Philips 2010 Annual Report Download - page 9

President’s message
Annual Report 2010 9
Simply making a difference
In September 2010 we announced our Vision 2015
strategic plan, which focuses on fuelling growth, increasing
brand preference and strengthening our market
leadership in the domain of health and well-being.
This new five-year plan builds upon the achievements of
Vision 2010. Through Vision 2010 we transformed Philips
into a health and well-being company with a stronger
focus on emerging markets. We built a strong, balanced
portfolio of businesses, simplified the company in order to
capitalize upon market opportunities, invested in
marketing and innovation to drive future growth, and
structurally lowered our cost base, thereby boosting
profitability.
Now we are ready for the next step – growth. We want to
become the preferred health and well-being brand in most
of our chosen markets, as we leverage major global trends
to expand our leadership in key businesses such as home
healthcare, LED lighting solutions and healthy living and
personal care. We will also focus even more strongly on
emerging markets – as the number of middle-class
households in these markets rises, we expect demand for
our products to increase as people have more money to
spend on feeling and staying healthy. Last but not least, we
remain committed to leading the way in the area of
sustainability through the execution of our EcoVision5
program.
With our understanding of global trends and people’s
needs and aspirations, as well as our strong brand, solid
financial foundation and engaged workforce, I believe we
will continue to simply make a difference to people’s lives
with meaningful, sustainable innovations – and so deliver
structural top-line growth and consistently healthy profit
margins.
In concrete terms, we have set ourselves the following
challenging, yet realistic medium-term goals for the
2011-2015 period:
• Comparable sales growth on annual average basis at
least 2 percentage points higher than real GDP growth
• Reported EBITA margin between 10% and 13% of sales
• Growth of EPS at double the rate of comparable annual
sales growth
• Return on invested capital at least 4 percentage points
above weighted average cost of capital
Management Agenda 2011 – Accelerating
growth
Our overall challenge for 2011 is to accelerate growth.
This year we will take a series of firm steps towards
implementing our longer-term Vision 2015 objectives.
This will require us to accelerate our current course and
performance in order to seize the great opportunities we
have in most of our markets.
Under Drive performance we stress the need to urgently
accelerate the pace of growth, to take market share and
deliver on our financial and sustainability objectives.
Under Improve capabilities we outline what is required to
grow faster: a customer-centric culture of growth, with
granular business/market plans and the resources to
realize them, enabled by pragmatic teamwork across the
organization. If we succeed in bringing these elements
together, we will deliver, with excellence and faster time-
to-market.
The final column Implement strategy refers to the strategic
battles we want to win and underscores how crucial it is
to succeed in the rapidly growing emerging markets.
Final thoughts
Upon approval by the Annual General Meeting of
Shareholders, Frans van Houten will succeed me as
President of Philips as of April 1, 2011. Frans knows Philips
very well and brings strong qualities to the post – energy,
strong leadership and a deep understanding of both
professional and consumer markets. Under his leadership
Philips’ future is in very good hands.
I would like to take this opportunity to thank Pierre-Jean
Sivignon for his valuable contribution to Philips in his six
years as our CFO. He has been a great colleague and
business partner to work with, and I wish him the very
best for the future. I am delighted that in Ron
Wirahadiraksa we have found a highly qualified successor
from within our own ranks.
I would also like to express my deep gratitude to Jan-
Michiel Hessels, who is stepping down as Chairman of our
Supervisory Board, for his counsel and support during my
tenure as President.
On a sadder note, toward the end of the year we lost a
fine colleague with the passing of Gerard Ruizendaal, our
Chief Strategy Officer. Gerard played a key role in
defining the strategic focus of the company and in
strengthening our business portfolio. He is deeply missed.