Third-Quarter 2011 Financial Results for Royal Philips Electronics

Third-quarter 2011 financial results for Royal Philips Electronics of the Netherlands showed a 6 percent overall growth, led by 8 percent growth in its lighting division and 32 percent growth in LEDs, together with 7 percent growth in healthcare. Investments in R&D and selling expenses required for new product launches negatively affected margins in the quarter. In the lighting division, the company reported a decline in earnings due to investments in selling and R&D, higher raw material costs, and adverse performance from Lumileds and the consumer luminaire sectors. Overall earning before income tax, depreciation and amortization (EBITA) declined from 11.8 percent in Q3 2010 to 6.8 percent in Q3 2011. The company is implementing a program, Accelerate!, to invest in growth while addressing structural change, focusing on execution, reducing overhead costs and adopting a new company culture. The program includes a cost-savings component, which will result in the loss of 4,500 jobs, 1,200 of which will be in the Netherlands. "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,” said Frans van Houten, CEO of Royal Philips Electronics. “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.” Source: LEDs Magazine