Review plunges Philips in red - Business - News - The Independent

Review plunges Philips in red

The root-and-branch review of Philips Electronics by Cor Boonstra since he became president of the world's third-largest electronics company last October has led to a further rise in already hefty restructuring charges, resulting in a surprise loss for the fourth quarter of 1996.

There was a mixed reaction among analysts to the additional action announced yesterday by Philips to become more competitive against its two main Far Eastern rivals - Samsung and Sony - and to two top level departures from the management board.

Some analysts believed the decision to increase restructuring charges from 1.85bn guilders to 2.57bn guilders (pounds 835m) should yield solid benefits next year, while others doubted whether it would be enough to resolve the company's problems. The mixed views caused Philips' share price to bounce around between 76.5 and 79.9 guilders after the announcement.

Peter Wortle, an analyst at Delta Lloyd Bank, said: "The figures were not as good as expected, but not terribly disappointing. It is a good idea Philips is taking all the charges now ... 1997 will probably still be tough, but in 1998 the effects of all the restructuring should start working out."

The restructuring charges - of which 725m guilders related to the troubled Grundig business in Germany - culminated in the company booking a net loss of 590m guilders for the year, a stark contrast to the 2.52bn guilders profit made in 1995. And before the restructuring costs, the loss in the fourth quarter was 81m guilders as almost all of Philips' businesses recorded declines.

Commenting on the results and on prospects, Mr Boonstra said 1996 was "disappointing'' as sales rose just 6 per cent to l 69.2bn guilders and costs rose faster. In 1995, sales rose 11 per cent.

He said that positioning Philips for growth "cannot be done by cutting alone" and added that he would be ready to implement a growth strategy by year-end.

He reiterated his policy of weeding out the company's under-performers and loss-makers. "While this process is not yet complete, it is on schedule, and we are rapidly disposing of activities that absorb profits, cash and management time."

Dudley Eustace, Philips' chief financial officer, said Grundig cost the company about 1.2bn guilders in 1996, exclusive of operating losses. The Dutch electronics maker has set aside 600m guilders to buy itself out of an agreement to bear Grundig's losses and pay the founding family trust a yearly dividend, irrespective of results.

Beside severing ties with Grundig since becoming president, Mr Boonstra has closed the Superclub International chain of video stores, decided to sell the cable television business and to find a partner for the multi- media business.

His strategy virtually opposes the vision of Jan Timmer, his predecessor, who yesterday resigned from Philips' supervisory board - a move that analysts construed as a protest against Mr Boonstra's actions.

Mr Boonstra, however, dismissed claims that the departure of Frank Carruba, a management board member, that was also announced yesterday was a sign of top-level discord. He has agreed to continue to work for Philips as a consultant.

News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week