Philips steps up cost cuts and job losses
By Roberta Cowan
AMSTERDAM (Reuters) - Philips Electronics stepped up its cost-cutting drive on Tuesday and said more jobs would go as part of a drastic overhaul of its business, which began to turn around in the first half after losing 1.3 billion euros in 2011.
Ahead of an investor event in London, Chief Executive Frans van Houten said another 2,200 jobs would be cut, but a spokesman for the Dutch company added that most would be outside the Netherlands, which holds a national election on Wednesday where job losses are among the main campaign issues.
Philips, maker of consumer electronics, medical equipment, and lighting systems, announced the first round of 4,500 job cuts in October, 1,200 of them on home turf. At the end of the second quarter Philips had 121,801 employees worldwide, 14,000 of them in the Netherlands.
Van Houten raised the Dutch company's cost-cutting target to 1.1 billion euros ($1.41 billion) from 800 million euros, as it takes an axe to overheads, which were around 5 billion euros last year on revenue of 22.6 billion, by removing duplication and reducing complexity in areas such as IT.
An analyst who asked not to be named said he understood Philips had around 70 different IT platforms and Van Houten wanted to cut that to six.
Philips has said it wants to reinvest some of the savings into innovation, research and sales as it aims to get new products into local markets faster.
"The identified additional overhead cost reduction measures will help us mitigate the effects of macro-economic headwinds and changes in pension-cost accounting, while making us a more agile innovation company serving our customers effectively across the world," said Chief Executive Frans van Houten.
Europe's largest consumer electronics producer, the world's biggest lighting maker and a top-three maker of hospital equipment reported bumper second-quarter earnings in July, giving investors hope that the overhaul was starting to pay off. Continued...