Consumer electronics giant Koninklijke Philips Electronics NV (PHG,PHGFF.PK) on Tuesday said it has identified additional structural saving opportunities of 300 million euros that would impact around 2,200 additional positions globally.
The firm has been going through tough times as the economic crisis led to lower demand and a drop in purchasing power. While announcing the quarterly results in July Philips CEO Frans van Houten said there was no denying that the global economy is weaker now than it was just three months ago, especially in Europe, which accounts for approximately 25 revenue of the company's revenue.
The firm is in the process of implementing its Accelerate! transformation program launched in 2011 with the aim of saving 800 million euros. The firm had previously announced elimination of 4,500 jobs as part of this cost savings plan.
During its implementation, Philips identified additional opportunities worth 300 million euros, among others in the Healthcare and Lighting sectors, to decrease inefficiency and complexity further.
These opportunities will bring the overall savings program from 800 million euros to 1.1 billion euros, to be completed by 2014. These additional savings will also impact around 2,200 jobs worldwide.
In July, Philips had said that its overhead cost-reduction program is on track and that incremental savings totaled 176 million euros in the first half of the year. Cumulative savings by year-end were estimated to be about 400 million euros.
Philips said the program will keep the firm on track to deliver on its 2013 targets, despite economic headwinds. For 2013, the company's goal is to achieve 4 percent to 6 percent comparable sales growth, 10 percent to 12 percent EBITA growth, and 12 percent to 14 percent increase in Return On Invested Capital.
Houten said today, "We continue to focus on improving the performance of our company, and we are making good progress. The identified additional overhead cost reduction measures will help us mitigate the effects of macro-economic headwinds and changes in pension cost accounting, while making us a more agile innovation company serving our customers effectively across the world."
The company is conducting a meeting with investors and financial analysts today in London.
The stock is currently up 0.53 percent in Amsterdam in early morning trade at 19.13 euros on 1.49 million shares.
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