cost-cutting target to €1.1 billion by 2014, the Amsterdam-based company said in a statement today.
"This will make us more agile and competitive company," chief executive officer Frans van Houten told journalists on a call prior to the start of Philips' investor day in London.
"The additional savings will lead to job losses, which is regrettable. At the same time, we continue to invest in innovation and the customer value chain."
Mr Van Houten, now in his second year as chief executive, is responding to tougher competition and a slowdown in demand for healthcare equipment and lighting systems.
After transferring an unprofitable television operation to a joint venture, Philips is reviewing "various business models" for its $2 billion audio and video consumer electronics unit as demand for DVD and MP3 music players fade.
Philips has a target to lift earnings before interest, taxes and amortization as percentage of sales to 10 per cent to 12 per cent by 2013, on sales growth of 4 per cent to 6 per cent.
"The key for Philips is to maintain the 2013 targets and that even if things get worse in the macro economic situation they have enough headroom and flexibility to keep the targets," Martin Prozesky, an analyst at Sanford C Bernstein said before the capital markets day.
Mr Van Houten initiated a revamp last year to cut 4,500 jobs and save €800 million. He is also trying to change the culture in the company, to speed up the process of bringing products such as electrical toothbrushes and wake up lights to the market.