Philips 2009 Annual Report Download - page 9

We acquired a number of strategically aligned high-
growth businesses in 2009. As outlined above, these
included coffee machine maker Saeco, healthcare
company Traxtal in the growth area of image-guided
intervention and therapy, and Dynalite and Teletron, two
specialists in lighting controls – technology that is key to
the unfolding LED lighting revolution.
Increase revenue derived from leadership positions
In spite of worldwide market downturns, some 60% of
our revenue was generated by businesses with global
leadership positions in 2009.
Building the leading company in Health and
Well-being
Based on fundamental customer and end-user insights, we
integrate technology and design into people-centric
solutions that deliver on our promise of “sense and
simplicity”. We believe the current economic crisis is
likely to have the effect of accelerating the fundamental
trends underpinning our strategy, thereby intensifying
demand for healthcare (especially outside the hospital), a
healthy lifestyle and solutions with a better ecological
footprint, such as energy-efficient high-quality lighting.
With strong leadership positions in both clinical and home
healthcare, as well as a growing presence in emerging
markets, we will continue to simplify healthcare by
focusing on the people in the care cycle – patients and care
providers – in order to improve patient outcomes while
easing the financial pressure on the healthcare system.
Building upon market-leading positions based on
differentiation and profitability rather than scale, we will
also continue to focus on innovative lifestyle solutions that
enhance consumers’ sense of personal well-being. Where
appropriate, we will enter new value spaces.
And, supported by the growing demand for energy-saving
solutions and the trend toward solid-state lighting, we will
continue to drive the transition from lighting products to
application-based solutions.
We have responded to the economic downturn by
stepping up our efforts to become a more customer-
focused, agile and simpler company. I remain confident we
will come out of this difficult economic period as a leader
in the field of health and well-being. We have the strategy,
financial resources and human capital that are required for
success. Clearly, aspiring to improve people’s health and
well-being automatically implies that sustainability will
remain integral to everything we do.
Management Agenda 2010
Our Management Agenda 2010 is our compass for the
next year of our journey to bring “sense and simplicity” to
health and well-being markets.
In the column Drive performance we stress the importance
of returning to growth and increasing market share. At
the same time, we must continue to manage cost and cash
aggressively, as that is essential to enable healthy growth.
Under Accelerate change we have made the empowerment
of our people in local markets and customer-facing staff a
key priority, so that we can help our customers more
quickly and effectively and thus gain a competitive edge.
Increasing the number of Philips promoters and driving
engagement levels remain crucial objectives.
As well as referring to key strategic initiatives in our
sectors, the final column, Implement strategy, reaffirms our
vital ambition to strengthen our position in emerging
markets and the importance of leveraging sustainability as
an integral part of our strategy and an additional driver of
growth.
Final thoughts
In the current climate we cannot reliably predict future
developments. Visibility beyond the short term remains
low. However, we are very confident about our prospects
when the economy does recover.
We have a portfolio of strong businesses that provide
innovative, simplicity-led solutions to many of the issues
associated with important global trends – the demand for
affordable healthcare, the desire for personal well-being
and the need for greater energy efficiency.
We have a solid balance sheet and a good cash position, an
increasingly strong brand and leading market positions,
especially in emerging markets, as well as a committed,
highly motivated workforce.
We will continue to stay focused on cost and cash flow
and to act decisively to capture growth opportunities. I
believe 2010 will be a year of solid progress towards our
EBITA profitability target of 10% or better. During the
past 12 months we have rigorously managed cash and cost
while retaining the capability to ramp up production to
meet demand when sales do rebound. Across our sectors
we have substantially lowered our fixed costs and our
break-even point. At the same time, we continue to invest
in emerging markets and acquisitions while maintaining
our spending on innovation and marketing.
President’s message
Philips Annual Report 2009 9