Philips 2005 Annual Report Download - page 71

Philips Annual Report 2005 71
Optical Licenses’ sales declined. In the Lighting division,
Lighting Electronics and Luminaires were the main
drivers of the 4% growth. Semiconductors’ sales level
approximated 2004, despite the less buoyant cycle for
the greater part of 2005. Other Activities’ sales
declined
almost 18% in nominal terms due to the divestment of
certain non-strategic activities within the Corporate
Investments portfolio.
Earnings before interest and tax
The following overview aggregates sales and EBIT.
in millions of euros 2005
sales EBIT
as a % of
sales
Medical Systems 6,343 679 10.7
DAP 2,194 358 16.3
Consumer Electronics 10,422 506 4.9
Lighting 4,775 556 11.6
Semiconductors 4,620 307 6.6
Other Activities 2,041 (156 ) (7.6 )
Unallocated − (471 ) –
30,395 1,779 5.9
in millions of euros 2004
1)
sales EBIT
2)
as a % of
sales
Medical Systems 5,884 35 0.6
DAP 2,044 332 16.2
Consumer Electronics 9,919 370 3.7
Lighting 4,526 593 13.1
Semiconductors 4,491 430 9.6
Other Activities 2,482 366 14.7
Unallocated − (540 ) −
29,346 1,586 5.4
1) Restated to present the MDS activities as a discontinued operation
2) Restated to refl ect the move of the EUR 22 million global brand campaign costs
to Unallocated
Total EBIT increased from 5.4% to 5.9% of sales in 2005.
Medical Systems’ EBIT of EUR 679 million was above 2004.
2004 included impairment charges of EUR 590 million for
MedQuist and EUR 133 million for the Volumetrics litigation
settlement. The growth in sales in 2005 was not fully refl ected
in EBIT margins mainly due to increased expenditures in
research and development and the loss of EUR 87 million
for MedQuist.
DAP improved its EBIT primarily as a result of strong sales
growth driven by new products. Profi tability improved to
16.3% of sales, slightly above both 2004’s 16.2% and the
division’s target of 15%.
The EBIT of CE’s operational business, which excludes
Optical Licenses, improved signifi cantly in 2005 due to
higher sales, the positive impact of its Business Renewal
Program, EUR 73 million lower restructuring charges and
the EUR 136 million gain on the TPV transaction.
Earnings before interest and tax for Optical Licenses
in millions of euros
600
400
200
0
of which past-use 
of which current-use
258
93
351
2001
149
39
188
2002
176
121
297
2003
226
252
478
2004
140
50
190
2005
Optical Licenses, which is part of CE, saw income from
optical patents decline, from EUR 478 million in 2004 to
EUR 190 million in 2005 following an exceptionally strong
contribution to income generated by past-use licenses and
general settlements in 2004. Current-use license income
decreased by EUR 86 million, mainly as a result of lower
proceeds from CD and DVD-related programs.
Lighting’s EBIT declined from EUR 593 million in 2004
to EUR 556 million, mainly as a result of increased research
and development expenditures for new products, lower
demand for UHP applications and costs related to the
acquisition in November 2005 of a further 47.25% stake in
Lumileds. Philips’ stake in Lumileds is now 96.5%.
As Semiconductors’ EBIT in 2005 was impacted by
weaker markets in the early part of the year, it declined
from EUR 430 million in 2004 to EUR 307 million in 2005.
The division fi nished the year strongly to report a full
year EBIT of 6.6% of sales, which was within the division’s
targeted 5-15% range.