Signify reports second quarter sales of EUR 1.8 billion, comparable
sales growth of 5.1% and an operational profitability of 9.5%
Press Release
July 29, 2022
Signify reports second quarter sales of EUR 1.8 billion,
comparable sales growth of 5.1% and an operational profitability of
9.5%
Second quarter 20221
- Signify's installed base of connected light points increased
from 100 million in Q1 22 to 103 million in Q2 22
- Sales of EUR 1,836 million; nominal sales increase of 14.1% and
CSG of 5.1%
- LED-based sales represented 84% of total sales (Q2 21:
82%)
- Adj. EBITA margin of 9.5% (Q2 21: 10.9%)
- Net income of EUR 248 million (Q2 21: EUR 82 million)
- Free cash flow of EUR 135 million (Q2 21: EUR 104 million)
- Net debt/EBITDA ratio of 1.7x (Q2 21: 1.7x)
- Completed the acquisitions of Fluence and Pierlite, divested
non-strategic real estate assets
Eindhoven, the Netherlands – Signify (Euronext:
LIGHT), the world leader in lighting, today announced the company’s
second quarter 2022 results.
“In the second quarter, we continued to deliver top-line growth.
This was driven by strong traction of the professional segment,
which more than compensated headwinds from the lockdowns in China,
the effect of the war in Ukraine on our Eastern European market,
and a weaker consumer environment. This top-line increase –
achieved despite a challenging comparison base – illustrates our
improved profile for growth, fueled by the continuing shift towards
connected lighting. At the same time, currency movements and
inflationary pressures affected our gross margin and adjusted
EBITA, although the impact on the latter was partially compensated
by cost management. We maintain our CSG guidance for the full year,
given continued momentum in the professional segment and our solid
order book. The challenging external environment has led us to
revise our outlook for the adjusted EBITA margin. In addition,
persistent supply chain disruption and long supplier lead times
will impact our free cash flow performance,” said CEO Eric
Rondolat.
“We are taking adaptive measures and expect margin headwinds to
ease in the second half of the year. Cash flow generation will
normalize once supplier lead times shorten. We remain firmly
committed to investing in our business and driving our long-term
growth objectives. Our extensive portfolio of sustainable and
connected lighting solutions uniquely positions Signify to capture
the heightened demand for energy efficient lighting.”Brighter
Lives, Better World 2025
In the second quarter of the year, Signify was on track for
three of its Brighter Lives, Better World 2025 sustainability
program commitments that contribute to doubling its positive impact
on the environment and society.
- Double
the pace of the Paris Agreement:Cumulative carbon
reduction over the value chain is ahead of track. This is mainly
driven by the sales of energy-efficient and connected LED lighting,
which drive emissions reduction in the use phase.
- Double Circular revenues
to 32%:Circular revenues increased to 31%, well on track
for the 2025 target of 32%. This positive trend continues to be
driven by the upgrade of luminaires to serviceable luminaires.
- Double Brighter lives
revenues to 32%:Brighter lives revenues of 26% were off
track, yet Signify remains confident that it will achieve the 2025
target of 32%.
- Double the percentage of
women in leadership positions to 34%:The percentage of
women in leadership positions was 27%, on track. This quarter,
Signify continued to drive actions to achieve its 2025 commitment,
including inclusive job posting and diverse hiring panels. In
addition, Signify conducted training sessions together with Hult
International Business School. These training sessions equip teams
with the right tools to realize the company's diversity
ambitions.
OutlookSignify maintains its CSG guidance of 3-6% for the year,
driven by continued momentum in the professional segment and its
solid order book.
The company revises its Adjusted EBITA margin guidance for the
full year to 11.0-11.4%, reflecting the lower margin performance in
Q2 2022.
