Philips 2006 Annual Report Download - page 65

Philips Annual Report 2006 65
Materials and services that are not used in products
or production are purchased through Philips General
Purchasing, leveraging the signifi cant buying power of
the Philips Group. Suppliers must comply with Philips’
sustainability requirements in respect of environmental
and working conditions.
Distribution channels
Due to the diverse nature of its business, DAP
maintains a broad span of distribution channels – e.g.
mass merchants such as hypermarkets as well specialist
chains, department stores and mail-order companies.
In 2006, DAP further intensifi ed its contacts with
international key accounts, sharing future business
and product strategies and involving them earlier in
the product creation process for direct market input.
This is crucial for strengthening the innovation-to-
market approach for both DAP and its trade partners.
Regulatory requirements
DAP has to manage an increasing array of regulatory
requirements for its products, in particular those in
the Health & Wellness domain; compliance with its
regulatory environment is key for the division. DAP’s
processes and products need to conform to the
relevant regional or national regulatory requirements.
Such legislation includes the EU WEEE (Waste from
Electrical and Electronic Equipment) Directive and the
RoHS (Restriction of Hazardous Substances) Directive.
Strategy and 2007 objectives
DAP has an ambitious annual comparable growth target
of 7% while maintaining an EBITA margin of around 15%.
The division sees this sustainable profi table growth being
supported by all of its businesses. With the emphasis on
speed, focus and innovation, DAP’s strategy for 2007
defi nes the following targets:
Growth
Increase customer focus: category management,
international key account management and
channel strategy
Focus resource allocation on mission-critical initiatives
Ensure functional leadership to maximize cost
effi ciencies and speed
Talent
Further develop consumer-centric innovation
competence
Focus on talent by securing engagement and
internationalizing the talent pipeline
Simplicity
Simplify the organization by creating a direct
link between markets and the business
Redesign and simplify the innovation process
towards Open Innovation.
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Philips Annual Report 2006 65
Sales and net operating capita
l
i
n
b
illi
o
n
so
f
eu
r
os
Sa
l
es
NOC
3
2
1
0
2.3
0.5
2002
2.1
0.5
2003
2.0
0.4
2004
2.2
0.4
2005
2
.
6
1.8
2006
Earnings before interest and tax (EBIT)
i
n milli
o
n
so
f
eu
r
os
EBIT
as a % of sale
s
500
400
3
00
200
1
00
0
401
17.6
2002
398
18.7
2003
332
16.2
2004
358
16.3
2005
386
14.6
2006
54 The Philips sectors
Domestic Appliances
and Personal Care
86 Risk management 100 Report of the Supervisory Board 110 Financial Statements