2012 05 22 Vanhouten EPG Florida

7/31/2019 2012 05 22 Vanhouten EPG Florida

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Royal Philips Electronics

Frans van Houten, CEO

1

EPG Spring Conference, Florida

May 22nd, 2012


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Our Path to Value

Accelerate! at work

Key takeaways

2

Agenda


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Our portfolio is focused on growing markets

3

Demand for

affordable healthcare

Need for energy

efficient solutions

Desire for increased

personal well-being

% of Sales: 40% 35% 25%


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Worlds 41st most valuable brand 2011: USD 8.7 billion

Building on our strong fundamentals

Employee Engagement Index1 exceeds high performancebenchmark value of 70%

Culturally diverse top-200 leadership team

Global market leader in Lighting; Top 3 Healthcare player; LeadingConsumer Lifestyle brands (e.g. Philips Sonicare, Avent, Saeco)

1 Based on annual Philips Employee Engagement Survey

Technology, know-how, strong IP positions (53,000registered patents)

A3 rating by Moodys and A- by Standard & Poors

Loyal customer base in 100+ countries

1/3 of group revenues from growth geographies

Philips brand

People

Domain leadership

Innovation capabilities

Solid balance sheet

Global footprint

4


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Our Path to Value

2013

2011 MidtermPerformance

Box

Executive Committee

Growth investments

Philips Business System BMC1 performance management

Share buy back

TV Joint Venture

Improving Lighting performance

Value

ROIC

Current

Performance

BoxGrowth

ROIC

Laying the foundation to

improve performance

Transform Philips throughAccelerate!

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 2013

Growth

5

4-6% CSG2

10-12% EBITA12-14% ROIC

1 BMC = Business Market Combination2Assuming 3 to 4% real GDP growth


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Executive Committee

Frans van Houten

CEO

Deborah DiSanzo

CEO Healthcare

Ron Wirahadiraksa

CFO

Ronald de Jong

Chief Market Leader

Patrick Kung

CEO Greater China

Jim Andrew

Chief Strategy & Innovation

Officer

Eric RondolatCEO Lighting

Carole WainainaChief HR Officer

Eric Coutinho

Chief Legal Officer

Pieter Nota

CEO Consumer Lifestyle

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Accelerate!to unlock our full potential

7

Changing the way we work at Philips

A new growth and performance culture to become a moreagile and market oriented growth company

Strongcustomer centricity

and entrepreneurship in our

markets

Innovating with higher speed and excellence to outpace

competition through effective end2end customer value chains

Developing a simplified operating model to enable marketsand businesses: reduced overhead costs

Clear strategies which are resourced to win and agreedbetween businesses and markets

Culture

Customer Centricity

End2end

Operating model

Resource to win


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81 BMC = Business Market Combination

Example improvement actions in 2011

Improving on locally relevant

portfolio and time to market

Around 2/3 of BMC1s in Consumer Lifestyle

have grown market share in the last year

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

Airfloss

Launch

advanced by 6

months

Rice Cooker

Developed

in 4 months

by leveraging

the Povos acquisition

Ultrasound ClearVue

30% faster time

to market

compared to

the past

LED Lighting

More than 200

LED based

product launches

in 2011

Examples of granular performance managementSector A Sector B

Market 9

Market 1

B1 B2 B4 B5 BProduct categories

Total

B3

1% above target

On (or no) target

1% below target

No position

Market 2

Market 3

Market 4

Market 5

Market 6

Market 7

Market 8


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Q4 2011

Q1 2012

Approximately a quarter of the targeted 4,500

headcount reduction completed by Q1 2012

Plan Actuals

4,500

1,190

EUR 800 million cost reduction program - Results

9

Actuals

Cumulative gross savings

EUR million 2011 Q1 2012

TOTAL 25 62

Restructuring costs


TOTAL (37) (9)

Investments


TOTAL (37) (26)

First savings achieved in Q4 2011


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Investments in growth and transformationresulted 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 Luminairesaddressed. Performance improvement expected

in second half of 2012

New management team in Lumileds hits theground running to address performance issuesin the business

Lighting: Restoring performance

10

Unique value propositions


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0.14

0.18 0.18

0.230.25

0.30

0.36 0.36 0.36 0.360.40

0.44

0.60

0.70 0.70 0.70

0.75 0.75

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

A history of sustainable dividend growth

We are committed to a stable dividend policy with a 40%

to 50% pay-out of continuing net income.

12

EUR cents per share


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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 nextyears

Key takeaways

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2012 05 22 Vanhouten EPG Florida

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