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Pieter Nota
CEO Philips Consumer Lifestyle
Introduction
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Consumer Lifestyle is led by an experienced and
international team
We are geared for value delivery
Presenting today
Murali Sivaraman Egbert van Acht Caroline Clarke Federico de Angelis Fabian Wong
GM Domestic GM Health & Wellness GM Personal Care GM Coffee GM Greater China,
Appliances Consumer Lifestyle
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Key takeaways
• We are reshaping the Consumer Lifestyle portfolio
for profitable growth
– We are further re-positioning Consumer Lifestyle
towards the health and well-being domain, by
driving global scale and category leadership
– We are turning around Lifestyle Entertainment,
focusing the portfolio on growing categories
– We are progressing with the Television Joint
Venture, reducing our exposure to Consumer
Electronics
4
Key takeaways
• We are reshaping the Consumer Lifestyle portfolio
for profitable growth
– We are further re-positioning Consumer Lifestyle
towards the health and well-being domain, by
driving global scale and category leadership
– We are turning around Lifestyle Entertainment,
focusing the portfolio on growing categories
– We are progressing with the Television Joint
Venture, reducing our exposure to Consumer
Electronics
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Increased focus
We have reduced our exposure to Consumer Electronics from ~75% towards ~33%
TV
Lifestyle Entertainment
~33%
Personal Care
Domestic Appliances
We see strong growth in the combined Personal We significantly stepped-up investment in advertising
Care, Health & Wellness and Domestic Appliances & promotion and research & development, which
businesses1 improved market share2
Double digit
growth Health & Domestic
Personal Care
Wellness Appliances
Mid single
Greater
digit growth China
Americas
APMEA3
1.Values in the matrix represent enterprise value based on an indexed midpoint of 100
2. GfK, ZYK YTD-Jun 2011
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3. APMEA: Asia Pacific, Middle East & Africa
We will drive global scale and category leadership
In Male Grooming, Oral Healthcare, Kitchen Appliances and Coffee. All of these
categories show healthy growth and profit potential
Ambitions
Male • Attract new and younger users (combined wet and dry)
Grooming • Local product range in China to expand our value segment offerings
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We will drive global scale and category leadership
In Male Grooming, Oral Healthcare, Kitchen Appliances and Coffee
We will address our ‘spottiness’ by increasing our …by stepping-up our investments in Brand and
market share leadership positions in Business Innovation in Personal Care, Health & Wellness,
Market Combinations Domestic Appliances and Coffee
Male Oral Kitchen Brand:
Coffee
Market Grooming Healthcare Appliances
• ~85% of A&P investment in growth businesses
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Innovation:
4 • ~77% of R&D investment in growth businesses
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10
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Significant move-up
Remain leader (1st or 2nd)
in market position
Move from non-leader
Others
to leader
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We will drive global scale and category leadership
Using bolt-on acquisitions to grow our businesses
Strengthen existing Business Strengthen product portfolio for Enter new adjacent businesses
Market Combinations (BMCs) existing global businesses
Regional innovation hubs enable us to The acquisition of Discus Dental in We will explore high-growth adjacent
bring relevant innovation in large 2010 complements our Oral businesses in the health and well-being
growth geographies Healthcare portfolio and strengthens domain
the network of dental professionals that
we are serving
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We will drive global scale and category leadership
Leveraging our position in attractive growth geographies
In growth geographies Significant part of our business In the first two quarters our
spending power is increasing comes from growth market share2 improved
rapidly1 geographies
+12% China
236
India
40%
Brazil
135
Russia
60%
2010 2015
We see strong growth coming from the Growth geographies We will leverage growth geographies
rising urban middle class in growth by creating innovations catering to local
Mature geographies
geographies, driving aspirational needs
demand to improve their lifestyle
We will drive preference amongst our target We will drive preference amongst our target
audiences in-store (e.g. China) audiences online (e.g. United Kingdom)
