Financial Update. Ron Wirahadiraksa Chief Financial Officer, Philips Healthcare

Transcription

1 Building a Foundation for Growth: Financial Update Ron Wirahadiraksa Chief Financial Officer, Philips Healthcare

2 Financial update Topics for discussion How did we perform on our actions of last year Healthcare s performance Overview of financial results Progress on acquisitions Focus on return on invested capital Improving margins and managing our cost base Conclusion 2

3 How did we perform on our actions of last year? Very well May 2009 identified actions Realized Accelerate growth Increase margins Capitalize on acquisitions Modest market share growth and expand in emerging markets. Solid progress in expanding our non-imaging Systems portfolio. Value-based pricing approach to deliver top and bottom line growth. Implementing structural operational improvements / savings through: - Supply Base Optimization; - Improvements in Integrated Customer Service; and - Re-engineered Quote to Cash processes. Structural and discretionary cost savings expected to amount to 150 million in Managing working capital to maintain strong cash flow. Committed to effective integration, synergy capture and growth of acquisitions. Approximately 180M realized in

4 Building momentum for 2010 Solid 2009 performance with strong 2H in difficult market circumstances Expect to approach our 15-17% adjusted EBITA target in 2010 Q1 10 at 10.7%, EBITA full year adjusted (1) (1) higher than prior EBITA quarterly adjusted three year EUR million, % EUR million, % comparatives 2H 09 was 16.4%, 300 basis pts above 2H , , , LTM Mar Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q (1) Adjusted EBITA: EBITA excluding acquisition/integration related expenses, restructuring costs and gain on divestments. 4

5 Equipment order intake showing signs of recovery Improving trend since 1H 2009 Quarterly currency adjusted equipment order intake 40% 30% 20% 10% 0% -10% -20% -30% -40% World International & Emerging North America Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Currency adjusted order intake only relates to the Imaging Systems and Patient Care & Clinical Informatics businesses which account for approximately 60% of the Healthcare portfolio, partly book-and-bill in the quarter. 5

6 Comparable sales rebounding in 2010 Regaining mid single digit sales growth in 2010 Full year comparable sales (adjusted for currency and portfolio) Quarterly comparable sales (adjusted for currency and portfolio) 10,000 8,000 6,000 Sales in EUR millions Comparable sales growth 10% 5.6 5% 3,000 2,500 2,000 Sales in EUR millions Comparable sales growth % 6.8 5% 0% 1,500 0% 4,000 2, % 1, % 0 6,013 6,562 6,638 7,649 7, % 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1-10%

7 Continuing sales growth in Emerging g markets Emerging markets will continue to grow as a percentage of sales in Actual 2009 Actual 2010 Indication Mature markets 2,631M North America 3,747M Mature markets 2,704M North America 3,685M Mature markets North America 34% 49% 34% 47% ~34% ~46% 17% 19% ~20% Emerging markets 1,271M Emerging markets 1,450M Emerging markets Sales in emerging markets expected to grow at double digits. North America sales are recovering slowly. 7

8 Our free cash flow remains strong EBITA and free cash flow converging as we manage working capital investment Net working capital as % of LTM sales EUR million Free cash flow (1) EUR million 1,500 1,000 Net working capital As a % of LTM sales % 15% FCF FCF as % of sales EBITA as % of sales % % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q , Working capital as a % of sales improved in the course of 2008 to sustainable levels free cash flow and EBITA % were closely aligned, indicating efficient management of working capital. Working capital investment will be an ongoing focus as the business grows following the economic downturn. 1) Free cash flow is defined as cash flow from operating activities minus net capital expenditures. 8

9 The acquisition portfolio is on track to deliver the expected results = On track = Some issues being addressed = Recently acquired Traxtal (2009) Intermagnetics (2006) Healthwatch (2007) TOMCAT (2008) Aerosol (2008) XIMIS (2007) Raytel (2007) Somnolyzer o (2010) 0) Goldway (2008) InnerCool (2009) EMERGIN (2007) VISICU (2007) Respironics (2007) Meditronics (2008) Alpha (2008) Tecso (2010) VMI-Sistemas Medico (2007) Dixtal Biomedica e Technologia (2008) Synergies & EBITA of Respironics, our largest acquisition, are in line with original targets. 9

10 Significant enhancement of ROIC Driven by EBITA growth while holding our asset base flat ROIC Bubble size represents EBITA Net operating capital EUR million 8% 2010 Indication 669 Other assets 687 Tangible assets 2,155 Other intangible assets 6% 4,923 Goodwill 4% December ) NOC turnover calculated as sales divided by net operating capital. NOC turnover (1) 10

11 Improving operating margin Executing our operational improvement and restructuring initiatives will yield marginal expansion in 2010 beyond the 100M expected from fixed cost reduction Programs Objectives Optimize Market Approach Creating value-based price competency Decreasing margin leakage via Price Lab Supply Base Optimization Consolidating industrial footprint & ERP systems Improving bill of material savings: negotiation & low cost country sourcing Integrated Customer Service Realizing service parts material cost-savings Driving delivery of standard processes and tools Quote to Cash Simplifying and standardizing business processes Rationalizing commercial business centers Restructuring Optimizing i i our non-us geographic organizations Reducing layers and simplifying decision making in our International sales organization 11

12 Simplifying the way we do business Further empowering our customer facing staff in our new International & Emerging market structure will increase our net promoter score while lowering our cost base Further empower our people closest to the customer through the new district structure. Support districts through enhanced functional leadership and optimization of processes to further streamline our way of working. Simplify and focus district responsibilities by transferring support functions to dedicated business centers. 12

13 Key takeaways Building momentum for further sales, free cash flow and EBITA growth. Ongoing diversification of our business from a geographic and portfolio perspective. Improving ROIC and driving value from our acquisitions. Anne: Pls Add image and highlight text in Key (I added key (to be consistent ) takeaways See example Lighting below Leveraging operational excellence programs to lower costs and improve efficiencies. Implementing a next step in close-tocustomer organizational interface at lower cost. 13

14 Q&A Ron Wirahadiraksa

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