Philips is a strong industrial company focusing on the attractive HealthTech and Lighting markets. Our businesses are well positioned to capitalize on global trends that create great opportunities for profitable growth.
Our multi-year change and performance program Accelerate! was launched in the second half of 2011 and is being implemented across the organization to drive value creation and speed up growth. Key initiatives have been launched to implement the Philips Business System and step up resourcing for growth, granular strategy execution, value delivery to customers, and to adapt the culture and reward system. Accelerate! is working well and will continue to create significant value. Initiatives include a EUR 1.8 billion overhead cost reduction program to be completed by the year 2016, End2End productivity gains and procurement savings through Design for Excellence (DfX).
We believe that the following growth drivers will enable Philips to achieve its growth and profitability ambitions:
- Growing and aging population with more chronic diseases
- Growing demand for integral value-based healthcare solutions
- Growth geographies with growing middle class
- Consumers increasingly engaged in their health.
- The world’s need for more light and energy efficient light
- Digitalization driving demand for integrated lighting solutions
Our leading portfolio and business domains play right into these global trends and we have a clear execution plan to deliver on our strategy.
Creating two focused companies to capture highly attractive market opportunities.
|Our Lighting strategy||Our plan to grow Philips' Healthtech Leadership|
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Progress on our Path-to-Value to 2016
Operational improvements offset macro risks and headwinds
We launched a EUR 1.5 billion share buy-back program in October 2013 which will be completed by 2016.
At Philips, we strive to make the world healthier and more sustainable through innovation. Our goal is to improve the lives of 3 billion people a year by 2025. To guide our efforts and measure our progress, we take a two-dimensional approach – social and ecological – to improving people’s lives. Products and solutions from our portfolio that directly support the curative (care) or preventive (well-being) side of people’s health, determine the contribution to the social dimension. As healthy ecosystems are also needed for people to live a healthy life, the contribution to the ecological dimension is determined by means of our Green Product portfolio, such as our energy-efficient lighting. In 2014, we improved the lives of 1.9 billion people, an increase of 200 million compared to 2013.
Success of our EcoVision program
Green Product sales increased further in 2014 to 52%, up from 50% in 2013, driven by investments in Green Innovation. In 2014, Philips already achieved the cumulative EUR 2 billion Green Innovation investment target a year ahead of schedule, as we invested some EUR 463 million in Green Innovation. Lighting continued to be the largest contributor, mainly as a result of investments in LED.
Our sustainability commitments are grouped under the label EcoVision, comprising of the following elements:
|target 2015||baseline year|
|Green Product Sales||55% of total sales|
|Lives Improved||2 billion|
|- Investments||EUR 2 billion (cumulative)||2010|
|- Energy Efficiency||50.3 Lumen/Watt (up 50%)||2009|
|- Collection & Recycling||45,000 tonnes (up 100%)||2009|
|- Recycled content||15,000 tonnes (up 100%)||2009|
|- CO2 reduction||40%||2007|
|- Health & Safety||0.26 Lost Workday|
Injury Cases per 100 FTE
|Supplier Sustainability(1)||72% compliant|
1 For more information see section 14.2.8, Supplier indicators, of the Annual Report 2014