Press Release
April 26, 2019
Signify reports first quarter sales of EUR 1.5 billion, operational profitability of 7.8% and free cash flow of EUR 55 million
First quarter 20191
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Signify`s installed base of connected light points increased from 34 million in Q1 18 to 47 million in Q1 19
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CSG growing profit engines 1.1%; CSG total Signify -3.3%
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LED-based comparable sales grew by 3.6% to 73% of sales (Q1 18: 68%)
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Adj. indirect costs down EUR 39 million on a currency comparable basis, a reduction of 8%, or 170 bps of sales
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Adj. EBITA margin improved by 80 bps to 7.8%, despite a negative currency impact of -130 bps
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Net income more than doubled to EUR 44 million (Q1 18: EUR 20 million)
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Total free cash flow of EUR 55 million (Q1 18: EUR -6 million)
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Signify 2019 outlook confirmed
Eindhoven, the Netherlands - Signify (LIGHT.NX), the world leader in lighting, today announced the company`s 2019 first quarter results. "We are satisfied with the 1.1% sales growth of our growing profit engines in the first quarter, against the backdrop of headwinds in China and Europe," said CEO Eric Rondolat. "Continued progress in our simplification actions resulted in a further improvement in our profitability, and our free cash flow remained solid. While market conditions remain challenging, we continue to invest in our growth platforms and rigorously improve our operational efficiency."
Outlook
We confirm our outlook that in 2019 our growing profit engines (LED, Professional and Home combined) are expected to deliver a comparable sales growth in the range of 2 to 5%. Our cash engine, Lamps, is expected to decline at a slower pace than the market, in the range of -21 to -24% on a comparable basis. For total Signify, we aim to reach an Adjusted EBITA margin in 2019 within the range of 11 to 13% set at the time of the IPO in May 2016. In 2019, we expect free cash flow, excluding the positive impact from IFRS 16, to be above 5% of sales.
Financial review
| | First quarter |
| in € million, except percentages | 2018 | 2019 | change |
| Comparable sales growth | | | -3.3% |
| Effects of currency movements | | | 1.1% |
| Consolidation and other changes | | | 0.7% |
| Sales | 1,501 | 1,478 | -1.5% |
| Adjusted gross margin | 580 | 557 | -4.0% |
| Adj. gross margin (as % of sales) | 38.6% | 37.7% | |
| | | | |
| Adj. SG&A expenses | -417 | -395 | |
| Adj. R&D expenses | -81 | -69 | |
| Adj. indirect costs | -498 | -464 | 6.7% |
| Adj. indirect costs (as % of sales) | 33.2% | 31.4% | |
| | | | |
| Adjusted EBITA | 106 | 115 | 8.8% |
| Adjusted EBITA margin | 7.0% | 7.8% | |
| Adjusted items | -43 | -22 | |
| EBITA | 62 | 93 | 49.3% |
| | | | |
| Income from operations (EBIT) | 39 | 69 | 74.9% |
| Net financial income/expense | -9 | -9 | |
| Income tax expense | -10 | -16 | |
| Net income | 20 | 44 | 119.1% |
| | | | |
| Free cash flow | -6 | 55 | |
| Basic EPS (€) | 0.15 | 0.35 | |
| Employees (FTE) | 31,615 | 28,689 | |
First quarter
Sales amounted to EUR 1,478 million. Adjusted for 1.1% positive currency effects, comparable sales decreased by 3.3%, with LED-based sales increasing by 3.6% and now accounting for 73% of sales. The adjusted gross margin declined by 90 bps to 37.7%, due to a currency effect of -140 bps, partly offset by ongoing procurement savings. Adjusted indirect costs decreased by EUR 34 million, or 180 bps as a percentage of sales, as a result of our ongoing cost reduction initiatives. Adjusted EBITA amounted to EUR 115 million, compared with EUR 106 million in the same period last year, and was negatively impacted by EUR 18 million of currency effects. The Adjusted EBITA margin improved by 80 bps to 7.8%, despite a currency effect of -130 bps. Total restructuring costs were EUR 20 million and other incidentals were EUR 2 million. Net income more than doubled from EUR 20 million last year to EUR 44 million in Q1 19, mainly as a result of better operational profitability and lower restructuring costs. Free cash flow amounted to EUR 55 million, including a positive impact of EUR 17 million related to IFRS 16.
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.
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) and Stéphane Rougeot (CFO) will host a conference call for analysts and institutional investors at 9:00 a.m. CET to discuss first quarter results. A live audio webcast of the conference call will be available via the Signify Investor Relations website.
Financial calendar
14 May 2019 Annual General Meeting of Shareholders
26 July 2019 Second quarter and half year results 2019
25 October 2019 Third quarter results 2019
For further information, please contact:
Signify Investor Relations
Robin Jansen
Tel: +31 6 1594 4569
E-mail: robin.j.jansen@signify.com
Signify Corporate Communications
Elco van Groningen
Tel: +31 6 1086 5519
E-mail: elco.van.groningen@signify.com
About Signify
Signify (LIGHT.NX) 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 2018 sales of EUR 6.4 billion, we have approximately 29,000 employees and are present in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We have been named Industry Leader in the Dow Jones Sustainability Index for two 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 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, impact of the Group`s operation as a separate publicly listed company, pension liabilities and costs, establishment of corporate and brand identity, adverse tax consequences from the separation from Royal Philips and exposure to international tax laws. Please see "Risk Factors and Risk Management" in Chapter 12 of the Annual Report 2018 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 2018.
Looking ahead, the Group is primarily concerned about the challenging economic conditions, currency headwinds and political uncertainties in the global and domestic markets in which it operates. 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 2018.
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 2018.
Market Abuse Regulation
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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Signify via GlobeNewswire
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