Signify also revises its 2022 free cash flow guidance to 5-7% of
sales, including the proceeds from real estate divestments. Signify
expects to return to the target of over 8% as soon as supplier lead
times ease and no longer require the company to carry higher
inventory.Financial review
Second quarter |
|
Six months |
2021 |
2022 |
change |
in millions of EUR, except percentages |
2021 |
2022 |
change |
|
|
5.1 % |
Comparable sales growth |
|
|
5.8 % |
|
|
6.6 % |
Effects of currency movements |
|
|
5.9 % |
|
|
2.4 % |
Consolidation and other changes |
|
|
1.3 % |
1,609 |
1,836 |
14.1 % |
Sales |
3,209 |
3,624 |
13.0 % |
638 |
674 |
5.6 % |
Adjusted gross margin |
1,275 |
1,359 |
6.5 % |
39.7% |
36.7% |
|
Adj. gross margin (as % of sales) |
39.7% |
37.5% |
|
|
|
|
|
|
|
|
-423 |
-465 |
|
Adj. SG&A expenses |
-847 |
-921 |
|
-70 |
-73 |
|
Adj. R&D expenses |
-142 |
-144 |
|
-493 |
-537 |
-9.0 % |
Adj. indirect costs |
-989 |
-1,065 |
-7.6 % |
30.6% |
29.3% |
|
Adj. indirect costs (as % of sales) |
30.8% |
29.4% |
|
|
|
|
|
|
|
|
175 |
174 |
-0.5 % |
Adjusted EBITA |
347 |
361 |
4.0 % |
10.9% |
9.5% |
|
Adjusted EBITA margin |
10.8% |
10.0% |
|
-39 |
166 |
|
Adjusted items |
-97 |
125 |
|
136 |
340 |
149.9 % |
EBITA |
251 |
486 |
93.7 % |
|
|
|
|
|
|
|
106 |
306 |
189.0 % |
Income from operations (EBIT) |
191 |
421 |
120.6 % |
-7 |
11 |
|
Net financial income/expense |
-16 |
5 |
|
-17 |
-68 |
|
Income tax expense |
-32 |
-91 |
|
82 |
248 |
202.8 % |
Net income |
142 |
335 |
135.9 % |
|
|
|
|
|
|
|
104 |
135 |
|
Free cash flow |
272 |
-54 |
|
0.65 |
1.97 |
|
Basic EPS (€) |
1.12 |
2.66 |
|
39,143 |
35,407 |
|
Employees (FTE) |
39,143 |
35,407 |
|
Second quarterSales increased
by 14.1% to EUR 1,836 million, with a comparable sales growth of
5.1%, largely driven by continued strong professional demand across
most markets except China, which was impacted by lockdowns during
the quarter. Nominal sales included a positive currency effect of
6.6%, mainly from the appreciation of the USD, and a positive
contribution from the recently acquired Fluence and Pierlite
businesses.
The Adjusted gross margin decreased from 39.7% to 36.7%. While
continued price increases more than offset the input cost
increases, Signify was not able to offset within the quarter the
surge of energy costs, nor the negative impact from currency
movements.
Adjusted indirect costs as a percentage of sales decreased by
130 bps to 29.3%, driven by operating leverage and strengthened
cost discipline in view of the pressure on gross margin.
Adjusted EBITA decreased slightly to EUR 174 million. The
Adjusted EBITA margin decreased by 140 bps to 9.5%, reflecting the
lower gross margin, which was partly offset by operating leverage
and indirect cost savings. Currency movements also had a negative
effect of 110 bps on the Adjusted EBITA margin.
Adjusted items of EUR 166 million include a EUR 184 million gain
from the disposal of non-strategic real estate, while year-on-year
restructuring and acquisition-related costs decreased from EUR 22
million to EUR 12 million. As a result, net income increased from
EUR 82 million to EUR 248 million.
The number of employees (FTE) decreased from 39,143 to 35,407,
reflecting the exceptionally high base in the previous year related
to the strong volume recovery and additional staff requirements in
factories, following the COVID-19 pandemic. The number of FTE can
be affected by fluctuations in volume and seasonality.¹ This 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.For the full
and original version of the press release click hereFor the
presentation click hereConference call and audio
webcastEric Rondolat (CEO) and Javier van Engelen (CFO)
will host a conference call for analysts and institutional
investors at 9:00 a.m. CET to discuss the second quarter 2022
results. A live audio webcast of the conference call will be
available via the Investor Relations website.Financial
calendar 2022
October 28, 2022 Third quarter
results 2022January 27, 2023 Fourth quarter and
full-year results 2022For further information, please
contact:
Signify Investor
RelationsThelke GerdesTel: +31 6 1801 7131E-mail:
thelke.gerdes@signify.com
Signify Corporate
CommunicationsLeanne CarmodyTel: +31 6 3928 0201
E-mail: leanne.carmody@signify.com
Abigail LeveneTel: +31 6 2939 3895E-mail:
abigail.levene@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 2021 sales of EUR 6.9 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, have been in the Dow Jones Sustainability World Index since
our IPO for five consecutive years and were named Industry Leader
in 2017, 2018 and 2019. 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
& UncertaintiesThis 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, in
particular the impacts of the Russia-Ukraine conflict, the impacts
of COVID-19, supply chain constraints, component shortages, cost
inflation, 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.
Looking ahead to the second half of 2022, the Group's key
concerns are about the further impact of the Russia-Ukraine
conflict, the high level of inflation, the worsening global
macro-economic conditions, the continued supply chain constraints,
and the uncertainties related to the resurgence of the COVID-19
pandemic in the global and domestic markets in which it operates.
The main challenge remains the visibility on how these topics will
develop. 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
InformationAll 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
MeasuresCertain 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 2021.
PresentationAll 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 2021.
Market Abuse RegulationThis
press release contains information within the meaning of Article
7(1) of the EU Market Abuse Regulation.
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