APC 2005 Annual Report Download - page 69

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67
Business Review
5
Outlook for 2006
We intend to actively pursue a strategy designed to
increase our growth potential and reduce the cyclical
nature of our business.
As part of this strategy, we’re maintaining a sustained
commitment to innovation, with nearly 5% of revenue
invested in R&D. We are continuing to deploy R&D
capacity in emerging markets–with centers in Shang-
hai, China, Bangalore, India, and Monterrey, Mexi-
co–while ensuring a strong presence in high technol-
ogy countries like the US, Germany, and Japan.
We are stepping up our expansion in high-growth
countries, especially the US and emerging markets,
by investing heavily to maximize our market coverage
and strengthen our leadership positions.
At the same time, we’re growing at a quick pace in
energy management, industrial and building automa-
tion, ultra terminal electrical distribution and services.
With these new activities, we’re broadening our lineup
to meet our customers’ new and growing needs.
Thanks to these moves, we have a unique portfolio of
energy management solutions to help customers opti-
mize their strategies, as well as their energy costs.
These solutions offer automation functions that
enhance installation performance, efficiency and ease
of use in the Industry, Buildings, Residential and Ener-
gy & Infrastructure markets.
As part of our new2Company Program focused on
growth, efficiency and people, we have set the follow-
ing targets for 2005-2008:
Organic revenue growth of more than 5%.
An operating margin of between 12.5% and 14.5%
throughout the business cycle.
A 2% to 4% improvement in ROCE over 4 years.
A payout rate equivalent to 50% of net profit and an
optimized balance sheet with a debt-to-equity ratio of
30% to 40% in the next two years.
Based on current economic conditions and exchange
rates, we anticipate further growth in revenue and
operating profit, in line with new2’s growth and efficien-
cy targets.
Aside from announced acquisitions described in note
28 (Subsequent Events) to the consolidated financial
statements, no changes have occurred since Decem-
ber 31, 2005 that are likely to have a meaningful
impact on the Company’s assets or income.