Philips Seeks More Savings in Consumer Electronics
Aug 18, 2003
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Philips Electronics NV said it expects to reap an extra 400 million euros (U.S. $456 million) in annual savings by 2005 at its consumer electronics division by sharpening the unit's focus.
The Dutch company said the business, its largest division but only marginally profitable even at the best of times, will focus on three product areas: displays, entertainment hubs or networked multimedia devices, and "infotainment" -- mobile audio, video, and communications products.
Philips will be looking to cut costs in IT, distribution, packaging, and production within the unit and it could also prune its product portfolio, a Philips spokesman said.
Philips, Europe's largest maker of consumer electronics and lighting and number three in semiconductors, said the new savings were on top of the one billion euros in cost savings it plans for 2003.
At its second-quarter results announcement 2 weeks ago, the company said it had also identified 500 million euros of additional overhead cost savings. The Philips spokesman said the 400 million-euro expense reductions in the consumer electronics unit were separate and on top of these 500 million euros.
The spokesman said the size of one-time restructuring charges, aimed to reduce overlap and duplication, would be decided in the current quarter, but it was too early to give details.
The consumer electronics unit made a second-quarter loss of 42 million euros, below an expected break even, on sales of 1.98 billion euros -- about a third of the company's total sales. (Reuters)
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