philips restores profit by rediscovering relevance

Amsterdam-every year, when farmers and plantation companies in neighboring Indonesia clean up the land with fires during the dry season, Singaporeans and Malaysians are choked by smoke.
Last summer, Philips moved inventory of air purifiers in Hong Kong and China to the region in time to cope with the worst pollution in 16 years.
The shift in supply symbolizes a more flexible approach by chief executive Frans van Houten to help Philips reinvent itself in healthcare, lighting and consumer goods.
Over the past decade, the Dutch company\'s television business has failed in cheap competition from Asian companies such as Samsung Electronics and LG Electronics.
In 2007, the company lost 0. 436 billion euros in television business ($601. 26 million)
The second year.
Philips\'s response turned to new products and business lines.
Van Houten, the designer of the new strategy, wants Philips to be more culturally entrepreneur.
\"It\'s too early to announce the victory-the company stopped too fast in change.
The change needs to be permanent and only in five years you might say \"Yes, the new culture has been incorporated into the company,\" said Van Houten, who has been at Philips since April 2011.
\"We haven\'t finished yet \".
Philips\'s transformation is largely driven by improvements in its consumer and lighting business.
The two companies accounted for most of the group\'s earnings growth of 54% in the third quarter.
Philips shares have reached their highest level since the middle2010.
Philips problem children have long been a consumer electronics business including TV, audio and video.
It sold its TV business in April 2012.
The company is still looking for buyers for its audio and video business.
At the same time, Philips has invested in other consumer goods to win the market share of competitors such as Procter & Gamble\'s Braun, which produces electric razors, is the market leader in German electric toothbrushes, and the French mou, owner of kitchen appliances in Moulinex.
The air purifier has also been redesigned.
Customers say they want to be able to monitor air pollution at home and outdoors and turn the machine on or off remotely to avoid large electricity bills, so Philips has developed a smartphone app.
Models with these features at a price of 600-
700 euro plus filter of about 50 euro per year will be in fast next year-
Philips is now a leader in the Chinese market.
\"Parents are busy with work: they want to know that the air they breathe is normal when their children are at home,\" said Peter Notta, head of consumer business at Philips . \", Their products are aimed at middle-class buyers looking for a healthy lifestyle.
SOY, 53, or SOUPVan Houten spent most of his career at Philips.
After forming the former Philips semiconductor subsidiary NXP, he won the reputation of restructuring executives.
Prior to re-joining Philips at the end of 2010, he also consulted ING Groep on its division of insurance and banking operations and became chief operating officer in January 2011.
Three months later, he took over from Gerard Kleisterlee in charge of the company. At that time, the company was in a long-term downturn in the two most important markets of the United States and Europe.
On a visit to France, he found a team low on morale due to a shrinking consumer business that has lost space on the shelves of major retailers such as Auchan and Dati.
\"We visited a store and the store manager said \'of course Philips has less and less shelf space, why can\'t you do what we want to do? \'?
The word related is triggered by these discussions.
Philips has developed a soymilk machine that sells well in China, and consumers are worried about food safety in China.
They made soup for the French market.
These products help improve the performance of the consumer business. in the consumer business, fast-
Emerging markets such as Asia rose 15% in the third quarter, after gains in the first and second quarters were around fifth.
As CEO, Van Houten has set a new strategy and performance target to transform Philips into a larger share of sales and profits in emerging markets.
To encourage innovation, Van Houten has spent more money on R & D.
He also targeted 1.
Reduce indirect costs by 5 billion euros, reduce management and simplify the number of IT platforms.
Philips has laid off more than 5,000 people, or four.
4% of the labor force since the end of 2011.
He also shook the corporate culture.
Philips is known for its design-
Companies that spend time perfecting their products find themselves missing opportunities or being beaten by a more flexible competitor in price.
\"This is complacent,\" said Hans sloeb, an analyst at the Dutch cooperative bank in charge of Philips business.
\"There is a very good hand now --
More agile, more streamlined.
\"More than half of the top 200 managers have been replaced or re-created
Approximately 1,800 employees have been assigned to complete projects focused on a performance culture.
There are also financial incentives that pay is now tied to where someone is working, not the performance of the whole team.
\"In the past, if we did well, our wages would be the same.
\"All of this has changed completely,\" said one employee . \".
The change in lighting up the brand culture involves not only new products, but also new ways to sell new products to make customers more loyal and avoid threats from lower levels
At a time when consumer, corporate and government spending in the United States and Europe is weak, cost competitors.
Locking customers is particularly important in the lighting department, where the focus has been shifted to projects such as street lights, where scanners and other medical equipment are sold to hospitals in the health care sector, and cause Philips to provide complete lighting or hospital equipment arrangement, or pay for itper-use deals.
After ten years at the Amsterdam National Museum
After a long renovation, Philips worked with museum curators and architects to redo the lighting system for the entire collection from marble statues to Rembrandt\'s Night Watch.
The contract is a coup for Philips, which hopes to facilitate similar deals.
Recently, Philips agreed to renovate 262 government buildings with LED in Dubai, the money will be paid from the actual savings.
\"The traditional way of selling products from the catalog is no longer effective, and the relationship needs to become more tricky,\" Van Houten said . \".
In Healthcare, Philips is betting on the growing middle class and longevity that increases the demand for medical equipment in homes and hospitals.
More targeted transactions help to sell healthcare devices such as scanners, which can reduce the risk of patient exposure to x-
Light, improve the image quality inside the patient, or allow a much less invasive treatment, thus shortening the time spent recovering in the hospital.
By the third quarter, the sector accounted for 40% of the group\'s revenue, nearly 60% of operating profits and nearly 8% of revenue growth, in line with the performance of rival General Electric and Siemens.
Last year, it agreed with Abu Dhabi\'s new 196-
Burjeel Hospital offers, installs, maintains and upgrades medical equipment, including MRI and CT scanners, digital breast X-ray equipment, and ultrasonic machines.
Alliance with the Georgian Regency Medical Center, onefor-
In June, the profit company of Augusta, Georgia, provided a breakthrough in the United States because the uncertainty of spending plans and health care reforms hindered orders.
Under the terms of the $0. 3 billion deal, Philips will provide consulting services, advanced medical technology, planning and maintenance services
Determine more than 15 per month-year term.
The next test of Philips\'s rebound means its stock is now trading at forward prices
Price-earnings ratio of 14.
According to the estimate of StarMine SmartEstimates, 7, or 9% higher than the peer average.
The next test will be the fourth.
Quarterly results will show whether Philips has reached its 2013 target sales growth of 4% to 6%, ranging from pre-tax wages, interest and amortization of 10% to 12%, and return on investment capital of 12% to 14%.
The fourth quarter is usually the strongest.
During the holiday season, consumer spending has increased, and hospitals and government agencies that have not canceled their annual budget must now place orders, otherwise funds may be lost.
Still, Rabobank\'s Sloan thinks it will be difficult for Philips to meet its sales targets, as concerns about Obamacare in the United States make American hospitals reluctant to spend money because of uncertainty about the impact of the reforms.
He also said the growth momentum of the lighting and consumer business was difficult to maintain.
\"The focus will be on the healthcare business.
You need to have a good acceleration in the fourth quarter . \"
\"But in the long run, they are in a very good position in terms of recovery.