1. Building the leading company in
health and well-being
An introduction to Philips
1
2. A strong diversified industrial group leading in
health and well-being
Who we are Our businesses Our mission
Founded in 1891
Headquartered in Amsterdam,
The Netherlands Improving
26%
Sales of €22.6 billion in 20111
40%
people’s lives
Growth Markets
33% of sales generated in
2011 through
growth geographies
meaningful
34%
Globally recognized brand
(world top 50)
innovation.
Our brand value doubled to $8.7bn
since 20042
Healthcare
122,000 employees
Lighting
Sales and service outlets in over
100 countries
Consumer Lifestyle
€1.6 billion investment in R&D,
7% of sales
2
1
Note - All figures exclude discontinued operations 2
Source: Interbrand
3. Operating in the right markets
Addressing key societal issues
Demand for Need for energy Desire for increased
affordable healthcare efficient solutions personal well-being
Mature
67%
4. Healthcare
Highlights 2011:
• Philips received Food and Drug Administration (FDA)
clearance to market its whole-body PET-MR imaging
system in the US
• Ultrasound ClearVue manufactured in China and
sold locally and globally
2011
Imaging Systems
Customer Service
Patient Care and Clinical Informatics
Home Healthcare Solutions
5. Healthcare
Philips Healthcare
Businesses1 Sales & services geographies1
Imaging Home Patient Care Customer North America International Growth
Systems Healthcare and Clinical Services Geographies
Solutions Informatics
38% 14% 22% 26% 45% 34% 21%
€8.9 37,000+ 8% 450+
Billion sales People employed of sales invested in R&D Products & services
in 2011 worldwide in 100 countries in 2011 offered in over 100 countries
1
Full year 2011
6. Consumer Lifestyle
Highlights 2011:
• Since launch of Sonicare AirFloss in key geographies,
Philips increased market share
• The new mixer grinder co-developed with Preethi for local
Indian market launched in record time
Domestic Appliances
2011
Personal Care
Health & Wellness
Lifestyle Entertainment
Other incl. Licenses
7. Consumer Lifestyle
Philips Consumer Lifestyle
Businesses1 2 Geographies1
Personal Health & Domestic Lifestyle Mature Growth
Care Wellness Appliances Entertainment Geographies Geographies
22% 13% 28% 31% 58% 42%
€5.8 18,000+ 5% 27%
Billion sales People employed of sales invested of green product
in 2011 worldwide in R&D in 2011 sales in 2011
Full year 2011
1
Other category (6%) is mainly license income and is omitted from this overview
2
Note - All figures exclude discontinued operations
8. Lighting
Highlights 2011:
• Philips won the ‘L-Prize’ for LED replacement of 60W
light bulb in a competition by the US Department of Energy
• Philips InstantTrust: innovative water solution based on
cutting-edge UV disinfection technology
Lamps/Lighting Systems & Controls
2011
Professional Luminaires
Consumer Luminaires
Automotive
Packaged LEDs
9. Lighting
Philips Lighting
Customer Segments1
Homes Offices Outdoor Industry Retail Hospitality Entertainment Healthcare Automotive
23% 17% 15% 9% 15% 5% 3% 4% 9%
€7.6 53,000+ 5% 80,000+
Billion sales People employed of sales invested Products & services
in 2011 worldwide in 60 countries in R&D in 2011 offered in 2011
1
Indicative split
10. Sustainability as a driver for growth
Accelerating sustainable business
• Green Products represented 39% of total sales
in 2011, up from 30% in 2009
• By 2015 Philips aims to invest EUR 2 billion in
Green Innovation
EcoVision 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
amounts of our products, as well as double the
amount of recycled materials in our products
10
11. Creating meaningful innovations
Improving lives in new ways
Gain deep insights into people’s
needs and aspirations
by following a process requiring
end-user input at every stage
Transform insights into innovations
by combining the diverse perspectives of
different disciplines
“Learn fast, fail cheap”
by applying a rigorous process to assess value
potential early
Lead in open innovation
by working closely together with partners in a
spirit of open innovation
11
12. Customer intimacy and speed
Essentials for successful innovation
• Understanding local relevance and
customer insights
• Increasing entrepreneurial power in
the markets
• Innovating in regional hubs in both
mature and growth geographies
• Partnering with (local) customers,
companies, universities,
governments…
12
13. Unique leadership positions in many markets
Healthcare
Global Global Global Global Regional
Cardiovascular Patient Cardiac Sleep Therapy Ultrasound
X-ray Monitoring resuscitation Systems
Consumer
Lifestyle
Global Global Global Regional Regional
Male electric Garment Care Rechargeable Kitchen Electric Hair
shaving Toothbrushes Appliances Care
Lighting
Global Global Global Global Global
Lamps LED Lamps Automotive Professional High Power LEDs
Lighting Luminaires
14. The world’s 41st most valuable brand in 2011
Philips increased brand value by 29% in the last five years
Value of the Philips brand1 A strong brand drives sales
USD billions A significant amount of sales is attributable to
the brand alone:
• Healthcare 42%
• Consumer Lifestyle 42%
8.7 8.7
8.3 8.1 • Lighting 16%
7.7
6.7
5.9 Brand ranking improves in 2011
4.4
Moving up one rank in top 100 global brands list,
Philips has reached the highest position ever.
