Indiantelevision.com Team

(10 September 2007 7:58 pm)

MUMBAI: Royal Philips Electronics has decided to extend the company further in the areas of healthcare, lighting and consumer lifestyle. These steps are part of a strategy called 'Vision 2010.'

The aim is to further position Philips as a market-driven, people-centric company with a strategy and a structure that fully reflect the needs of its customer base, while also increasing shareholder value.

Philips plans to simplify its business structure by creating three core sectors: Philips Healthcare, Philips Lighting, and Philips Consumer Lifestyle.

To this end, the company intends to integrate its current Consumer Electronics (CE) and Domestic Appliances and Personal Care (DAP) businesses into one Consumer Lifestyle sector as of 1 January 2008, capitalizing on the existing integration initiatives such as the international retail board created three years ago.

It will also combine consumer healthcare solutions, renamed as home healthcare solutions, with Philips Medical Systems, under the new name of Philips Healthcare.

Through 'Vision 2010', Philips also aims to achieve higher levels of operating profitability. By 2010, Philips expects the EBITA (earnings before interest, taxes and amortization) margin of its current businesses to exceed 10 per cent through improved margin management, increased contribution from recent acquisitions, improvement of its product mix and the effects of the organizational simplification, estimated at $110.3 million to $147 million of cost savings.

"Following the implementation of our 2004 - 2007 strategic plan, we are well on track to deliver on our objective to achieve above 7.5 per cent EBITA in 2007. The time is right therefore to give our stakeholders a clear blueprint of what we want Philips to be in 2010," said Philips president and CEO Gerard Kleisterlee.

"While our healthcare strategy is already people-centric, focusing on improving patient outcomes in specific care cycles such as cardiology, oncology and critical care from the hospital to the home, we have now developed a comprehensive consumer lifestyle strategy that takes into account the evolving needs of the modern, lifestyle oriented consumer. And as structure follows strategy, successful implementation requires a further realignment of the organization."

"By aligning our organization within three core sectors under strong and experienced management, I am confident that the business structure now optimally reflects our strategy, and that we are close to becoming the Philips we envisaged when we embarked on our path to transform the company in 2001", Kleisterlee said.