Philips 2010 Annual Report Download - page 237

18 Investor Relations 18.1 - 18.2
Annual Report 2010 237
Success of our EcoVision4 program
Targets over the period 2007-2012
•Generate 30% of total revenues from Green Products
• Double investment in Green Innovations to a
cumulative EUR 1 billion
• Improve our operational energy efficiency by 25% and
reduce CO2 emissions by 25%, all compared with the
base year of 2007.
In 2009 we achieved the Green Product sales target three
years ahead of schedule, with 31% of total sales from
Green Products. Subsequently, we increased the target to
50% in 2015. Green Product sales increased further in
2010 to 38%. In 2010 our cumulative investment in Green
Innovations was over EUR 1.1 billion, two years ahead of
schedule. Our operational energy efficiency and carbon
footprint reduction are on track to reach the third target
as planned in 2012.
Launch of our EcoVision5 program
In 2010, ‘Lead in Sustainability’ became one of the key
objectives of our Vision 2015 program, driven by the
launch of the EcoVision5 program, comprising of the
following leadership KPIs:
•Bringing care to people
Target: 500 million lives touched by 2015
•Improving energy efficiency of Philips products
Target: 50% improvement by 2015 (for the average
total product portfolio)
•Closing the materials loop
Target: Double global collection and recycling amounts
and recycled materials in products by 2015 compared
to 2009
More information on the EcoVision programs can be
found in section 5.4, Sustainability, of this Annual Report.
18.2 The year 2010
Emerging stronger from the crisis
We finished a strong 2010 on a stable note, with growth in
the second half of the year being slower than the first half.
We rebounded strongly from the economic downturn
caused by the financial crisis. Within the constraints of a
much weaker economy, we successfully implemented a
major part of our Vision 2010 strategy. With that we set
the stage for a successful future as outlined by our Vision
2015 strategy. Last but not least, we started to prepare for
a seamless transition to a new leadership team.
For the whole year, we achieved revenues of EUR 25.4
billion, a 10% increase compared to 2009. On a
comparable basis, that represents growth of 4.3%. For the
whole year, we achieved an EBITA margin of 10%. Our
adjusted EBITA margin, excluding non-recurring items,
was 10.5%, compared to 6.4% in 2009, significantly higher
than the target we set for ourselves as part of Vision 2010.
Free cash flow, at EUR 1.3 billion, was almost EUR 500
million up on 2009 driven by improvements in all sectors.
Our return on invested capital (ROIC) continued the
strong recovery started in the second half of 2009 and
reached 11.7% in the last quarter of 2010, which is very
close to our Vision 2010 target of 12%, and well ahead of
our WACC of 8.1%.
We continued to make good strategic progress during
2010. We kept our focus firmly on customer centricity,
which resulted in a further 7% increase in the value of the
Philips brand. Our brand value, at USD 8.7 billion, has
doubled since we launched our brand promise of “sense
and simplicity” in 2004, a significant achievement. Our
focus on becoming a leader in health and well-being is also
resonating with our customer base, with 60% of our brand
value being generated by our professional business. We
also strengthened our position in emerging markets, the
growth markets of the future. This is illustrated not only
by the growth of our sales figures in our key emerging
markets, i.e. China, India and Latin America, but also by
the outstanding growth in other emerging geographies
like the ASEAN countries, Ukraine, Central Europe,
South Africa and the Middle East. We have acquired
companies all over the world to further strengthen our
portfolio, and have product propositions which are
relevant for local markets. The year 2010 saw us making
two acquisitions each in China and Brazil.