Brand value doubled since 2004
2004 2005 2006 2007 2008 2009 2010 2011
Strong internal brand2
84% of employees are “proud to work for Philips”
Brand campaign 2011
Developing thought leadership in health and
well-being and making our trusted brand
promise of ‘sense and simplicity’ meaningful in
this area
1
Source: Interbrand Brand Valuation 2011
2
Employee Engagement Survey 2011
15. Philips people
Unlocking full potential: driving market-oriented entrepreneurship
Employee Engagement Index • In the times of change,
remaining on par with
High performance 77
benchmark
76 high-performing companies
72 71
• Customer centricity and
strive for excellence strongly
66
63
embedded in performance
62
culture
• Making employees
accountable for results
2005 2006 2007 2008 2009 2010 2011
Philips at high performance norm
The 2011 ‘employee engagement index’ polling over
90,000 of the Philips workforce showed we are amongst
the world’s top-ranking companies
17. Our portfolio now consists of ~65% B2B businesses
Healthcare Healthcare Healthcare
Lighting Lighting Lighting
Consumer Lifestyle Consumer Lifestyle Consumer Lifestyle excl. TV
Semiconductors
16%
22% 26%
30%
40%
2 43% 3
2005 2008 2011
17%
45%
27% 34%
1
Healthcare Consumer Lifestyle Lighting Semiconductors
1
Consumer Lifestyle in 2005 includes the former DAP and Consumer Electronics divisions
2
2005 figures are based on US GAAP
3
Figures exclude Television as it is treated as discontinued operation
18. Building on our strong company assets
1
Based on annual Philips’ Employee Engagement Survey
19. Looking ahead
• Building on legacy of 120 years Philips
• A focused portfolio, with strong potential in growth
and mature markets
• Driving investments and results in innovation,
people, systems, and markets to deliver
improved profitable growth
• Responding to fast-changing market conditions
2011 Sustainability Report key facts: Green Product 39% of total sales – well on track to reach the target of 50% in 2015 In 2011 investment of EUR 479 million in Green Innovation – dedicated to addressing global challenges related to care, materials, and energy efficiency (as detailed in EcoVision program) In 2011 we already touched over 465 million lives, mainly through our Healthcare solutions Recent accomplishments Philips regained its sector and super sector leadership in the Dow Jones Sustainability Index Philips reaches a joint first place in the Global Carbon Disclosure Leadership Index Philips received the prestigious Giga Ton Award (known as the Green Oscar) for its long-standing business leadership to reduce carbon usage Philips received an overall global rating of 10.0 (“best in class”), the highest being assigned from GMI, an independent global company in Corporate Governance and ESG Top 10 position in Newsweek Green ranking 2011 Top 50 position in Best Global Green Brands 2011 NOTES: From 2012 onwards, EcoVision4 and EcoVision5 are merged into a single program labeled as EcoVision Green Product sales figures of 2011 exclude discontinued operations (e.g. TV business) For more details on Philips’ Sustainability performance, please refer to www.philips.com/annualreport2011
While our product portfolio has changed profoundly, innovation remains a cornerstone of our business strategy. We improve people’s lives at many levels: We make cardiovascular surgery quicker, safer and less costly. Our smart lighting in schools helps students to achieve better results and lowers the schools’ electricity bill. And our innovative kitchen appliances help people prepare healthier and tastier food. Investing in innovation will help you to become more productive and more future proof. In June 2011 we announced that we are stepping up targeted investments in market penetration and innovation. In the challenging economic times, by investing in breakthrough innovation companies and governments could even invest themselves out of the crisis. For example: Investments in Home Healthcare and sophisticated Patient Monitoring can improve the quality of the full care cycle while at the same time reducing its overall costs significantly. Investments in technology have proven to bring down the costs of the overall healthcare system. And the same holds true for lighting. We recently upgraded highways in both Malaysia and the Netherlands with new energy efficient street lighting and built a system that actually is paid out of its savings. And upgrading and refurbishing existing buildings with new, energy efficient technologies will result in even more attractive office spaces in the future. Savings can reach tens of billions of Euros a year when switching to innovative, energy efficient lighting of our streets and buildings. [depicted proofpoint: Lumiblade Living Shapes, OLED installation – demonstrated at Innovation Experience, Eindhover, September 2011’]
