Amsterdam, The Netherlands - In a meeting with investors and financial analysts today, Royal Philips Electronics (AEX: PHI, NYSE: PHG) will discuss how the company's Domestic Appliance and Personal Care (DAP) and Lighting businesses are expected to continue their solid contribution to profitable growth at the company in 2005 and beyond. The company will also review ongoing measures to further simplify and standardize its administrative processes.
DAP and Lighting positioned for further growth - 2005 will see higher investments in R&D, product development and advertising in 2005
"In 2005, we expect DAP to continue its solid contribution to growth, achieving operating margins in the mid-teens," Mr. Han van Splunter, President and CEO of Philips Domestic Appliances and Personal Care said. To maintain this momentum, Philips intends to allocate more funds to developing products, advertising and penetrating emerging markets, as the company builds on the strategic partnerships established with such leading companies as SaraLee, Unilever and Procter&Gamble. "Last week, we announced the launch of the new aluminum line of SENSEO coffee makers, an example of the innovative product categories that are helping us further build on our leadership position in many markets," he added. By mid-2004, Philips had sold just under seven million SENSEO coffee makers in three years.
The company's Lighting division is also expected to continue as a growth engine in 2005. To secure Philips' number one position in Lighting, the company will further expand into emerging markets, while boosting investment in R&D on innovative products like solid state and automotive lighting. "Advanced products - like Night Guide, an automotive headlight we brought onto the market in September - form the backbone of our business," Mr. Theo van Deursen, President and CEO of Philips Lighting said. "In the automotive industry, we're a leader, equipping four out of every ten new cars worldwide with lamps, and we aim to build on these leadership positions," he continued. Tuesday will also mark another milestone for the division's advanced LED (light emitting diode) business: "Today we're launching a four-year partnership with Saks Fifth Avenue stores in the United States. This will see our state-of-the-art LEDs light up Saks' flagship storefront in New York during the holiday season," he said.
Company plans to further simplify and standardize administrative processes
Philips will also use today's meeting to outline its ongoing plans for improving the quality of business support functions - like finance, IT, purchasing and HR - by making them simpler and more standardized across the company. Following the EUR 1 billion cost savings program completed in 2003, Philips is now drawing up plans to make these support functions best-in-class. "Our 'Best in Finance 2006' program will set an example on how to generate higher value-added services at a significantly lower cost. Other support services are developing their own Best in Class programs. This will provide Philips with higher quality administrative processes at reduced cost. We estimate we'll be able to achieve approximately EUR 500 million in additional annual savings three to four years from now," Mr. Jan Hommen, Vice Chairman and Chief Financial Officer, said.
A webcast of the Analyst Day begins at 10.00 CET and can be followed at www.philips.com/investor.
|