Algemene Vergadering van Aandeelhouders...market growth per sector… Growth1 of markets in which...
Transcript of Algemene Vergadering van Aandeelhouders...market growth per sector… Growth1 of markets in which...
Algemene Vergadering van AandeelhoudersAlgemene Vergadering van AandeelhoudersKoninklijke Philips Electronics N.V.
31 maart 2011
Confidential Working Draft 1 13-01-2011
Annual General Meeting of ShareholdersAnnual General Meeting of ShareholdersRoyal Philips Electronics
March 31, 2011
Confidential Working Draft 1 13-01-2011
Important informationpForward-looking statements This document and the related oral presentation, including responses to questions following the presentation contain certain forward-looking statements withrespect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items, in particular the sections “Looking ahead” and “Outlook”. Examples of forward-looking statements include statements made about our strategy, estimates of sales growth, future EBITA and future developments in our organic business. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these statements. These factors include but are not limited to domestic and global economic and business conditions, the successful implementation of our strategy and our ability to realize the benefits of this strategy, our ability to develop and market new products, changes in legislation, legal claims, changes in exchange and interest rates, changes in tax rates, pension costs and actuarial assumptions, raw materials and employee costs, our ability to identify and complete successful acquisitions and to integrate those acquisitions into our business, our ability to successfully exit certain businesses or restructure our operations, th t f t h l i l h liti l i d th d l t i t i h Phili t i d t lid ti d titi Athe rate of technological changes, political, economic and other developments in countries where Philips operates, industry consolidation and competition. As a result, Philips’ actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. For a discussion of factors that could cause future results to differ from such forward-looking statements, see the Risk management chapter included in our Annual Report 2010 and our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (the “SEC”), which is available on the SEC’s website at www.sec.gov.
Third-party market share dataStatements regarding market share including those regarding Philips’ competitive position contained in this document are based on outside sources such asStatements regarding market share, including those regarding Philips competitive position, contained in this document are based on outside sources such as research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Philips, those statements may also be based on estimates and projections prepared by outside sources or management. Rankings are based on sales unless otherwise stated.
Use of non-GAAP InformationIn presenting and discussing the Philips Group’s financial position, operating results and cash flows, management uses certain non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures A reconciliation of such measures to the most directly comparable IFRS measures isconjunction with the most directly comparable IFRS measures. A reconciliation of such measures to the most directly comparable IFRS measures is contained in this document. Further information on non-GAAP measures can be found in our Annual Report 2010.
Use of fair-value measurementsIn presenting the Philips Group’s financial position, fair values are used for the measurement of various items in accordance with the applicable accounting standards. These fair values are based on market prices, where available, and are obtained from sources that are deemed to be reliable. Readers are cautioned that these values are subject to changes over time and are only valid at the balance sheet date. When quoted prices do not exist, we estimated the fair values using appropriate valuation models and when observable market data are not available we used unobservable inputs They require managementfair values using appropriate valuation models, and when observable market data are not available, we used unobservable inputs. They require management to make significant assumptions with respect to future developments, which are inherently uncertain and may therefore deviate from actual developments. Critical assumptions used are disclosed in our 2010 financial statements. Independent valuations may have been obtained to support management’s determination of fair values.
All amounts in millions of euro’s unless otherwise stated; data included are unaudited. Financial reporting is in accordance with IFRS, unless otherwise stated. This document comprises regulated information within the meaning of the Dutch Financial Markets Supervision Act ‘Wet op het Financieel Toezicht’.
