Philips 2007 Annual Report Download - page 81

Philips Annual Report 2007 87Philips Annual Report 2007 87
Sales and net operating capital
in billions of euros
Sales NOC
7
6
5
4
3
2
1
0
4.5
1.5
2003
4.5
1.5
2004
4.8
2.5
2005
5.5
2.5
2006
6.1
3.9
2007
EBIT and EBITA
in millions of euros
EBITA in valueEBIT in value EBITA as a % of sales
0
200
400
600
800
2003
528
528
11.7
12.0
10.6
11.1
11.9
2004
542
541
2005
508
499
2006
608
577
2007
722
675
growth across all businesses except for Special Lighting
Applications in Asia, related to the rapid contraction
of the rear-projection TV market. Sales growth was
notably strong in China (18%) and India (16%).
EBITA in 2007 amounted to EUR 722 million, growing
by EUR 114 million year-on-year to reach 11.9% of sales,
compared to EUR 608 million or 11.1% in 2006. This
improvement was driven by solid earnings growth at
Lamps and Luminaires, additional EBITA following the
successful integration of PLI, and lower losses related
to the  uorescent-based backlighting solutions business
which we exited in Q1 2007.
EBIT improved by EUR 98 million to reach EUR 675
million, or 11.1% of sales. Restructuring charges, purchase-
accounting-related charges and other net incidental items
totaled EUR 55 million, compared to EUR 48 million in 2006.
Cash  ows before  nancing included acquisition-related
investments totaling EUR 1,162 million in 2007, most
notably the net payments of EUR 561 million for Partners
in Lighting International and of EUR 515 million for
Color Kinetics. Net capital expenditures declined by
EUR 88 million compared to 2006, mainly due to higher
investments in Lumileds in 2006.
Net inventories increased to 15.4% of sales, compared
to 13.5% in 2006, primarily due to higher inventory levels
within PLI (due to rapid order ful llment requirements
and above-average lead times from PLI-owned factories
in China) and at Lamps (due to increased lead times
resulting from the transfer of the production of energy-
ef cient lamps to Asia).
Strategy and 2008 objectives
Philips Lighting will play an important role in the realization
of Philips’ Vision 2010 ambition. For 2008 and beyond,
Lighting has put in place a number of speci c value-creating
initiatives which it will drive through a framework of
Growth, Talent and Simplicity:
Accelerate growth, both organically and through •
the successful integration of acquisitions, on the basis
of strength in emerging markets and in energy-ef cient
lighting solutions
Expand in the direction of system solutions, closely •
connected to the applications in the market, in the areas
of professional luminaires and consumer luminaires
Continue to build on the leading position in •
solid-state lighting
Strengthen the leadership bench via proactive •
talent recruitment
Continue to build on the strong culture of excellence, •
while creating a learning organization focused on
continuous improvement
Streamline ways of working by implementing segment •
marketing, strengthening customer focus and driving
for supply excellence.
98 Risk management 112 Our leadership 116 Report of the Supervisory Board 126 Financial Statements