Philips 2013 Annual Report Download - page 8

Message from the CEO
8 Annual Report 2013
vision to improve the lives of 3 billion people a year by
2025 helps to dierentiate us from the competition,
have a closer relationship with our customers, create IP
and ultimately create more value.
We see the shift from a linear to a circular economy as a
further opportunity to create value. In a linear economy,
products are used briefly and then discarded as waste.
In a circular economy, products are designed so they
become part of a value network where re-use and
refurbishment ensure continuous re-exploitation of
resources.
We are redesigning our products in order to capture
their residual value. And we are shifting from
transactions to relationships via service and solution
business models. A good example is the 10-year
performance contract we were awarded to install,
monitor and maintain 13,000 connected lighting
fixtures and energy management controls for parking
garages in Washington, DC. Because we are ensuring
light levels and delivering the solutions as a service that
is paid for by the energy savings, Washington gets
brighter, safer LED lighting for its garages with none of
the up-front cost, thereby removing one of the main
barriers to the adoption of energy-efficient technology.
Driving productivity improvement
Over the coming years we will continue to drive
operational excellence and invest in innovation and
sales development. We will also continue to focus on
improving profitability, e.g. by further reducing
overhead costs and driving value engineering through
our Design for Excellence (DfX) program. Altogether we
see significant potential to improve productivity over
the next few years. We also have scope for value-
creating bolt-on acquisitions, but will remain prudent
with our capital allocation. Most of our growth
opportunities are organic.
In 2014 we will roll out a new IT landscape to make
Philips a truly real-time company, and we will further
embed the Philips Business System (PBS). The PBS is
the way we run our company to ensure business
success is repeatable. This year will also see our new
brand positioning being activated across the globe.
New growth initiatives
I am pleased to say that Philips has multiple new growth
opportunities in the making. Within our Healthcare
sector we have established the Healthcare Informatics
Solutions & Services business group, which is focusing
on a digital connected healthcare delivery platform,
advanced informatics and big data analytics, and
world-class integration and consulting services. At
Consumer Lifestyle we have a new business initiative
on Personal Health. And in our Innovation, Group &
Services sector we have several highly promising start-
ups, although it will be a few years before they are
margin-accretive because of the necessary
investments. Examples of these exciting new business
areas include point-of-care diagnostics as well as
horticultural and city farming technology.
Confident in the future
While remaining cautious about the short-term macro-
economic outlook, we are committed to delivering on
our 2016 financial performance targets. As a sign of our
confidence in Philips’ future, we are proposing to the
upcoming General Meeting of Shareholders to increase
this year’s dividend to EUR 0.80 per common share, in
cash or stock.
Dividend per common share
in euros
0.80
0.60
0.40
0.20
0
0.70
2010
0.75
2011
0.75
2012
0.75
2013
0.80
20141)
1) Subject to approval by the 2014 Annual General Meeting of Shareholders
On behalf of my colleagues on the Executive
Committee, I wish to thank all our employees for
embracing Accelerate!, helping to build a great
company fit for the demands of the 21st century, and
delivering innovations that matter to people the world
over. And I would like to thank our customers,
shareholders and other stakeholders, for their
continued trust and support.
Frans van Houten,
Chief Executive Officer