Innovation starts with a good idea, which comes from true understanding of your customers and markets. It means that we need to offer the right products and technologies people need. And bring it to market fast and effectively. If we get that whole chain right, a good idea will become a successful innovation, grow the business and will become relevant for our customers and the society in general. Customer intimacy is an essential part of innovation. That means you need to know what your customers need. To stimulate local entrepreneurship, we are going to devote much more attention to the specific needs of local markets. That can only be done by giving local people the scope to respond to those local needs and influence worldwide product policy. In Brazil they prepare coffee in a different way than in the Netherlands. And hospitals in China have different needs than those in the United States. One size does NOT fit all. Our Healthcare business in China, for example, increased 25% in sales per year, as a result from more local operational freedom. For example: We are now building China as our second global home. We innovate in and for China. We have developed the “Active Water” solution to tackle the problem of residual pesticides on fruit and vegetables, which is a serious problem in China and can cause health issues. We have also developed a solution for indoor air pollution in China, caused by chemical substances emanating from inner walls. Of course, our focus in emerging markets is not just on China. We are strong in Brazil and Russia and strong in India, where we are stepping up our investments to build up a stronger presence in the kitchens of the Indian households. [depicted proofpoint: The new mixer grinder co-developed by Philips and Preethi, which was launched in record time for the local Indian market in mid-October 2011]
HEALTHCARE Cardiovascular x-ray Global #1 position Seen as most exciting and interesting Brand by Cardiologists Patient monitoring Global #1 position Leader in Cardiology PACS and Critical Care Informatics in the United States and Germany Cardiac resuscitation Global #1 position Advanced Algorithms for enhanced gender-specific criteria to help recognize and interpret cardiac symptoms in women Sleep Therapy Global #1 position in sleep therapy systems for OSA 1 Full range of solutions with the quietest platform Ultrasound #1 position in North America NPS leader in Ultrasound globally Home monitoring [not pictured on the slide] #1 position in North America Leading innovation with AutoAlert automatic fall detection CONSUMER LIFESTYLE Male electric shaving Global #1 position Leading in most major markets, including #1 in the USA and China Garment care Global #1 ironing brand #1 position in China, India and Russia Rechargeable toothbrushes Global #2 position #1 position in the USA, Korea and Japan Kitchen appliances #1 positions in India, Brazil and Russia We strive to achieve global leadership through local relevance Electric haircare #1 position China and increasing our lead over the next best competitor #2 in Russia, closing gap with current market leader Filter coffee machines [not pictured on the slide] #1 position in Europe, and leading position in Brazil Strong edge over the next competitor in most European markets LIGHTING Lamps Global #1 position Widest portfolio of lamps NPS ‘Best partner’ used & recommended by customers LED lamps Global #1 position Won the L-Prize challenge (60W LED replacement); only company to meet the challenge Automotive lighting Global #1 position 1 out of 3 cars globally equipped with Philips bulbs NPS ‘Best partner’ used & recommended by customers Professional luminaires Global #1 position Largest LED luminaires company in the world High power LEDs Global #2 position #1 in flash and #2 in general Illumination NPS ‘Best partner’ used & recommended by customers Lighting systems & controls [not pictured on the slide] Global #1 position NPS ‘Best partner’ used & recommended by customers in Lamp Drivers
This year's results show an overall employee engagement of 76% (-1% vs. 2010). Our People Leadership Index - which reflects your perception of your line management - increased to 78%, up two points compared to last year. These results tell us that Philips employees are committed to our company which is a tremendous and crucial asset in our ongoing journey to Accelerate Philips to higher growth and performance. With this result we also remain on par with high-performing companies in the times of change. New in this year's survey, we asked our employees’ feedback on our performance culture.* We have learned that our employees experience our 'strive for excellence' and 'customer centricity to win in the market' as strong points (respectively 90% and 84% favorable scores). On the other hand, employees feel that can improve the speed of decision making and making people accountable for their results. In the coming year(s), operational excellence and customer centricity remain key areas we are addressing and one of the cornerstones for how our company will operate in the future. * INTERNAL NOTE: EES scoring system entails 4 items as of year 2011. Data from previous years has been recalculated [in the graph] to make a fair comparison of progress.
ACQUISITIONS IN 2011 HEALTHCARE Jun-2011 Sectra (Imaging Systems: Expand Women’s Healthcare portfolio with a unique digital mammography solution in terms of radiation dose) Jun-2011 AllParts Medical ( Customer Services: Expand capabilities in imaging equipment services, strengthening Philips’ Multi-Vendor Services business) Mar-2011 Dameca ( Patient Care and Clinical Informatics: Expand portfolio with integrated, advanced anesthesia care solutions) Jan-2011 medSage (Home Healthcare: Strengthen portfolio with by becoming a leading provider of patient interaction and management applications) CONSUMER LIFESTYLE Jul-2011 Povos (Domestic Appliances: Expanding product portfolio in China and continue to build business creation capabilities in growth geographies) Jan-2011 Preethi ( Domestic Appliances: Becoming a leading kitchen appliances company in India) LIGHTING Jan-2011 Optimum (Professional Luminaires: Expand portfolio with customized energy-efficient lighting solutions) Jun-2011 Indal (Professional Luminaires: Strengthen leading position in professional lighting within Europe)
