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Lighting analysts day, Eindhoven, September 20th, 2006 2
Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China
India Japan
Automotive lighting
Solid State Lighting
Conclusions
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Asia21%
LatinAmerica
5%North
America
27%
Europe
47%
Asia
16%
LatinAmerica
5%North
America
25%
Europe
54%
2000 2006 Q2YTD
Philips Lighting
Growing importance of Asia in regional portfolio
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Japan
13%
Rest Asia
Pacific
23% India/
Pakistan19%
Asean
18%
China
27%
2006 Q2YTD
Philips Lighting: market position in Asia
Regional sales distribution within Asia
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Philips Lighting: market position in Asia
Sales growth
0
200
400
600
800
1000
1200
1400
2000 2001 2002 2003 2004 2005
USD million Sales to thirds: USD1.2 bio (2005)CAGR 15% (2000-2005)
Market share: 24% (general lighting excluding Japan)
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Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China India
Japan
Automotive lighting
Solid State Lighting
Conclusions
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Business opportunity
Energy Saving: The Opportunity for Lighting in Asia
Asian economic growth is boosting energy demands by 45% for global
oil demand and 25% of natural gas
Rising energy prices decreases consumer demand and drive inflation
Economic growth requires energy savings
Philips is the global leader in lighting industry with broad portfolio of
energy efficient lighting solutions
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Building on strength
Asia Pacific: untapped potential of existing lighting technology
Todays potential savings
14 billion Euros in energy costs/year
112 million tons of CO2 emissions/year
Equivalent of more than5.6 billion trees
More than 296 million barrels of oil/year
Output of more than 70 power plants (@ 2 TWh/yr)
Sources: International Energy Agency (IEA)World Resource Institute (WRI)
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Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China India
Japan
Automotive lighting
Solid State Lighting
Conclusions
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Business opportunity
China - expansion to rural areas
Rural counties
Class II counties
Class II Tier 2 cities
Class I Tier 1cities
Metro
Class II Tier 3 cities
Criteria # of cities
Population > 10M
GDP > 30B
Population 2- 8M
GDP 10-30B
Population 0.2-0.5M
GDP 10M-200M
Population
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Business opportunity
China - BEST Partner program introduced to develop distribution.
Best Partner Program with selected key distributors
shared marketing programs towards end-user segments & retailers
dedicated portfolio addressed to local market needs
knowledge sharing & satisfaction improvement programs
development thru product & application training
logistic support from both sides
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Business opportunities
China - Further expansion to 2nd
/ 3rd
tier cities
Tier 2/3 city market size is large
Fast growing needs of high quality lighting products.
Build effective distribution coverage (quantity and quality of dealers) End-users marketing approach in professional & consumer segments
Class II Tier 2 cities
Class I Tier 1cities
Metro
Class II Tier 3 cities
Criteria # of cities
Population > 10M
GDP > 30B
Population 2- 8M
GDP 10-30B
Population 0.5-2M
GDP 0.2B-10B
4
30
257
659
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Business opportunity
China; vast supply base for Philips world-wide
0
50
100
150
200
250
300
350
400
450
2004 2005 2006E
USD million
Value of external sourcing
Next to 8 own factories use of Chinese supply base
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Intensified R&D investment
More than 180 lighting engineers Philips Innovation Campus, Shanghaiopening December 8th, 2006
Co-allocated with other Research Groups Philips; Linkages with
universities & standardization federations; Launching platform for newtechnologies (SSL, .)
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Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China
India
Japan
Automotive lighting
Solid State Lighting
Conclusions
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Business opportunity
India - SMILE: Sustainable Model In Lighting Everywhere
Uday rechargeable portable unitfor general illumination
Kiran hand held, hand crankedLED flashlight
Total Households:212 million
Electrified: 118 million Not Electrified: 93 million
Urban: 55 million Rural: 64 Mn---SMILEPhase 1--
Urban: 8 million Rural: 85 million
Target Markets
Products developed
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Business opportunity
India: Rural Distribution Initiative in India
Semi-
urban+rural
63%
Urban37%
GLS Market
2 million
retail stores
0.8 million
retail stores
> 920 towns
> 2600 smaller towns,
> 600 000 villages
The typical rural retailer
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Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China
India
Japan
Automotive lighting
Solid State Lighting
Conclusions
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Business opportunity
Japan: Niche approach
We focus on niche opportunities
in the professional market.
Key Account Management is key.
Our strength: Automotive Lamps,
CDM and UHP
CDM is fastest growing product
line in OEM segment
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Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China
India
Japan
Automotive lighting
Solid State Lighting
Conclusions
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Business opportunity
Automotive Lighting: Emerging Markets, car production
2006: China taking over #3 position, after USA and Japan 2010: Asia car production nearly 2 times Europe or USA
2010: China+India+Thailand+Indonesia+Malaysia = 85% of total Europe production
Philips Automotive Lighting is market leader in Japan, Korea, China
Philips Market share in Emerging markets comparable to Japan and Korea
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
UNITED STATES JAPAN CHINA GERMANY
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2,00
0
2,00
1
2,00
2
2,00
3
2,00
4
2,00
5
2,00
6
2,00
7
2,00
8
2,00
9
2,01
0
ASIA WEST EUROPE NORTH AMERICA
EAST EUROPE SOUTH AMERICA
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2,00
0
2,00
1
2,00
2
2,00
3
2,00
4
2,00
5
2,00
6
2,00
7
2,00
8
2,00
9
2,01
0
CHINA INDIA THAILAND INDONESIA MALAYSIA
Source: Global Insight
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Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China
India
Japan
Automotive lighting
Solid State Lighting
Conclusions
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Business opportunity
Solid state lighting (SSL) Focus on Application Segments
Fast growing market (40% / year)
Asia is fruitful soil for Solid State Lighting
Philips in Asia is present as LED supplier (Lumileds),
as module supplier and as total solution provider
Rapidly building capabilities in the region
Sales growth for total solutions: sales doubled in 2005 and in 2006
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SSL- Luminaires Focus Segments
Hospitality
Offices Shops
INDOOR
City Beautification
OUTDOOR
Road & Tunnel
Signal & Signage
Residential
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Agenda
Philips Lighting Market Position in Asia
Business opportunities:
Energy saving solutions
China
India
Japan
Automotive lighting
Solid State Lighting
Conclusions
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Conclusions
Growth in Asia
The demand for energy saving solutions will accelerate market growth.
The well structured distribution in India and the ASEAN countries
(High market shares) is a sound basis for rapid growth in fast
growing markets.
Expansion of distribution in China will lead to further increase
our market share.
China is important as a supply base.
Asia, an early adaptor for new technologies, offers great opportunities
to enlarge our share in the professional Lighting business.