Philips 2011 Annual Report Download - page 65

6 Sector performance 6.1.4 - 6.1.6
Annual Report 2011 65
Developing locally relevant solutions via partnership
agreements: We worked with the Russian State Atomic
Energy Corporation (ROSATOM) aimed at jointly
manufacturing important imaging modalities in nuclear
medicine in Russia.
Executing operational excellence initiatives
to increase margin and time-to-market
We continued our transPHorm efficiency and
effectiveness program aimed at improving our operating
margins over time, focusing on pricing, optimization of
low-cost-country sourcing, bill of material reductions, and
increased service productivity and operational efficiency.
6.1.5 EcoVision
Philips Healthcare is committed to deliver on its
EcoVision sustainability goals. We consider all Green
Focal Areas and aim to reduce total life cycle impact. In
2011 we added 29 Green Products to our portfolio,
including the Ingenia MRI systems with dStream, which use
up to 24% less energy than their predecessor. Another
example is the IntelliVue MX40 Patient Monitor, which
offers 85% reduction in power usage. Also our Home
Healthcare Solution Trilogy, which uses 62% less energy
than its predecessor. We also play an active role in
developing environmental legislation such as self-
regulatory initiatives on EcoDesign of Energy-using
Products.
6.1.6 2011 financial performance
In 2011, sales amounted to EUR 8,852 million, 3% higher
than in 2010 on a nominal basis, driven by higher sales in
all businesses. Excluding a 2% unfavorable impact of
currency effects, comparable sales were 5% higher. Mid-
single-digit comparable sales growth was achieved by all
businesses. Green Product sales amounted to EUR 2,663
million, a 25% year-on-year increase.
Geographically, comparable sales in mature geographies
were higher than in 2010 in all businesses except Imaging
Systems. The year-on-year sales increase was largely
attributable to North America, tempered by lower sales
in Western Europe. In growth geographies, we achieved
15% growth, largely driven by strong, double-digit growth
in China, India and Russia.
EBITA decreased from EUR 1,186 million, or 13.8% of
sales, in 2010 to EUR 1,145 million, or 12.9% of sales, in
2011. EBITA improvements were realized at Patient Care
& Clinical Informatics, Home Healthcare Solutions and
Customer Services, largely as a result of higher sales and
cost-saving programs. However, this was more than offset
by lower EBITA at Imaging Systems, due to higher selling
expenses and investments in R&D. Restructuring and
acquisition-related charges amounted to EUR 20 million,
compared with EUR 77 million in 2010.
EBIT amounted to EUR 93 million, or 1.1% of sales, and
included EUR 229 million of charges related to
amortization of intangible fixed assets and EUR 824
million of goodwill impairment losses.
Net operating capital in 2011 decreased by EUR 490
million to EUR 8.4 billion, mainly attributable to lower
intangible assets due to goodwill impairment and partially
offset by higher inventories, primarily at Imaging Systems.
Cash flows before financing activities decreased from an
inflow of EUR 1,139 million in 2010 to an inflow of EUR
770 million in 2011, mainly attributable to lower cash
earnings.
Sales at Healthcare are generally higher in the second half
of the year largely due to the timing of new product
availability and customers attempting to spend their
annual budgeted allowances before the end of the year.
Key data
in millions of euros
2009 2010 2011
Sales 7,839 8,601 8,852
Sales growth
% increase, nominal 2 10 3
% increase, comparable1) (3) 4 5
EBITA1) 848 1,186 1,145
as a % of sales 10.8 13.8 12.9
EBIT1) 593 922 93
as a % of sales 7.6 10.7 1.1
Net operating capital (NOC)1) 8,434 8,908 8,418
Cash flows before financing
activities1) 889 1,139 770
Employees (FTEs)2) 34,525 36,253 37,955
1) For a reconciliation to the most directly comparable GAAP measures, see
chapter 15, Reconciliation of non-GAAP information, of this Annual Report
2) Adjusted to reflect a change of employees reported for the past periods