Frans van Houten, President and CEO of Royal Philips Electronics
Frans van Houten, President and CEO of Royal Philips Electronics, “Our second-quarter results were impacted by near-term operational challenges, weaker markets and a significant impairment charge. We are taking necessary steps to improve performance and we are confident in the prospects of our portfolio.
Healthcare performed strongly, improving earnings and growing comparable sales by 8% over last year. In Consumer Lifestyle, we are encouraged by growth in all businesses, excluding Lifestyle Entertainment, though investments in growth affected earnings in the quarter. Lighting sales grew 4% comparably, with our LED portfolio up a strong 21%. However, Lighting results in the quarter were disappointing.
We are addressing our operational issues, while investing for growth and instilling a new culture of entrepreneurship and accountability. We have strengthened our executive leadership and rolled out a comprehensive performance improvement and change program, Accelerate! In addition to growth initiatives, this includes a cost reduction program of EUR 500 million to improve our operating model and pave the way for profitable growth.
Given our confidence to grow organically, complemented with bolt-on acquisitions, we are launching a EUR 2 billion share buy-back program. This will also address the efficiency of our balance sheet. We do not expect a material performance improvement in the near term as operational risks and issues remain, and also considering the current uncertain economic environment. However, we are pleased to give clarity on our mid-term trajectory ahead of plan, reflecting our ambitions for the future.”