Philips 2014 Annual Report Download - page 8

Message from the CEO 2
8 Annual Report 2014
top 50 Best Global Green Brands, acknowledgement as
a leader in both carbon disclosure and performance by
the Carbon Disclosure Project, and top scores in the
Dow Jones Sustainability Index. We also continued to
upscale our eorts in the area of circular economy,
which we believe presents a signicant value-creation
opportunity. For instance, we opened a new
refurbishment center for medical imaging systems in
Best (Netherlands), signed an agreement with the
island of Aruba to revamp its entire public lighting
system, and expanded our partnership with the Ellen
MacArthur Foundation, a circular economy advocate.
I am also delighted that we were able to set up the
Philips Foundation, a registered charity organization
dedicated to helping enable lasting social change in
disadvantaged communities through the application of
innovation, talent and resources provided by Philips.
An exciting future
With our decision to create two companies in the areas
of HealthTech and Lighting Solutions, we have clearly
set our strategic direction.
The road ahead is clear, and our determination to
succeed absolute. By continuing to execute our
Accelerate! program, we will serve our customers better
and compete more eectively in the coming years. We
will listen closely to our customers, so we continue to
understand and anticipate their needs and market
requirements.
We will improve operational excellence in everything
we do, enhance our capabilities, and implement a
standard operating model. Building upon the Philips
Business System, this operating model will make us a
simpler, more agile company, while also reducing
overhead cost.
In order to drive growth, we have encouraged locally
relevant innovation, invested in developing business
with governments, boosted our advertising and
promotion investments, and started new business
creation in areas such as Healthcare Informatics,
Solutions & Services, Healthcare Transformation
Services and Personal Health Solutions.
Over the coming year we will also maintain our focus on
improving gross margins, e.g. through our Design for
Excellence (DfX) program. And we will realize
productivity gains from the overhaul of our business
model architecture, with all businesses adopting one of
four standardized business models.
In conclusion
We are proposing to the upcoming Annual General
Meeting of Shareholders to maintain this year’s
distribution at EUR 0.80 per share, in cash or stock.
Philips Group
Dividend per common share in EUR
2009-2015
0.70
‘09
0.70
‘10
0.75
‘11
0.75
‘12
0.75
‘13
0.80
‘14
0.80
‘151)
1) Subject to approval by the 2015 Annual General Meeting of
Shareholders
Looking ahead, we remain cautious about the macro-
economic outlook and expect ongoing volatility in
some of our end-markets. We also anticipate further
restructuring and separation costs in 2015 and 2016.
As of year-end 2014 we are tracking one percentage
point behind on the path to achieving each of our 2016
Group nancial targets. We are convinced that this does
not change our longer-term performance potential,
considering the attractiveness of the Lighting Solutions
and HealthTech markets and our competitive position.
Later this year, as we progress with the separation of
Philips and reallocation of IG&S, we will update the
market about the integral performance targets for each
of the two operating companies.
On behalf of my colleagues on the Executive
Committee, I would like to thank all our employees for
their hard work over the past year, as well as their
willingness to embrace change. And I wish to thank our
customers, shareholders and other stakeholders for the
trust and support they continue to give us.
Frans van Houten
Chief Executive Ocer