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Philips pares by a third
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November 2, 1998: 4:23 a.m. ET
Profits slump forces Dutch electronics giant to close one third of factories worldwide
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LONDON (CNNfn) - Philips, Europe's largest consumer electronics groups, confirms it's set to close almost a third of its factories worldwide over the next four years in an effort to boost profits.
Under the plan the Dutch company will slash the number of manufacturing sites from a current level of 226 to between 160 and 170 by the year 2002.
Closures have already begun in the 40 countries where Philips (PHG) has manufacturing sites.
As recently as March, the company had 269 factories making everything from lamps to television picture tubes to integrated circuits for electronics equipment.
Philips president Cor Boonstra told the Financial Times the group had "built too big a production capacity for requirements".
Last month the company reported third-quarter earnings fell sharply compared to a year ago.
The group earned 449 million guilders ($243 million) from continuing operations in the first nine months of the year, down 37 percent from last year.
The company also warned the scrapping of a year-old telephone handset joint venture with U.S. company Lucent (LU) would mean its workforce would be "substantially downsized".
It said this would require a restructuring charge in the fourth quarter, though the company would not say how much it might be.
Boonstra told the FT the final number of closures would depend upon how Philips' markets developed. He said despite the collapse of the Lucent tie-up, the company was still looking for partners in the electronics fields.
Boonstra also said Philips was now open to acquistions in areas such as medical products, semiconductors and lighting.
But he warned Philips would not rush into acquisitions once it completes the sell-off of its 75 percent stake in Polygram to Canada's Seagram.
Philips shares rose more than 5 percent on the Amsterdam stock exchange, up 5.80 guilders to 105.20.
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Philips
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