Cost-cutting accelerated as losses continue
Electronics giant Philips has said today that it can see no sign of economic improvement in the months ahead after a decline in worldwide demand for its lighting, healthcare and consumer products caused it to record a first-quarter loss.
The group made a net loss of €59m for the first three months of 2009 compared to a net profit of €294m a year ago. Sales in the period fell 17% to €5.1bn. Philips had made its first net loss in five years in the fourth quarter of 2008 and announced restructuring plans in January, which it has now said it will accelerate.
The company now expects to cut €500m in fixed costs by the end of the year instead of €400m.
Philips said it forecasts that demand in the second quarter will be “broadly in line” with the first three months, signalling no expectation of any improvement.
The loss-making lighting division was hit by deteriorating demand from the car-making and construction industries but Philips also said sales fell in its more consumer-oriented lighting businesses. Sales were down 19% on the same period a year ago.
The group previously said it would cut 6000 jobs this year, across the lighting, consumer and healthcare divisions. The accelerated cost-cutting will focus on the lighting business, although no extra job cuts were announced.
Despite the pressure on the lighting division, Philips has acquired two lighting businesses in recent weeks: controls firm Dynalite and architectural lighting firm Selecon.
Electrical and Mechanical Contractor