The Philips investment proposition

Our strategy

We believe that demand for healthcare (especially outside the hospital), a healthy lifestyle and energy-efficient high-quality lighting will grow by 6% per annum and generate double-digit EBITA margins. We have therefore realigned and focused our portfolio on leading businesses in these markets. We have divested our portfolio of semiconductor and electronic components businesses (including participations) and used half the proceeds to acquire leadership-strengthening companies, with Genlyte and Respironics as the key examples in 2008; the other half was used for reducing debt and for return to shareholders.
 

Based on our “sense and simplicity” brand promise, combining advanced end-user insights with our rich technological heritage, we build competitive advantage by bringing meaningful innovations to our customers and end-users. In doing this, we will make Philips, already one of the oldest and strongest global brands, the preferred brand in health and well-being.

Key financial targets

Our main strategic financial target to double EBITA per common share compared to the level of 2007 is supported by a number of specific financial objectives as follows:

  • Realize average annual comparable sales growth of 6%
  • Increase Group EBITA margin to 10-11% of sales of which
    • Healthcare 15-17%
    • Consumer Lifestyle 8-10%
    • Lighting 12-14%
  • Generate a return on invested capital of 12-13%

Sustainability

We seek to make constant progress in the sustainability of our business. A clear example of how we are driving business growth through sustainability is evident in our current EcoVision4 program:

EcoVision4 targets

over the period 2007 - 2012
 

  • Double revenues from Green Products to 30% of total sales
  • Double investment in Green Innovations to a cumulative EUR 1 billion
  • Improve our operational energy efficiency by 25% and reduce CO2 emissions by 25%