Signify reports third quarter sales of EUR 1.7 billion, operational
profitability of 11.5% and free cash flow of EUR 214 million
Press Release
October 23, 2020
Signify reports third quarter sales of EUR 1.7 billion,
operational profitability of 11.5% and free cash flow of EUR 214
million
Third quarter 20201
- Signify’s installed base of connected light points increased
from 64 million in Q2 20 to 71 million in Q3 20
- Sales of EUR 1,728 million, nominal sales growth of 12.1% and
CSG of -8.3%
- LED-based sales represented 82% of total sales (Q3 19:
81%)
- Adj. indirect costs down EUR 22 million, or -4.9% excl. FX
effects and changes in scope2
- Adj. EBITA margin increased by 50 bps to 11.5%, including
currency impact of -30 bps
- Adj. EBITA margin of the growing profit engines increased by
130 bps to 12.3%
- Net income of EUR 90 million (Q3 19: EUR 74 million)
- Free cash flow increased to EUR 214 million (Q3 19: EUR 45
million)
- Cooper Lighting integration and synergies ahead of plan
- Achieved carbon neutrality and set course to double positive
impact on environment and society in 2025
- Debt prepayment of EUR 350 million to reduce overall gross debt
position; net leverage at 2.2x
Eindhoven, the Netherlands – Signify (Euronext:
LIGHT), the world leader in lighting, today announced the company’s
2020 third quarter results. “We are very proud of our carbon
neutrality achievement in Q3 and of the launch of our new
sustainability program aimed at doubling our positive impact on the
environment and society in 2025. Amidst difficult market dynamics
caused by the COVID-19 pandemic, this financial quarter we are
reporting yet another resilient performance underpinned by our
consumer and connected lighting. Our gross margin improvement,
through rigorous price management, translated into a higher
operational margin. Our discipline in working capital management
allowed us to generate a solid free cash flow for the quarter,
while as previously announced, we reduced our debt by EUR 350
million,” said CEO Eric Rondolat. “Given the acceleration of the
pandemic in many regions, we remain cautious about market
developments, but confident in our ability to further adapt, which
we have demonstrated since the beginning of the year. Our teams
remain focused on making continued good progress on the integration
of Cooper Lighting and Klite, while relentlessly driving our growth
platforms to develop new business opportunities in line with our
strategy.”
Outlook
Given recent developments of the pandemic, Signify does not
provide financial guidance for full year 2020. Signify remains
confident in the underlying resilience of its businesses and
operating model, and that its liquidity needs are well covered by
the financial framework it has in place. During the virtual Capital
Markets Day 2020, which is scheduled on December 9, Signify will
provide more details on its expectations for the medium-term.
Financial review
Third quarter |
|
Nine months |
2019 |
2020 |
change |
in millions of EUR, except percentages |
2019 |
2020 |
change |
|
|
-8.3 |
% |
Comparable sales growth |
|
|
-15.3 |
% |
|
|
-3.6 |
% |
Effects of currency movements |
|
|
-1.2 |
% |
|
|
24.0 |
% |
Consolidation and other changes |
|
|
19.3 |
% |
1,542 |
1,728 |
12.1 |
% |
Sales |
4,497 |
4,624 |
2.8 |
% |
585 |
689 |
17.8 |
% |
Adjusted gross margin |
1,699 |
1,801 |
6.0 |
% |
37.9% |
39.9% |
|
Adj. gross margin (as % of sales) |
37.8% |
39.0% |
|
|
|
|
|
|
|
|
-377 |
-443 |
|
Adj. SG&A expenses |
-1,155 |
-1,237 |
|
-65 |
-77 |
|
Adj. R&D expenses |
-201 |
-211 |
|
-442 |
-520 |
-17.7 |
% |
Adj. indirect costs |
-1,356 |
-1,448 |
-6.8 |
% |
28.7% |
30.1% |
|
Adj. indirect costs (as % of sales) |
30.2% |
31.3% |
|
|
|
|
|
|
|
|
169 |
199 |
17.7 |
% |
Adjusted EBITA |
416 |
444 |
6.6 |
% |
11.0% |
11.5% |
|
Adjusted EBITA margin |
9.3% |
9.6% |
|
-31 |
-38 |
|
Adjusted items |
-80 |
-93 |
|
138 |
161 |
16.6 |
% |
EBITA |
336 |
351 |
4.4 |
% |
|
|
|
|
|
|
|
114 |
131 |
14.9 |
% |
Income from operations (EBIT) |
263 |
261 |
-0.7 |
% |
-11 |
-16 |
|
Net financial income/expense |
