Jun 27, 2001 Amsterdam today, Royal Philips Electronics' President and CEO Gerard
Kleisterlee elaborated on the Company's objective to become a high
growth technology company. He emphasized that it is of the utmost
importance for Philips to invest aggressively in marketing competence
in order to achieve market leadership in key growth areas,
capitalizing on the company's extensive portfolio of innovative
technologies, bringing products to the market that capture the
consumer's imagination.
For the short term, a number of problem areas are being addressed. PCC
will cease to be an independent manufacturer of handsets, as announced
yesterday. For wireless technologies in a broader sense, Philips will
further strengthen its activities in Semiconductors and Components.
Major corrective actions for Digital Networks are in progress. The
set-top box activities in the USA will limit its platform diversity
and focus on profitability. Partnerships will be actively pursued in
order to gain scale.
In Components, the joint venture with LG of Korea in the field of CRT
is being completed, which encompasses a transfer of assets of EUR 2
billion and 24,500 employees. Philips Semiconductors is adjusting to
decreasing demand where possible and aggressively managing
inventories, without limiting future growth potential.
Mr Kleisterlee gave an overview of restructuring programs and the
related one-time pre-tax charges which have been previously
communicated:
underperforming activities, in particular in Components and Consumer
Electronics. This concerns a job reduction of 6,000-7,000 of which
2,500 Philips employees within the CRT joint venture with LG of Korea
and another 3,000-4,000 in Components and some other activities.
semiconductors production line from Albuquerque to Fishkill, USA. This
includes a job reduction of 220.
yesterday's announcement on the mobile handset business of PCC. This
includes a job reduction of approximately 1,300.
Mr Kleisterlee stated that a program is now underway to identify and
deal with low growth low return businesses. He therefore reiterated
that Philips in the mid-term (three to five years) is aiming for its
portfolio of activities at 10% average sales growth per annum, 15%
earnings growth on average per annum, an IFO margin above 10%, RONA
above 30% and positive cash flow.
About Consumer Electronics Mr Kleisterlee said that consolidation will
result in only a handful players surviving and that the
de-verticalization in this industry will continue. Philips CE will
focus on performance and will capture new growth opportunities in the
digital era. As a company, leveraging device technology (silicon, LCD)
and the internet must be at the core of our growth objective in a
converging digital electronics world, he said.
Mr Guy Demuynck, CEO of CE Mainstream and a member of Philips' Group
Management Committee, stated that Philips was gaining market share in
every product category and that it had reached the number two position
in DVD. Outside of the USA, Philips CE Mainstream had RONA of 30% in
2000. The key operational challenge is to bring the USA in line with
other regions, Mr Demuynck said.
For further information:
Philips Corporate Communications, Ben Geerts, tel. +31-(0)20-59 77
215
'Safe Harbor' Statement under the Private Securities Litigation Reform
Act of 1995
This document contains certain forward-looking statements with respect
to the financial condition, results of operations and business of
Philips and certain of the plans and objectives of Philips with
respect to these items.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances
that will occur in the future. There are a number of factors that
could cause actual results and developments to differ materially from
those expressed or implied by these forward-looking statements. These
factors include, but are not limited to, levels of consumer and
business spending in major economies, changes in consumer tastes and
preferences, the levels of marketing and promotional expenditures by
Philips and its competitors, raw materials and employee costs, changes
in future exchange and interest rates (in particular, changes in tax
rates and future business combinations, acquisitions or dispositions
and the rate of technical changes. Market share estimates contained in
this report are based on outside sources such as specialized research
institutes, industry and dealer panels, etc. in combination with
management estimates.
