The Netherlands-based electronics giant Philips today said that it will cut costs by €500 million ($703 million) after revealing quarterly net loss of €1.34 billion ($1.9 billion).
Philips, Europe's biggest consumer electronics producer and the world's biggest lighting maker, took writedowns at its healthcare and lighting divisions leading to net loss of €1.34 million compared with a net profit of €259 million a year ago.
The loss comes after the Dutch giant had last month warned of slowing sales growth at both its lighting and healthcare business due to weak consumer demand in Europe and competition from lower-cost Asian makers.
"Our second-quarter results were impacted by near-term operational challenges, weaker markets and a significant impairment charge," Philips CEO Frans van Houten said in a statement.
van Houten, who has just completed his first 100 days at the helm, pledged to cut costs marks and a €2 billion-euro share buyback program, which will be completed in the next year.
Since van Houten became CEO in April, Philips shares have declined more than 20 per cent, bring down the company's market value to €17.5 billion. For the operating performance, van Houten said that the company does not expect improvement in the short term.
Philips has not announced job cuts, but analysts do not rule it out as the company had already cut 6,000 jobs during the global financial crisis after posting its first quarterly loss in five years in January 2009.
In April 2011, the Amsterdam-based company said that it will spinoff its loss making TV business into a partnership that will be 70 per cent owned by Hong Kong-based TPV Technology.