-32 |
-42 |
|
-28 |
-25 |
|
Income tax expense |
-63 |
-21 |
|
74 |
90 |
21.0 |
% |
Net income |
169 |
198 |
17.3 |
% |
|
|
|
|
|
|
|
45 |
214 |
|
Free cash flow |
220 |
484 |
|
0.58 |
0.67 |
|
Basic EPS (€) |
1.34 |
1.53 |
|
27,337 |
37,057 |
|
Employees (FTE) |
27,337 |
37,057 |
|
Third quarterSales amounted to
EUR 1,728 million, a nominal increase of 12.1%. Adjusted for 3.6%
negative currency effects and 24.0% consolidation, comparable sales
decreased by 8.3%. LED-based sales decreased by 8.2% and now
account for 82% of total sales. The adjusted gross margin increased
by 200 bps to 39.9%, including a currency effect of -10 bps,
largely as a result of solid pricing management. The adjusted
indirect costs increased by EUR 78 million. Excluding currency
effects and changes in scope, the adjusted indirect costs are down
EUR 22 million, or 4.9%. Adjusted EBITA amounted to EUR 199
million, a 17.7% increase compared to the same period last year.
The Adjusted EBITA margin improved by 50 bps to 11.5%, mainly
driven by the robust gross margin improvement. Total restructuring
costs were EUR 25 million and acquisition-related charges and other
incidentals were EUR 13 million. Net income increased from EUR 74
million last year to EUR 90 million in Q3 20. Free cash flow
amounted to EUR 214 million, reflecting profitability improvements,
strong working capital management and the consolidation of Cooper
Lighting and Klite.
1This press release contains certain non-IFRS financial measures
and ratios, such as comparable sales growth, EBITA, adjusted EBITA
and free cash flow, and related ratios, which are not recognized
measures of financial performance or liquidity under IFRS. For a
reconciliation of these non-IFRS financial measures to the most
directly comparable IFRS financial measures, see appendix B,
Reconciliation of non-IFRS financial measures, of this press
release.2Changes in scope relate to the consolidation of Cooper
Lighting and Klite
For the full and original version of the press release click
here For the presentation click here
Conference call and audio webcast Eric Rondolat
(CEO), René van Schooten (CFO) and Javier van Engelen (CFO) will
host a conference call for analysts and institutional investors at
9:00 a.m. CET to discuss third quarter 2020 results. A live audio
webcast of the conference call will be available via the Investor
Relations website.
Financial calendar 2020
October 27, 2020: EGM 2020December
9, 2020: Capital Markets Day 2020January 29,
2021: Fourth quarter and full year results 2020
For further information, please contact:
Signify Investor Relations
Rogier Dierckx Tel: +31 6 1138 4609 E-mail:
rogier.dierckx@signify.com
Signify Corporate Communications
Elco van Groningen Tel: +31 6 1086 5519 E-mail:
elco.van.groningen@signify.com
About SignifySignify (Euronext: LIGHT) is the
world leader in lighting for professionals and consumers and
lighting for the Internet of Things. Our Philips products, Interact
connected lighting systems and data-enabled services, deliver
business value and transform life in homes, buildings and public
spaces. With 2019 sales of EUR 6.2 billion, we have approximately
37,000 employees and are present in over 70 countries. We unlock
the extraordinary potential of light for brighter lives and a
better world. We achieved carbon neutrality in 2020 and have been
named Industry Leader in the Dow Jones Sustainability Index for
three years in a row. News from Signify is located at the Newsroom,
Twitter, LinkedIn and Instagram. Information for investors can be
found on the Investor Relations page.Important Information
Forward-Looking Statements and Risks &
Uncertainties This document and the related oral
presentation contain, and responses to questions following the
presentation may contain, forward-looking statements that reflect
the intentions, beliefs or current expectations and projections of
Signify N.V. (the “Company”, and together with its
subsidiaries, the “Group”), including statements
regarding strategy, estimates of sales growth and future
operational results.
