Specialist
Former executive at Koninklijke Philips NV
Agenda
- Philips Domestic Appliances growth analysis by category, discussing potential softening demand post-coronavirus
- Performance outlook by region – key challenges in western Europe, potential compensation through China and D2C prospects in this region
- Product portfolio rationalisation and competitive positioning vs Groupe SEB (PAR: SK) and De’Longhi (TAA: DLG)
- Inventory management challenges amid supply headwinds
Questions
1.
What was the rationale for the carveout of Philips Domestic Appliances? Why did it make sense, and where do you see the business as a standalone entity today?
2.
Could you walk through domestic appliances category growth throughout coronavirus and your growth expectations for each subcategory into 2022-23?
3.
Is the growth you described sustainable across categories post-coronavirus? What are your assumptions here?
4.
How resilient could the Philips Domestic Appliances portfolio be throughout an economic downturn? Is there a threat that consumers choose to downtrade or postpone investments in a post-coronavirus scenario?
5.
Is there a geography that Philips Domestic Appliances is present in that may be overexposed to negative consumer sentiment? I think the business has reported some worries around western Europe in particular.
6.
Would you expect Philips Domestic Appliances to pursue any given strategy in Russia or Ukraine in the short-to-mid-term?
7.
Was Philips Domestic Appliance winning in any categories in terms of market share in Russia and Ukraine? As you mentioned, the brand is strong enough to rebuild its position once markets are fully accessible again.
8.
How do you assess the competitiveness of Philips Domestic Appliances’ portfolio across geographies post carve-out? Is there anything that could be shuffled around?
9.
Is there a possibility for portfolio rationalisation at Philips Domestic Appliances? How could this impact efficiency and cost?
10.
How do you assess Philips Domestic Appliances’ repositioning strategy in China? What else may be needed?
11.
How is Philips Domestic Appliances perceived by China’s consumers? Is there any opportunity to premiumise the offering further? I’m not sure how feasible this is when the consumer view is already anchored on a specific price point.
12.
How do you assess the D2C shift in China? Could any challenges come up?
13.
Could Philips Domestic Appliances eventually run into difficulties in dealing with online retailers such as Tmall while pursuing a D2C strategy?
14.
How do you assess the current magnitude of inflation for Philips Domestic Appliances across sourcing and logistics?
15.
You mentioned the category mix in terms of pricing, so are there any categories within Philips Domestic Appliances’ portfolio where it may be easier to increase pricing or protect margins vs others?
16.
How do margins compare across flagship and core products?
17.
How do you assess Philips Domestic Appliances’ production capabilities vs those of Groupe SEB or De’Longhi?
18.
Do you see any scope for vertical integration? Are there options here?
19.
How are Philips Domestic Appliances’ cost base and revenue split across currencies? Is most of the cost base in dollars and revenue realised in euros?
20.
How aggressive has Philips Domestic Appliances historically been in inventory management, and how would you assess its ability to offload in H2 2022?
21.
What are your expectations for H2 2022, especially as it seems consumer demand will soften around domestic appliances?
22.
We’ve seen competitors such as De’Longhi and Group SEB ramp up their A&P spend. Would you expect Philips Domestic Appliances to follow this? Is there a trend that we can pick out?
23.
You said historical margin crunches in light of pricing typically lasted for 6-12 months. What are your expectations for gross margins at Philips Domestic Appliances for 2022 and 2023 given they declined in H1 2022?
