Philips 2011 Annual Report Download - page 69

6 Sector performance 6.2.3 - 6.2.5
Annual Report 2011 69
retailers. And we have pioneered innovative approaches
in online and social media to build our brand and drive
sales.
Under normal economic conditions, the Consumer
Lifestyle sector experiences seasonality, with higher sales
in the fourth quarter resulting from the holiday sales.
Consumer Lifestyle employs approximately 18,300
people worldwide. Our global sales and service
organization covers more than 50 developed and growth
geographies. In addition, we operate manufacturing and
business creation organizations in Argentina, Austria,
Belgium, Brazil, China, Hungary, India, Netherlands,
Singapore, the UK and the US.
Consumer Lifestyle is subject to significant regulatory
requirements in the markets where it operates. This
includes the European Union’s Waste from Electrical and
Electronic Equipment (WEEE), Restriction of Hazardous
Substances (RoHS) and Energy-use of Products (EuP)
requirements. Consumer Lifestyle has a growing portfolio
of medically regulated products in its Health & Wellness
and Personal Care businesses. For these products we
strive to meet the requirements of all relevant regulatory
bodies such as the US FDA, the European Commission
for Regulations and Notified Bodies, the SFDA in China
and the Health Authorities in India.
With regard to sourcing, please refer to sub-section 5.3.3,
Supply management, of this Annual Report.
6.2.4 Progress against targets
The Annual Report 2010 set out a number of key targets
for Philips Consumer Lifestyle in 2011. In the course of
the year, reflecting the evolving business reality and the
adoption of Accelerate!, these were encapsulated in four
key sector acceleration trajectories designed to reshape
our portfolio towards growth – and to achieve our mid-
term targets. The progress made in addressing these
trajectories is outlined below.
Right-size the organization post TV joint
venture
We have plans in place to significantly reduce the
proportion of the stranded costs that resulted from the
disentanglement of our TV operations. We have moved
from a functional, centrally-led organization to an
organization centered around businesses and markets,
where businesses are responsible for the realization of
propositions and markets are responsible for the
realization of revenues.
Address Lifestyle Entertainment portfolio
and execute turnaround plan
We are transitioning the Lifestyle Entertainment portfolio
from declining traditional audio/video products such as
MP4 and DVD players towards growing and profitable
categories in the connected entertainment space,
including solutions that integrate with the Apple Airplay
and Google Android ecosystems. As a result, Lifestyle
Entertainment was profitable over the full year 2011.
Continued growth investment in core
businesses towards global category
leadership
We significantly increased our investment in advertising
and promotion, particularly in Male Grooming, Oral
Healthcare, Kitchen Appliances and Coffee. In Oral
Healthcare, we launched the Sonicare AirFloss, a major
innovation in dental care that uses rapid bursts of air and
water to provide an easier way for interdental cleaning. In
addition, we strengthened co-branding with our strong
single-category brands like Sonicare and Saeco.
Regional business creation; leverage fill-in
acquisitions in China and India
We acquired Preethi and Povos, leading kitchen
appliances companies in India and China respectively. We
moved the leadership of our Domestic Appliances
business to Shanghai, and implemented a network of
regional business creation hubs for kitchen appliances in
Europe, India, China and Brazil. Following the acquisition
of Preethi we now have clear kitchen appliances market
leadership in India. As a result of the acquisition of Povos
and locally-driven innovation, we have increased the
proportion of the Chinese kitchen appliances market we
address from 15% to 95%.
6.2.5 EcoVision
Sustainability continued to play an important role in the
product development process in our Consumer Lifestyle
sector. We continued to implement our voluntary
commitment to phase out polyvinyl chloride (PVC) and
brominated flame retardants (BFR) from our products,
launching new shavers and grooming products, among
others, free of these substances.
We introduced the SENSEO Viva Café Eco, the first
product in its category to be made from 50% recycled
plastics, and we also launched the EcoCare steam iron,
which reduces energy consumption by up to 25% and is
made from 30% recycled materials.