By their nature, these statements involve risks and
uncertainties facing the Company and its Group companies, and a
number of important factors could cause actual results or outcomes
to differ materially from those expressed in any forward-looking
statement as a result of risks and uncertainties. Such risks,
uncertainties and other important factors include but are not
limited to: adverse economic and political developments, the
impacts of COVID-19, rapid technological change, competition in the
general lighting market, development of lighting systems and
services, successful implementation of business transformation
programs, impact of acquisitions and other transactions,
reputational and adverse effects on business due to activities in
Environment, Health & Safety, compliance risks, ability to
attract and retain talented personnel, adverse currency effects,
pension liabilities, and exposure to international tax laws. Please
see “Risk Factors and Risk Management” in Chapter 12 of the Annual
Report 2019 for discussion of material risks, uncertainties and
other important factors which may have a material adverse effect on
the business, results of operations, financial condition and
prospects of the Group. Such risks, uncertainties and other
important factors should be read in conjunction with the
information included in the Company’s Annual Report 2019.
Additional risks currently not known to the Group or that the
Group has not considered material as of the date of this document
could also prove to be important and may have a material adverse
effect on the business, results of operations, financial condition
and prospects of the Group or could cause the forward-looking
events discussed in this document not to occur. The Group
undertakes no duty to and will not necessarily update any of the
forward-looking statements in light of new information or future
events, except to the extent required by applicable law.
Market and Industry Information All references
to market share, market data, industry statistics and industry
forecasts in this document consist of estimates compiled by
industry professionals, competitors, organizations or analysts, of
publicly available information or of the Group’s own assessment of
its sales and markets. Rankings are based on sales unless otherwise
stated.
Non-IFRS Financial Measures Certain parts of
this document contain non-IFRS financial measures and ratios, such
as comparable sales growth, adjusted gross margin, EBITA, adjusted
EBITA, and free cash flow, and other related ratios, which are not
recognized measures of financial performance or liquidity under
IFRS. The non-IFRS financial measures presented are measures used
by management to monitor the underlying performance of the Group’s
business and operations and, accordingly, they have not been
audited or reviewed. Not all companies calculate non-IFRS financial
measures in the same manner or on a consistent basis and these
measures and ratios may not be comparable to measures used by other
companies under the same or similar names. A reconciliation of
these non-IFRS financial measures to the most directly comparable
IFRS financial measures is contained in this document. For further
information on non-IFRS financial measures, see “Chapter 18
Reconciliation of non-IFRS measures” in the Annual Report 2019.
Presentation All amounts are in millions of
euros unless otherwise stated. Due to rounding, amounts may not add
up to totals provided. All reported data are unaudited. Unless
otherwise indicated, financial information has been prepared in
accordance with the accounting policies as stated in the Annual
Report 2019 and semi-annual report 2020.
Change in reporting segments Effective Q2 2020,
to further adapt to the industry transition and strengthen customer
centricity, Signify changed the organizational structure, which
included changing the previously four business groups (BG’s) to
three divisions.
- Division Digital Solutions (formerly BG
Professional, including Cooper Lighting Solutions) offers
luminaires, lighting systems and services for the Internet of
Things to the customers in the professional segment;
- Division Digital Products (combines BG LED and
BG Home). This division offers LED lamps, LED luminaires and
connected products, including Hue and Wiz, and LED electronics to
professional customers, OEM partners and consumers. By bringing
together its entire consumer LED portfolio, Signify can better
manage this lighting category for its channel partners; and
- Division Conventional Products (formerly BG
Lamps) continues to focus on conventional lamps and electronics for
professional customers, OEM partners and consumers. It is organized
separately to bring a clear distinction between conventional and
digital offerings.
In line with this change, effective Q2 2020, Signify's operating
segments are Digital Solutions, Digital Products, and Conventional
Products. The segments are organized based on the nature of the
products and services. ‘Other’ represents amounts not allocated to
the operating segments and includes certain costs related to
central R&D activities to drive innovation as well as group
enabling functions.
Market Abuse Regulation This press release
contains information within the meaning of Article 7(1) of the EU
Market Abuse Regulation.
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