Results warning as Philips sacks 6,000

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Philips, the Dutch electronics group, is to cut 6,000 jobs in the first large-scale redundancy programme since the company nearly went to the wall in 1991.

The cuts led to a provision of 760m guilders (pounds 290m) in yesterday's second- quarter figures, resulting in the first quarterly loss - of 456m guilders after tax - since the 1991 crisis. Philips also warned the full-year results would be down on last year's 583m guilders.

The cuts are to be at manufacturing plants in its Sound and Vision business which employs 70,000 to make videos, televisions and similar equipment.

After the initial shock in the Dutch stock market, there was a robust recovery in Philips shares from a morning slump, which ended 2.70 higher at 51.30 guilders as analysts applauded the restructuring plans. Some of the jobs are to be relocated from Europe to cheaper manufacturing centres in the Far East and low cost parts of Europe, Philips said.

Few redundancies are expected at Philips' UK plants,

Philips' consumer electronics have been hit by poor sales trends which are plaguing all manufacturers in the industry, particularly in Europe.

Simon Street of Barclays de Zoete Wedd said: "It's not just Philips. We have not really had any major new products. If manufacturers finally agreed on a standard for the new digital video disc it could give the market a big fillip."

Dudley Eustace, Philips' finance director, said the "payback period" for the redundancies would be 18 months and they would be implemented as soon as possible. Philips has shed 55,000 jobs since the peak of 330,000 at the end of the 1980s as part of a long-term streamlining programme. But Sound and Vision was largely untouched by earlier phases.

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