Frans van Houten, company’s CEO, recently talked to Linzie Janis on Bloomberg Television about company’s future plans.
According to Houten, the job cuts have become inevitable to address economic challenges and to revive the company. About 1,400 of the 4,500 jobs cuts will be in the Netherlands.
Company’s profits in third quarter were lowest in two years. In third quarter, company’s earnings before interest, taxes, etc., fell to 368 million euros ($510 million). A year ago, the earning were 647 million euros. Now the company expects to save 800 million euros ($1.1 billion) through the job cuts.
“Taking into account that cost-cutting measures will kick in the fourth quarter and next year, maybe Philips has hit the bottom this quarter,” said Jos Versteeg, an analyst at Theodoor Gilissen Bankiers. Versteeg.
Globally, about 120,500 people work for Philips, not including the suspended television operations. Most of the jobs cuts will be at the headquarters and involve administration, infrastructure, information technology and real estate departments. According to Houten, these job cuts will have “quite a big impact in 2012 and 2013.”
Houten became company’s CEO in April this year. He is focusing on increasing earnings before interest and taxes to 10 – 12 percent of revenue by 2013.