2010: Ready for a successful future y
• Building on our legacy: Philips in its 120th year
• Vision 2015 strategic plan launched
• Philips is well positioned to respond to fast-changing market conditions
• Seamless transition to new management
Balanced portfoliopProfound shift towards health and well-being
2%
We have fundamentally simplified our business portfolio, investing proceeds from disposals in our Healthcare, Consumer Lifestyle and Lighting businesses
8%
13%16%
5% Healthcare
Lighting
Consumer Lifestyle1 34%36%
12%Components
Semiconductors
2000actual
sales split
Last 12 months
Sept ’102010actual
sales split
44%Origin IT Services
Other 30%
1 Consumer Lifestyle in 2000 includes the former DAP and Consumer Electronics divisions 6
Leveraging global trends
The rise of emerging markets
Aging population
7
Increased consumer empowerment and
sustainable lifestyles
Climate change and sustainable development
Strength in brand and emerging markets
Emerging markets 33% of sales Vision 2015 target of at least 40% by 2015
Worldwide leaderWorldwide leader in nearly two-thirds of our product-market combinations (measured by NPS)1
Brand value doubled since 2004Brand value doubled since 2004• 7% increase in 2010 ($ 8.7billion)• nearly 60% of brand value generated by
professional businesses and brand strength in consumer health and wellness businesses
High corporate brand equity in fast growing markets2
Consistently among the top-ranking players:
888Placeholder image
India: top 10%, China: top 10%, Brazil: top 10%
1 (Co)Leadership is defined as outperforming (>5%) or on par with best competitor, globally or regionally2 Source: Consumer Heart BEAT brand equity study 2010
8
Sustainability as a driver for growthy g
Accelerating sustainable business• Green Product sales represented around 38%
of sales in 2010, up from 31% in 2009• Investment of EUR 2 billion on Green
Innovation across three sectors by 2015
EcoVision5 targets for 2010 – 2015EcoVision5 targets for 2010 2015• Bringing care to more than 500 million people• Improving the energy efficiency of Philips
overall portfolio by 50%• Doubling the global collection and recycling g g y g
amounts of our products, as well as double the amount of recycled materials in our products
999
Philips peoplep p pHigh engagement driving productivity
Phili b fit fE l E t I dHigh performance benchmark
Philips benefits from:
A strong leadership team
Employee Engagement Index
75
69A highly engaged workforce
Productivity per employee increased by 20% year on year
69
64
61
68
increased by 20% year on year6159
20102005 2006 2007 2008 2009
Philips at high performance normTh 2010 ‘ l t i d ’ lli
10
The 2010 ‘employee engagement index’ polling over 90,000 of the Philips workforce showed we are amongst the world’s top-ranking companies
2010 PerformanceGroup summary results
Amounts in EUR millions 2009 2010
Sales1 23,189 25,419
EBITA 1,050 2,552, ,
EBITA % 4.5% 10.0%
Adjusted EBITA 1,474 2,666Adjusted EBITA 1,474 2,666
Adjusted EBITA % 6.4% 10.5%
Net income 424 1 452Net income 424 1,452
Return on Invested Capital 4.0% 11.7%
Free Cash Flow 863 1 333Free Cash Flow 863 1,333
111 Indicates nominal sales
The power of Healthcarep
26%
Total sales EUR 2.5 billion
8%66%
1999 Total sales EUR 8.6 billion
26%
39%
2010
21%
14%
Imaging
Customer Service
Patient Care andPatient Care and Clinical Informatics
Home Healthcare Solutions
The power of Consumer Lifestylep y
1% 8%10%
1%Total sales EUR 11.3 billion1
51%
27%
2%1%
7%
Total sales EUR 8.9 billion2000
36%13%
Domestic appliances
Personal Care 2010
13%10%4%
17%Health & wellness
Television
Audio & video multimediaAudio & video multimedia
Accessories
Other incl. Licenses1 DAP and Mainstream part of Consumer Electronics only
The power of Lightingp g g
19%
8%
Total sales EUR 4.9 billion1
73%
19%
8%
Total sales EUR 7.6 billion2000
51%28%
6%
2010
7%
28%Lamps & lighting electronics
Professional luminaires
Consumer luminaires
Automotive
Packaged LEDs1 Excluding batteries EUR 0.2 billion
Management agenda 2010g gThe leading company in health and well-being
Implement strategy
Increase our market position
Drive performance
Drive top line growth and
Accelerate change
Increase customer centricity Increase our market position in emerging markets
Drive key strategy initiatives for each sector
Drive top-line growth and market share
Continue to reduce costs and improve cost agility
Increase customer centricity by empowering local markets and customer facing staff
Increase number of Move towards leadership position in imagingGrow Home HealthcareGrow Health and WellnessManage TV to profitability
Further increase cash flow by managing cash aggressively
businesses with NPS co/leadership positions
Increase employee engagement to high Manage TV to profitability
Become lighting solutions leader in outdoorGrow consumer luminairesOptimize lamps lifecycle
engagement to high performance level
Leverage Sustainability as an integral part of our strategy
15
Dividend more than doubled in the last decade
0 7511
EUR cents per share 1
0.60
0.70 0.70 0.700.75
0.300.36 0.36 0.36 0.36
0.400.44
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
“Our aim is to sustainably grow our dividend over time. Philips’ present dividend policy is based on an annual pay-out ratio of 40% to 50% of continuing net income.”
