©Philips Electronics Production | October 17, 2011

Philips announces 3Q results – loss of 4,500 positions

Philips has announced its third quarter results for 2011 and plans for the Accelerate! program targeting EUR 800 million in savings.
About 60% of savings will be people-related and will result in the loss of 4,500 positions, 1,400 of which will be in the Netherlands. The remaining 40% of savings will relate to structural costs.

“We are focused on improving the performance of Philips, driven by our change program Accelerate! We see the first signs of traction to accelerate growth through step-ups of investments in innovation and to win customers. We are still in the early stages of a multi-year overhaul to become a more entrepreneurial and lean company, but we are encouraged by the response of our employees,” said Frans van Houten, CEO of Royal Philips Electronics.
”Our cost reduction plan of EUR 800 million has now been detailed, and we are in the process of deploying it across the organization as we optimize all overhead and support costs not directly involved in the operational customer value chain. The cost savings program will lead to the loss of approximately 4,500 jobs, which is a regrettable but inevitable step to improve our operating model to become more agile, lean and competitive”.

Q3 summary:
• Comparable sales up 6%, led by 8% growth at Lighting and 7% growth at Healthcare
• Growth geographies sales increase 13% on a comparable basis
• EBITA at EUR 368 million, or 6.8% of sales
• Free cash outflow of EUR 172 million
• Cost-reduction actions commence

Q3 financials: Lighting, Healthcare and growth geographies lead revenue increase. EBITA declines from 11.8% Q3 2010 to 6.8% Q3 2011, marginally below Q2 2011
Solid Healthcare sales growth of 7% and equipment order intake growth of 5%. Investments in R&D and selling expenses required for new product launches negatively affected margins in the quarter.
Consumer Lifestyle growth businesses showed high-single-digit sales growth. Results affected by investments for growth and a strong decline at Lifestyle Entertainment.
Lighting grew by a strong 8%, driven by LED at 32%. Investments in selling and R&D, higher raw material costs, and adverse Lumileds and Consumer Luminaires performance led to a decline in earnings.
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