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We are turning around Lifestyle Entertainment
focusing the portfolio on growing categories
Lifestyle Entertainment will be profitable over the full year 2011
We will transition the Lifestyle Entertainment The transition of the portfolio will result in modest
portfolio towards growing and profitable categories sales growth from 2013 onwards
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-10
0%
-15
-20
-25
2011 2012 2013 >2013
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We are progressing with the Television Joint
Venture, delivering on what we said before
1. Due diligence is completed, final negotiations with TPV are progressing and
we aim to complete the transaction by year-end, subject to regulatory
approvals
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Key takeaways
• We are reshaping the Consumer Lifestyle portfolio
for profitable growth
– We are further re-positioning Consumer Lifestyle
towards the health and well-being domain, by
driving global scale and category leadership
– We are turning around Lifestyle Entertainment,
focusing the portfolio on growing categories
– We are progressing with the Television Joint
Venture, reducing our exposure to Consumer
Electronics
17
We plan, resource and manage performance by
Business Market Combinations (BMC)
Now more than 80% of our growth is underpinned with BMC ‘handshakes’
In December 2010 we launched our granular BMC plans detail our aspirations, where to play
approach to growth and how to win
“Grow aggressively”
2010 2011 2015 BG-CO 2015
Sector A Sector B Sales, EUR mln
Market share
… … … …
▪ Value, % … … … …
▪ Volume, % … … … …
NPS, position:% rel … … … …
Product categories B1 B2 B3 B4 B5 B IGM, % of sales
ISM*, % of sales
…
…
…
…
…
…
…
…
EBIT, % … … … …
Market 1
Market 2 Geographic focus
Mkt/population split by geography,%
Price/ Segments/ category focus
Market split by segment/ category, %
Channel
Market split by channel, %
Competition
Market shares %
Key Secondary Not present Key Secondary Not present >80% 50-80% 20-50% <20%
100%= Segments Categories Wtd. Distribution/ sales share/ penetration 100%=
Market 3 Region/tier 1 .. mln .. mln
100%=
…mln …mln
100%=
…mln …mln =100%
Philips .. mln .. mln
Region/tier 2 Channel 1 …mln …mln Competitor 1
Seg 3 Cat 3
Market 4 Region/tier 3
Region/tier 4
Channel 2
Channel 3
Competitor 2
Competitor 3
Seg 2 Cat 2
Channel 4
Market 5 Region/tier 5
Region/tier 6 Seg 1 Cat 1 Channel 5
Competitor 4
Other
2010 2015 2010 2015 2010 2015 2010 2015 2010 2015
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Our new operating model stimulates
entrepreneurship and speed, ensuring accountability
Delivering on what we promised in 2010, moving decisions closer to markets
3. Market leaders are now part of the Management Team, e.g. Fabian Wong,
GM Greater China and Bret Furio, GM Americas
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We will increase speed and quality of product
innovation
Through effective end-to-end customer value chains and processes
We will accelerate Idea-to- We will increase agility and We will strengthen the local
Market performance technological competitiveness relevance of our innovations
The Sonicare Airfloss, removing 99% The Aquatouch is our dedicated skin The Soya milk Maker, most efficient
more plaque than manual brushing friendly wet and dry shaver solution in soya milk making: less
alone, is easier to use than traditional residue through advanced grinding
floss technology and filtering
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Key takeaways
• We are reshaping the Consumer Lifestyle portfolio
for profitable growth
– We are further re-positioning Consumer Lifestyle
towards the health and well-being domain, by
driving global scale and category leadership
– We are turning around Lifestyle Entertainment,
focusing the portfolio on growing categories
– We are dealing with TV, reducing our exposure in
Consumer Electronics
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We will create value in Consumer Lifestyle
Stepping-up sales growth, targeting 8-10% EBITA excluding licenses and
continued strong ROIC
Sales growth 1 3 - 6%
EBITA %
1 Assuming real GDP growth of 3-4%
2 Including restructuring and acquisition related charges
3 Excluding licenses 22
Key takeaways
• We are reshaping the Consumer Lifestyle portfolio
for profitable growth
– We are further re-positioning Consumer Lifestyle
towards the health and well-being domain, by
driving global scale and category leadership
– We are turning around Lifestyle Entertainment,
focusing the portfolio on growing categories
– We are progressing with the Television Joint
Venture, reducing our exposure to Consumer
Electronics
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