1 Elective dividend, proposal subject to approval in the General Shareholders Meeting on March 31st 2011 16
Total Return to Shareholders
3 year: 2007- 2010 1 year: 2010
ELECTROLUX
SCHNEIDER
HITACHI
SIEMENS
3 year: 2007- 2010 1 year: 2010
EMERSON
3M
JOHNSON & JOHNSON
ELECTROLUX
SCHNEIDER
HONEYWELL
HONEYWELL
SIEMENS
PHILIPS
EMERSON
GENERAL ELECTRIC
PHILIPS
HITACHIMOTOROLAERICSSONNEC CORPSANYO
TOSHIBA
HITACHI
PANASONIC
3M
JOHNSON & JOHNSON
PANASONIC
17
-50% 0% 50% 100%
GENERAL ELECTRIC
-50% 0% 50% 100%
TOSHIBA
Vision 2015Our ambition
Philips wants to be a global leader inhealth and well-being, g,
becoming the preferred brandin the majority of our chosen markets. j y
We believe Philips is uniquely positioned forgrowth through its ability to simply make ag g y p y
difference to people’s lives with meaningful, sustainable innovations.
Vision 2015Outlining four key priorities
• Expand leadership positions while benefiting from markets growing faster than GDP
• Be the preferred brand in the majority of our chosen markets
• Lead in sustainability
• Be seen by all stakeholders as making a positive diff i l ’ lidifference in people’s lives
19
We expect our markets to grow faster than GDP3p gMost growth expected to come in lighting and healthcare markets
We expect our markets to grow faster than GDP… …translating into expected market growth per sector…
Growth1 of markets in which Philips participates vs. nominal GDP growth
30%
100%
market growth per sector…
CAGR5 % 2010-2015
10%
12%
14%
~ 20%
~ 30%
4%
6%
8%
~ 50%
Market size growth2
0%
2%
Western Europe
North America
BIC World Consumer Lifestyle
Healthcare4
1. Excluding TV/AVM2. Based on internal analysis
gNominal GDP3
Lighting
20
3. Nominal GDP growth, EIU estimates4. Brazil, India, China5. CAGR: Compound Annual Growth Rate
Management agenda 2011g gAccelerate growth to achieve Vision 2015
Drive performance
• Make the turn to faster
Improve capabilities
• Champion customer
Implement strategy
• Strengthen and grow inMake the turn to faster growth and gain market share
• Deliver on financial
Champion customer responsiveness and adopt culture of growth
• Improve speed and
Strengthen and grow in all emerging markets -make China a “home” market
Deliver on financial returns
• Deliver on our Ecovisionsustainability
Improve speed and execution to market
• “Resource to win” now to ensure to achieve Vision
• Execute “must win” strategic battles in key business-market combinationssustainability
commitmentsensure to achieve Vision 2015
combinations
• Pursue value-creating acquisitions and invest in growth to strengthen our
21
growth to strengthen our portfolio
Becoming a global leader in health and well-beingHealthcare Lighting &
g g g
2010
Healthcare, Lighting & Consumer Lifestyle
Leading in health and well-being
Leading in health and well-being
Vision 2015
2007 Healthcare, Lifestyle
g gVision 2010
T d O Phili
y& Technology
2001
Towards One Philips
High Volume
22
High Volume Electronics
23