Company Update. Frans van Houten, CEO Royal Philips Electronics

Transcription

1 Company Update Frans van Houten, CEO Royal Philips Electronics 1

2 Key takeaways In 2011 we laid the foundation to improve performance and the first half of 2012 is a step in the right direction Accelerate! is working and is driving structural change in Philips We have expanded our cost reduction initiatives from EUR 800 million to EUR 1.1 billion Accelerate! will keep us on track to deliver on our 2013 targets despite economic headwinds Innovation and Customer intimacy will drive sustainable competitive advantage Philips Singapore Accelerating! 2

3 Growth Value Growth Progressing on our Path to Value 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 Midterm Performance Box ROIC Transform Philips through Accelerate! Accelerate! Healthcare Restoring Lighting profitability, Leading the LED transformation Reshaping Consumer Lifestyle portfolio EUR 1.1 Billion 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 3

4 1H 2012 performance : a step in the right direction Sales growth and cost reductions enable improved operating margins Solid sales increases in all Healthcare businesses. Strong order intake growth. Solid improvement in earnings Higher earnings across all businesses in Consumer Lifestyle. Lifestyle Entertainment performance being addressed with distribution agreement, and divestment of Speech Operational improvements and cost savings positively impact earnings in Lighting. Lumileds and Consumer Luminaires losses halved in Q2 compared to Q1 Sales increases in growth geographies remain strong. Macro economic concerns remain in Europe Strict M & A discipline. 56% of EUR 2 billion share buy-back program completed. US dollar bond issue completed to ensure access to liquidity 4

5 Accelerate! is working Massive transformation, fundamentally changing the way we operate Customer Centricity Resource to win End2end Operating model Increased local relevance of the product portfolio is driving strong sales growth, e.g. Russia, Turkey, Africa, Indonesia, etc., China and India sales growth in the teens Granular performance management has resulted in a 50% improvement in BMC s delivering on plan Over 20 projects ongoing. Success with Walmart for Male grooming. LED lamps globally profitable after overhauling end to end value chain. 18% reduction in inventory. IT systems simplification started. Reduced time-to-market for new products Simpler and more accountable organization taking shape. Cost reduction plans on track. TV stranded costs reduced by 43%. Strengthened leadership bench. Savings target raised to EUR 1.1 billion Culture New leaders embedding a Performance culture in the organization. Improved cross functional collaboration. Incentive schemes aligned with 2013 targets 5

6 Overhead cost savings to reach EUR 1.1 Billion Cumulative gross savings EUR million Earlier Plan New Plan Annual restructuring costs EUR million Earlier Plan (37) (125) (80) (40) New Plan (37) (210) (125) (60) Annual investments EUR million Earlier Plan (37) (120) (100) (100) Additional savings Using the design principles of our Overhead cost reduction program, operating teams have come up with additional opportunities to reduce complexity and lean out processes Overhead and duplication in the end-toend customer value chains have now been included in the scope of savings Among others, we see significant opportunities as Healthcare and Lighting deploy Accelerate! deeper Head count reduction will go from 4500 to approx New Plan (37) (120) (100) (100) Note All figures (except 2011) are estimated amounts 6

7 Accelerating gross margin improvement Focused actions to drive Gross Margins 1. Rationalizing the industrial and distribution footprint to drive improved margins. Especially in Lighting. Higher restructuring costs in the second half of 2012 Accelerating the Lighting industrial footprint rationalization -45% 2. New product introductions will positively impact margins, e.g.: Value segments products for the Imaging systems range Plan 2015 Latest View New design wins in Lumileds Significant range renewal in Consumer Lifestyle 3. Significant opportunities to increase the annual savings in Bill of Materials with new initiatives led by newly appointed CPO Fredrick Spalcke Significant improvement opportunities for 2013 and beyond 7

8 Our path to value % 10% 7.4% 5.3% 2011 EBITA incl.tv TV 2011 EBITA Headwinds (Pensions + Medical device excise tax) Investments Improve selected businesses Volume Margin Mix Accelerate! Overhead cost reductions Restr.& acq. related costs 2013 EBITA 8

9 Our portfolio is well positioned for the future Demand for affordable healthcare Need for energy efficient solutions Desire for increased personal well-being 9

10 Our key assets and people drive value creation 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 10

11 Innovation at the core of our value propositions Connected LED Lighting: new applications and energy savings New innovations: networked LED lighting with embedded controls, City touch 11

12 Innovation at the core of our value propositions Driving better outcomes in Healthcare New innovations: image guided interventions and healthcare informatics 12

13 Innovation at the core of our value propositions Giving people a healthier and more enjoyable life New innovation: the HomeCooker 13

14 Key takeaways In 2011 we laid the foundation to improve performance and the first half of 2012 is a step in the right direction Accelerate! is working and is driving structural change in Philips We have expanded our cost reduction initiatives from EUR 800 million to EUR 1.1 billion Accelerate! will keep us on track to deliver on our 2013 targets despite economic headwinds Innovation and Customer intimacy will drive sustainable competitive advantage Philips China Accelerating! 14

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