Lighting: Building on Strength - Thinking the Future

Transcription

1 Lighting: Building on Strength - Thinking the Future Theo van Deursen CEO Philips Lighting November 23, 2004

2 Agenda Mission, Vision & Strategy We improve people s lives Building on Strength - securing financial results Thinking the Future - profitable growth Conclusion Lighting 2

3 Philips Lighting: Mission statement We understand people Light is a visible form of energy It pushes back the night Welcomes the weary Protects those you love Banishes monsters from under beds Makes eyes sparkle and improve their lives with lighting Lighting 3

4 Philips Lighting: Vision statement To be recognized by all our stakeholders as The Clear Leader; Setting the pace in the lighting industry the best partner to do business with the best company to work for the best company to invest in a responsible citizen contributing to the sustainability of society at large Lighting 4

5 Lighting Strategy Overview Ambition Profitable Growth: In developing markets With leading global customers In existing markets In new segments Recognized by our stakeholders as The Clear Leader: Setting the pace in the industry Key Business Drivers End user driven Innovation Marketing Excellence Supply Excellence Committed and competent people, living our values Strategic Challenges Building on Strength: China Key Account Management Business to Business Think the Future: Consumer Electr. Applications Solid State Lighting On the basis of: A learning organization (Continuous improvement) Control of costs and assets Lighting 5

6 Agenda Mission, Vision & Strategy We improve people s lives Marketing Excellence: Brand foundation End user driven innovation Building on Strength - securing financial results Thinking the Future - profitable growth Conclusion Lighting 6

7 Philips Lighting: Sense and simplicity Upgrade light-system without interruption of the light effect and save 30% energy Lighting 7

8 Designed around you: End User Driven Innovation Experiences Purpose Process Product Lighting 8

9 Easy to Experience: 2 in 1 Nightlight Unique combination of energy saver and LED One click: night light Two clicks: normal light Lighting 9

10 Advanced: Based on Leading edge R&D Even experimenting in non-gravity environments International Space Station (April 2004): to improve High Intensity Discharge Lamps together with Technical University Eindhoven Parabolic flights to test filament of halogen bulb Lighting 10

11 Development R&D % and Size Patent Portfolio 5.0% 4.5% 4.0% Increasing R&D effort 3.9% 4.3% Patent Portfolio Increase : 58% % 3.0% 2.5% 2.0% 1.5% 2.8% 3.0% 3.3% # of Patent Families % % % E2004 T E2004 Lighting 11

12 Philips Lighting - Recent Innovations 1994 CDM MasterColour (high efficacy and white light colour) 1995 Low mercury fluorescent lamp TL5 (narrow diameter fluorescent) Xenon Automotive Head Lamp UHP (Ultra High Power light system for projectors) 1997 Fully recyclable fluorescent lamp 1999 HiPerVision (High performance car signalling lamp) 2001 Luxeon LEDs 2002 Improved and smaller UHP 2003 Night-light (hybrid LED-Compact Fluorescent) 2004 Mini CDM MasterColour (white light mini-spots) LED-modules (building blocks for luminaires) Night-guide car light (more-non-blinding-light, better reflection) Mercury free Xenon Automotive Head Lamp 12 watt Extreme Ultraviolet source (for Lithography) Lighting 12

13 Agenda Mission, Vision & Strategy We improve people s lives Building on Strength securing financial results Financial results China Key account management Business to Business Supply excellence Thinking the Future - profitable growth Conclusion Lighting 13

14 Philips Lighting 2003 Q1-Q Revenues: EUR 4.5 billion 5% comparable growth EBIT: EUR 577 million, or 12.8% of sales 13.5% Net operating capital (NOC): EUR 1.5 billion Return on NOC 34% 37% Employees: 43,800 Capital expenditure: EUR 164 million Lighting 14

15 Philips Lighting: EBIT margin and RONA 16 EBIT/SALES 40 RONA % '90 '92 '94 '96 '98 '00 '02 '04 Q3 5 0 (RONA= Return on Net Operating Capital) '90 '92 '94 '96 '98 '00 '02 '04 Q3 Lighting 15

