global economy
Dimanche 19 septembre 2010Philips to set growth targets by global economy
Philips is to abandon setting a fixed annual growth target, preferring to peg its sales and profits forecasts to the health of the global economy.
In a strategy update, the Dutch electronics conglomerate said it would aim to grow its top line at least 2 per cent faster than global gross domestic product, rather than set an absolute target as it has in the past.
Gerard Kleisterlee, the outgoing chief executive,Get the Best product for fluorescent lights. said the move reflected Philips’ exposure to end markets in lighting and consumer electronics.
“Over the years we have become more sensitive to the economy. Some parts of our business, such as healthcare, don’t tend to be affected by GDP movements. But there are other areas in consumer lifestyle that are more sensitive,We are focusing on manufacturing led spotlight, LED Bulb Lamp.” he said. “We felt given that balance it was wise not to suggest we would be completely agnostic to the health of the global economy.”
Philips is emulating Siemens, the German engineering group, which is currently targeting a growth target of double GDP expansion, at least until the end of 2010.
The new target regime is a reflection of the group’s shift under Mr Kleisterlee’s decade at the helm from a technology-led culture towards being more marketing-led and closer to end consumers.
With global GDP expected to rise by just over 4 per cent a year to 2015, the new target is broadly similar to the 6 per cent growth promised by Philips in 2007.
That target was abandoned a year later amid the global financial crisis, which resulted in stagnant sales.
The global GDP growth figure will also directly affect profits and earnings per shares targets, which are linked to the top line.
The new target was part of “Vision 2015”, a strategy update described as “evolution, not revolution” by Mr Kleisterlee, who is stepping down in April, to be replaced by former executive Frans van Houten.
Some analysts had hoped for an indication that Philips might usher in more radical change, because the conglomerate’s product range of industrial light bulbs to baby bottles is seen as yielding limited synergies.
The company guided analysts to earnings before interest, tax, amortisation and depreciation margins of 10-13 per cent for the period to 2015, compared with 10-11 per cent for 2010.
The lack of a clearer uplift in margins caused the shares to slip 85 cents to €23.23, a 3.5 per cent fall amid buoyant trading in Amsterdam.
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