Royal Philips Electronics

Transcription

1 Royal Philips Electronics Frans van Houten, CEO EPG Spring Conference, Florida May 22 nd,

2 Agenda Our Path to Value Accelerate! at work Key takeaways 2

3 Our portfolio is focused on growing markets Demand for affordable healthcare Need for energy efficient solutions Desire for increased personal well-being % of Sales: 40% 35% 25% 3

4 Building on our strong fundamentals Innovation capabilities Technology, know-how, strong IP positions (53,000 registered patents) Philips brand World s 41st most valuable brand 2011: USD 8.7 billion Global footprint Loyal customer base in 100+ countries 1/3 of group revenues from growth geographies People Employee Engagement Index 1 exceeds high performance benchmark value of 70% Culturally diverse top-200 leadership team Domain leadership Global market leader in Lighting; Top 3 Healthcare player; Leading Consumer Lifestyle brands (e.g. Philips Sonicare, Avent, Saeco) Solid balance sheet A3 rating by Moody s and A- by Standard & Poor s 1 Based on annual Philips Employee Engagement Survey 4

5 Our Path to Value Value Growth 2011 Current Performance Box ROIC Laying the foundation to improve performance Executive Committee Growth investments Philips Business System BMC 1 performance management Share buy back TV Joint Venture Improving Lighting performance Growth 2013 Midterm Performance Box ROIC Transform Philips through Accelerate! 4-6% CSG % EBITA 12-14% ROIC Accelerate! Healthcare Restoring Lighting profit, LED transformation Reshaping Consumer Lifestyle portfolio EUR 800 million cost reduction program Value delivery from past acquisitions Next value creation steps beyond BMC = Business Market Combination 2 Assuming 3 to 4% real GDP growth 5

6 Executive Committee Frans van Houten CEO Deborah DiSanzo CEO Healthcare Ron Wirahadiraksa CFO Pieter Nota CEO Consumer Lifestyle Carole Wainaina Chief HR Officer Eric Rondolat CEO Lighting Ronald de Jong Chief Market Leader Jim Andrew Chief Strategy & Innovation Officer Patrick Kung CEO Greater China Eric Coutinho Chief Legal Officer 6

7 Accelerate! to unlock our full potential Changing the way we work at Philips Customer Centricity Strong customer centricity and entrepreneurship in our markets Resource to win Clear strategies which are resourced to win and agreed between businesses and markets End2end Innovating with higher speed and excellence to outpace competition through effective end2end customer value chains Culture A new growth and performance culture to become a more agile and market oriented growth company Operating model Developing a simplified operating model to enable markets and businesses: reduced overhead costs 7

8 Examples of granular performance management Sector A Sector B Product categories B1 B2 B3 B4 B5 B Market 1 Market 2 Market 3 Market 4 Market 5 Example improvement actions in 2011 Market 6 Market 7 Market 8 Market 9 Around 2/3 of BMC 1 s in Consumer Lifestyle have grown market share in the last year Total Improving on locally relevant portfolio and time to market 1% above target On (or no) target 1% below target No position All market leaders now appointed with > 50% uplift in seniority 5 pilot projects started to improve the End2End efficacy More than a third of top 200 managers have been replaced or reassigned Initiated behavioral change programs and aligned incentive system with midterm targets Ultrasound ClearVue 30% faster time to market compared to the past Airfloss Launch advanced by 6 months LED Lighting More than 200 LED based product launches in 2011 Rice Cooker Developed in 4 months by leveraging the Povos acquisition 1 BMC = Business Market Combination 8

9 EUR 800 million cost reduction program - Results First savings achieved in Q Actuals Cumulative gross savings EUR million 2011 Q TOTAL Approximately a quarter of the targeted 4,500 headcount reduction completed by Q ,500 Q Q Restructuring costs EUR million 2011 Q TOTAL (37) (9) 1,190 Investments EUR million 2011 Q TOTAL (37) (26) Plan Actuals 9

10 Lighting: Restoring performance Investments in growth and transformation resulted in strong top line growth, and leading position in LED solutions Organization structure in Lighting streamlined: From 6 to 5 Business Groups Regional structure simplified End2End value chain re-established Significant cost reduction Performance management re-established Operational issues in Consumer Luminaires addressed. Performance improvement expected in second half of 2012 New management team in Lumileds hits the ground running to address performance issues in the business Unique value propositions 10

11 Our Path to Value Value Growth 2011 Current Performance Box ROIC Laying the foundation to improve performance Executive Committee Growth investments Philips Business System BMC 1 performance management Share buy back TV Joint Venture Improving Lighting performance Growth 2013 Midterm Performance Box ROIC Transform Philips through Accelerate! Accelerate! Healthcare Restoring Lighting profit, LED transformation Reshaping Consumer Lifestyle portfolio EUR 800 million cost reduction program Value delivery from past acquisitions Next value creation steps beyond % CSG % EBITA 12-14% ROIC 1 BMC = Business Market Combination 2 Assuming 3 to 4% real GDP growth 11

12 A history of sustainable dividend growth EUR cents per share We are committed to a stable dividend policy with a 40% to 50% pay-out of continuing net income. 12

13 Key takeaways Building upon a focused portfolio, with strong potential in growth and mature geographies In 2011 we laid the foundation to improve performance on our Path to Value First quarter of 2012 is a step in the right direction Accelerate! is working and will drive structural change in Philips over the next years 13

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