16 Philips Lighting 2003 Sales by Region Asia 23% Europe 46% Americas 31% Lighting 16

17 Philips Lighting Sales per Business Group 2003 Automotive & Special Lighting 16% Lamps 50% Lighting Electronics 16% 30% 60% Direction of allocation of Capital Expenditures Luminaires 18% Total Sales to thirds: EUR 4.5 billlion Lighting 17

18 2003 Market Position Philips position # 1 # 2 or 3 < # 3 Size of market as % of world 38% 22% 7% 32% 100% Lamps W. Europe E. Europe N. America L. America Japan Asia/Pacific Total 46% Luminaires 29% Not served Not served Not Applicable Light. Elec. 15% Automotive 7% SpL. 3% Lighting 18

19 PD Lighting Comparable sales growth in Emerging markets Lamps 2004 vs (Q1-Q3) Market share Comparable growth 2003 Brazil 5% 32% C & E Europe 12% 27% China 8% 14% India 13% 36% Lighting 19

20 China: a fast expanding market Large market potential Philips #1 player in China We create and extend distribution with 100+ preferred partners Internet enabled: supplies, inventories, cash We extend into Mid-end of the market with dedicated products Track record of profitability Lighting 20

21 Continuous profitable sales growth in China Total Lighting Index based on USD '96 '97 '98 '99 '00 '01 '02 '03 Exp'04 Lighting 21

22 China: a vast supply base Access to vast supply base via fast growing China Sourcing Group (From USD 100 mln in 2004 to over USD 600 mln in 2007) Business Groups have 8 factories our leading edge assembly of UHP projection systems Lighting 22

23 China: Increasingly innovative Increasing local innovation resources: from 110 engineers in 2003 to 250 in 2007 Today: Shanghai Global Competence center for Compact Fluorescent Lighting 23

24 Growth partnerships with leading (global) Key Accounts Lighting 24

25 International Key Account Management drives sales top Key Accounts Philips Lighting EUR mln Exp.2004 Lighting 25

26 Strength in Business to Business: Olympic Games 2004 Athens 28 out of 33 venues (85%) with Philips Lighting Partnering with: Government & Municipality Olympic Committee TV Broadcasters International Sport Federations Lighting 26

27 Strength in Business to Business: Philips market leader with MasterColour CDM The change Today 5% penetration in shops Mini-Master Colour Miniaturization: Lead to increasing # of light points Resulting in acceleration of growth: 10% pa in value Lighting 27

28 Supply Excellence Impeccable quality: Towards 0 ppm level Integrated demand and supply planning suppliers customers High delivery reliability - Quick response Lighting 28

29 Supply Excellence Delivery Reliability: complete & on time Lighting Total 95.0 Target 90.0 % Q Q Q Q Q Q Q Q Q Q Q Lighting 29

30 Lighting IT Costs: ERP systems installed Index based on EUR mln '99 '00 '01 '02 '03 Exp'04 Further investment in IT to include supplier and customer in supply chain management, and to support account management and global R&D Lighting 30

31 Continuing Inventory Reduction as % of Sales '95 '96 '97 '98 '99 '00 '01 '02 '03 Lighting 31

32 PD Lighting Working Capital in mln EUR Turnover rate 1, Average Working Capital Turnover rate exp 04 4 Lighting 32

33 Continuous Improvement: Business Excellence in Philips Lighting All metrics show ample room for improvement Applying model from European Foundation for Quality Management we measure our progress: from 600 points today towards 700 in next two years Business Balanced Scorecards: focus on essentials Improve Business processes through: Systematic deployment of breakthrough plans Black Belts Green Belts Process Survey Tools Quality Improvement Competition: from 30 towards 40 % participation Lighting 33

34 Conclusion We improve people s lives Marketing Excellence: Brand foundation End user driven innovation Building on strength securing financial results China Key account management Business to Business Supply excellence Room for improvement In all our business processes In Margin and NOC turns But especially in accelerating profitable growth Lighting 34

35 We will accelerate profitable growth, breaking away from historic pattern Philips Lighting Sales growth % Average Growth Nominal 1.8% Comparable 2.2% Nominal Comparable Q Lighting 35

36 Agenda Mission, Vision & Strategy We improve people s lives Building on Strength - securing financial results Thinking the Future - profitable growth Automotive, Special Lighting & UHP Solid State Lighting Conclusion Lighting 36

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