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Philips TV Maker TPV Cutting Costs to Offset Weaker Europe

Aug. 31 (Bloomberg) -- TPV Technology Ltd., which took over Royal Philips Electronics NV’s television operation, said it’s cutting costs as it’s seen no recovery in demand for sets in Europe.

“It’s a very mixed picture in Europe, with significant double-digit declines in southern Europe and flat to slightly decreasing sales in the northern part,” Maarten de Vries, head of TPV Vision, the joint venture with Philips in which it has a majority, said at the consumer electronics IFA fair in Berlin.

De Vries is budgeting for growth in TV sales to 270 million units in 2015 from 245 million last year, driven by strengthening demand in Russia, Brazil and eastern Europe. TPV, tasked with restoring the TV operation to profit, is “streamlining” the cost base by integrating manufacturing sites of both companies.

A deadline to reach break even hasn’t been set, though TPV has demonstrated it can turn around a business, having overhauled Philips’s PC monitor business within two years, de Vries said.

TPV has changed its strategy for TVs, by broadening the offering beyond the higher-priced segment to the mid and lower-bracket markets. That led to high-single-digit growth in the second quarter, said de Vries.

With its headquarters in Amsterdam, TP Vision is the last major television maker in Europe, relying on the heritage of the Philips-brand to battle with Asian competitors such as Samsung Electronics Co.

“The Philips brand is our strongest asset,” de Vries said. “If you ask people the association with the Philips brand, the majority will mention TVs.”

To boost its market share, TP Vision is also betting on so-called smart TV’s, with 80 percent of the products currently enabled to allow users to listen to music, watch videos and play games via the internet using the same screen.

“Preferences are changing and we have to make sure we have the right product offering for the younger generations,” de Vries said.

Philips shares gained 1.3 percent to 18.32 euros as of 12:51 a.m. in the Dutch capital.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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