Philips 2008 Annual Report Download - page 46

Earnings
In 2008, Philips’ gross margin was EUR 8,495 million,
or 32.2% of sales, compared to EUR 9,223 million,
or 34.4% of sales, in 2007. Adjusted for the 2008
asbestos-related settlement charge of EUR 239
million, gross margin declined from 34.4% of sales
to 33.1%. The majority of this decline was due to
EUR 275 million restructuring and asset impairment
charges, attributable to most sectors.
Selling expenses increased from EUR 4,980 million
in 2007 to EUR 5,501 million in 2008, largely due
to additional acquisition-related selling expenses at
Healthcare and Lighting, as well as EUR 154 million
of restructuring charges across all sectors. These
increases were partly offset by lower selling expenses
at Group Management & Services. As a percentage of
sales, selling expenses increased from 18.6% in 2007
to 20.8% in 2008, mainly due to the aforementioned
restructuring charges and the impact of lower sales
at Consumer Lifestyle.
General and administrative expenses amounted to
EUR 1,016 million, an increase of EUR 97 million compared
to 2007, mainly due to EUR 51 million of restructuring
charges, primarily within Lighting and Consumer Lifestyle,
and higher costs in Consumer Lifestyle. As a percentage
of sales, G&A expenses increased from 3.4% in 2007
to 3.9% in 2008, largely due to the lower sales in
Consumer Lifestyle and higher restructuring charges
across most sectors.
Research and development costs declined slightly from
EUR 1,629 million in 2007 to EUR 1,622 million in 2008
as EUR 40 million of restructuring charges and higher
spend in Lighting and Healthcare were offset by lower
expenditures at Consumer Lifestyle. At 6.1% of sales,
2008 R&D expenditures were in line with 2007.
The overview on the previous page shows sales, EBIT
and EBITA according to the 2008 sector classification.
In 2008, EBIT declined by EUR 1,524 million compared
to 2007, to EUR 317 million, or 1.2% of sales. EBIT
included a EUR 232 million non-cash goodwill impairment
for Lumileds as well as EUR 15 million write-off of
acquired in-process R&D charges. EBIT and EBITA
were both impacted by EUR 520 million restructuring
charges and EUR 131 million of acquisition-related charges,
as well as a EUR 239 million asbestos-related settlement
charge. 2007 included EUR 37 million of restructuring
charges and EUR 41 million of acquisition-related charges.
Adjusted for the aforementioned charges, EBITA
declined from 8.0% of sales to 6.9% in 2008, largely
due to lower sales at Consumer Lifestyle and lower
license income at Innovation & Emerging Businesses.
‘Natural’ office lighting
Philips DayWave is the first LED-based luminaire for
functional office lighting. Incorporating cool and
warm-white LEDs and an innovative optical system,
this graceful, curving fixture has been specifically
conceived to create a more natural, inspiring
ambience, in order to enhance staff well-being and
performance. Subtle variations and nuances of light
level and tone create an effect more in tune with
people’s natural rhythms, contributing to their feeling
of well-being.
“ No other form could better express
the flexibility of LED technology.”
Architectenkrant, April 2008, issue 216
Philips Annual Report 200846
42
Our group performance
Management discussion
and analysis
18
We care about...
8
Message from
the President
6
Performance highlights
14
Who we are