Philips 2008 Annual Report Download - page 88

This systems approach, building on the strong position
we have gained in luminaires following our recent
acquisitions, is illustrated by new lighting solutions
we have introduced in 2008 in all our application
segments, such as shops, offices, homes, streets
and hospitality.
Leadership bench
Our 2008 People Leadership Index, which measures
the effectiveness of our leaders in engaging and managing
people, showed a major improvement from 63% to
71%. We have increased our annual recruitment of
‘top potentials’ to 24 (up 20%).
Excellence and learning
Our 2008 Employee Engagement score also showed a
significant improvement – from 64% to 72% – surpassing
our benchmark index and reflecting our efforts to build
a winning culture in our organization. And more than
40% of our employees are learning and developing their
competences in our Quality Improvement Competition.
Streamline ways of working
The transformation program outlined above reinforced
our segment marketing approach and strengthened our
customer focus. We have significantly simplified the way
we are organized by setting up regional commercial
organizations covering the whole product portfolio.
Both our sourcing and supply chain functions now have
global transparency and harmonized ways of working,
which has enabled us to offset a major part of the
commodity price inflation in 2008.
Key data
in millions of euros
2006 2007 2008
Sales 5,466 6,093 7,106
Sales growth
% increase, nominal 14 11 17
% increase, comparable 863
EBITA 608 722 538
as a % of sales 11.1 11.9 7.6
EBIT 577 675 165
as a % of sales 10.6 11.1 2.3
Net operating capital (NOC) 2,527 3,886 5,648
Cash flows before financing activities 451 (648) (1,139)
Employees (FTEs) 47,739 54,323 57,166
For a reconciliation to the most directly comparable US GAAP measures,
see the chapter Reconciliation of non-US GAAP information
2008 financial performance
Sales in 2008 grew by 17% in nominal terms, mainly
supported by the acquired companies: Genlyte and
Color Kinetics. Adjusted for portfolio changes of 18%
and unfavorable currency effects of 4%, comparable
sales grew by 3% compared to 2007. This growth was
driven by continued sales growth in energy-efficient
lighting solutions, notably within the Lamps and
Professional Luminaires businesses. Sales were broadly
in line with 2007 in the remaining businesses as a result
of the deteriorating economic climate in the latter part
of 2008 within the automotive, consumer and construction
industries. Green sales grew by 12% in 2008 compared
to 2007, reaching EUR 2,970 million. This growth was
supported by increased sales of solid-state lighting
applications, which grew by 6% to EUR 470 million,
as well as innovative product design and strong
growth in application-based solutions.
Geographically, comparable sales in the mature markets
slightly declined compared to 2007, as higher sales in
energy-efficient lighting solutions were more than offset
by the deteriorating economic climate in the automotive,
consumer and construction segments in North America
and Western Europe. Emerging market sales increased
8%, with growth in all businesses except Special Lighting
Applications, led by strong double-digit sales growth in
India, Eastern Europe and the ASEAN countries.
EBITA of EUR 538 million, or 7.6% of sales, declined
EUR 184 million compared to 2007 and included
EUR 221 million restructuring charges and EUR 41
million of acquisition-related charges. 2008 earnings
were also impacted by margin compression in mature
markets as a result of slowing demand, particularly
Philips Annual Report 200888
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Our group performance
18
We care about...
8
Message from
the President
6
Performance highlights
14
Who we are