2014 financial performance

Philips Consumer Lifestyle
Key data in millions of EUR unless otherwise stated
2012 - 2014
 
2012
2013
2014
Sales
4,319
4,605
4,731
Sales growth
 
 
 
% increase (decrease), nominal
15%
7%
3%
% increase (decrease), comparable1)
9%
10%
6%
EBITA 1)
456
483
573
as a % of sales
10.6%
10.5%
12.1%
EBIT
400
429
520
as a % of sales
9.3%
9.3%
11.0%
Net operating capital (NOC)1)
1,205
1,261
1,353
Cash flows before financing activities1)
413
480
553
Employees (in FTEs)
16,542
17,255
16,639
1)
For a reconciliation to the most directly comparable GAAP measures, see Reconciliation of non-GAAP information
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Sales amounted to EUR 4,731 million, a nominal increase of 3% compared to 2013. Excluding a 3% negative currency impact, comparable sales were 6% higher year-on-year. Health & Wellness achieved double-digit-growth and Domestic Appliances recorded high-single-digit growth, while Personal Care recorded low-single-digit growth. Green Product sales amounted to EUR 2,605 million, or 55% of total sector sales.

From a geographical perspective, comparable sales showed an 8% increase in growth geographies and 3% growth in mature geographies. In growth geographies, increase was mainly driven by China and Middle East & Turkey, primarily in the Health & Wellness and Domestic Appliances businesses. Growth geographies’ share of sector sales was in line with 2013 at 47%.

EBITA increased from EUR 483 million, or 10.5% of sales, in 2013 to EUR 573 million, or 12.1% of sales, in 2014. Restructuring and acquisition-related charges amounted to EUR 9 million in 2014, compared to EUR 14 million in 2013. EBITA in 2013 also included a EUR 1 million past-service pension cost gain in the US. The year-on-year EBITA increase was driven by improved earnings in all businesses and more than offset currency headwinds.

EBIT amounted to EUR 520 million, or 11.0% of sales, which included EUR 53 million of amortization charges, mainly related to intangible assets at Health & Wellness and Domestic Appliances.

Net operating capital increased from EUR 1,261 million in 2013 to EUR 1,353 million in 2014, due to higher working capital and a reduction in provisions.

Cash flows before financing activities increased from EUR 480 million in 2013 to EUR 553 million in 2014, mainly attributable to higher earnings.

Philips Consumer Lifestyle
Sales per geographic cluster in millions of EUR
2010 - 2014
1,2735601931,2903,316‘101,3236882281,5323,771‘111,3257682721,9544,319‘121,3507692992,1874,605‘131,403Western Europe781North America324Other mature2,223Growth4,731‘14
Philips Consumer Lifestyle
Sales and net operating capital1) in billions of EUR
2010 - 2014
3.3‘100.93.8‘110.94.3‘121.24.6‘131.34.7Sales‘141.4Net operating capital
1) For a reconciliation to the most directly comparable GAAP measures, see Reconciliation of non-GAAP information
Philips Consumer Lifestyle
EBIT and EBITA 1) in millions of EUR
2010 - 2014
231882116.4%‘10441091534.1%‘115640045610.6%‘125442948310.5%‘1353Amortization andimpairment in value520EBIT in value573 EBITA in value12.1%‘14EBITA as a % of sales
1) For a reconciliation to the most directly comparable GAAP measures, see Reconciliation of non-GAAP information
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SF6 (Sulfur hexafluoride) is used in the electrical industry as a gaseous dielectric medium.

Earnings before interest, tax and amortization (EBITA) represents income from continuing operations excluding results attributable to non-controlling interest holders, results relating to investments in associates, income taxes, financial income and expenses, amortization and impairment on intangible assets (excluding software and capitalized development expenses). Philips believes that EBITA information makes the underlying performance of its businesses more transparent by factoring out the amortization of these intangible assets, which arises when acquisitions are consolidated. In our Annual Report on form 20-F this definition is referred to as Adjusted IFO.

Comparable sales exclude the effect of currency movements and acquisitions and divestments (changes in consolidation). Philips believes that comparable sales information enhances understanding of sales performance.

CO2-equivalent or carbon dioxide equivalent is a quantity that describes, for a given mixture and amount of greenhouse gas, the amount of CO2 that would have the same global warming potential (GWP), when measured over a specified timescale (generally 100 years).

Growth geographies are the developing geographies comprising of Asia Pacific (excluding Japan, South Korea, Australia and New Zealand), Latin America, Central & Eastern Europe, the Middle East (excluding Israel) and Africa.

Mature geographies are the highly developed markets comprising of Western Europe, North America, Japan, South Korea, Israel, Australia and New Zealand.