Press Release
Signify reports second quarter sales of
Second quarter 20231
- Signify's installed base of connected light points increased from 117 million in Q1 23 to 119 million in Q2 23
- On track for all Brighter Lives, Better World 2025 sustainability program commitments
- Sales of
EUR 1,644 million ; nominal sales decline of -10.5% and CSG of -8.6% - LED-based sales represented 84% of total sales (Q2 22: 84%)
- Adj. EBITA margin of 8.3% (Q2 22: 9.5%)
- Net income of
EUR 45 million (Q2 22:EUR 248 million ) - Free cash flow of
EUR 88 million (Q2 22:EUR 135 million )
Eindhoven,
“In the second quarter, we saw continued softness in the consumer, indoor professional and OEM channels and a slower than anticipated recovery of the Chinese market. Against this backdrop, our actions to improve gross margin are paying off, although fixed costs reduction plans are not yet fully compensating for the volume decline. While our Digital Solutions and Conventional Products divisions demonstrated resilience in their bottom line, our Digital Products division was more exposed to these challenges,” said
“The continued economic softness has led us to apply caution in our outlook for the full year and adjust our Adjusted EBITA margin guidance to 9.5-10.5%. On the other hand, our free cash flow generation has and will continue to benefit from supply chain lead time improvements and effective working capital measures. We therefore expect our free cash flow generation to be at the higher end of the 6-8% range. To optimize our global operations, we have begun implementing structural measures to adapt our cost structure to the market environment. These measures will enable enhanced performance and a stronger focus on growth opportunities.”
Brighter Lives, Better World 2025
In the second quarter of the year, Signify remained on track to deliver on its Brighter Lives, Better World 2025 sustainability program commitments:
Double the pace of the Paris Agreement
Signify is on track to reduce emissions across the entire value chain by 40% against the 2019 baseline - double the pace required by the Paris Agreement. This is driven by Signify’s leadership in energy efficient and connected LED lighting solutions, which significantly reduce emissions during the use phase.
Double Circular revenues
Circular revenues remained stable at 29%, on track to reach the 2025 target of 32%. The main contribution is from serviceable and upgradeable luminaires, including the first serviceable Horticulture product family.
Double Brighter lives revenues
Brighter lives revenues increased to 28%, on track to reach the 2025 target of 32%. This was driven by the performance of Cooper’s tunable products supporting the consumer well-being portfolio and continued strength of the safety & security portfolio.
Double the percentage of women in leadership
The percentage of women in leadership positions continued to improve to 30%, on track to reach the 2025 target of 34%. This was mainly due to the acceleration of hiring practices for diversity across all levels.
Outlook
The continued economic softness has led us to apply caution in our outlook for the full year and adjust our Adjusted EBITA margin guidance to 9.5-10.5%. On the other hand, our free cash flow generation has and will continue to benefit from supply chain lead time improvements and effective working capital measures. We therefore expect our free cash flow generation to be at the higher end of the 6-8% range.
Financial review
Second quarter | Six months | |||||
2022 | 2023 | change | in millions of EUR, except percentages | 2022 | 2023 | change |
-8.6 % | Comparable sales growth | -8.9 % | ||||
-2.8 % | Effects of currency movements | -1.0 % | ||||
0.9 % | Consolidation and other changes | 1.5 % | ||||
1,836 | 1,644 | -10.5 % | Sales | 3,624 | 3,322 | -8.3 % |
674 | 639 | -5.3 % | Adjusted gross margin | 1,359 | 1,298 | -4.4 % |
36.7% | 38.9% | Adj. gross margin (as % of sales) | 37.5% | 39.1% | ||
-465 | -454 | Adj. SG&A expenses | -921 | -915 | ||
-73 | -68 | Adj. R&D expenses | -144 | -143 | ||
-537 | -523 | 2.7 % | Adj. indirect costs | -1,065 | -1,058 | 0.7 % |
29.3% | 31.8% | Adj. indirect costs (as % of sales) | 29.4% | 31.8% | ||
174 | 136 | -22.1 % | Adjusted EBITA | 361 | 285 | -21.1 % |
9.5% | 8.3% | Adjusted EBITA margin | 10.0% | 8.6% | ||
166 | -28 | Adjusted items | 125 | -95 | ||
340 | 108 | -68.3 % | EBITA | 486 | 190 | -60.8 % |
306 | 88 | -71.2 % | Income from operations (EBIT) | 421 | 149 | -64.6 % |
11 | -31 | Net financial income/expense | 5 | -61 | ||
-68 | -12 | Income tax expense | -91 | -15 | ||
248 | 45 | -81.9 % | Net income | 335 | 73 | -78.3 % |
135 | 88 | Free cash flow | -54 | 139 | ||
1.97 | 0.32 | Basic EPS (€) | 2.66 | 0.52 | ||
35,407 | 33,181 | Employees (FTE) | 35,407 | 33,181 |
Second quarter
Nominal sales decreased by 10.5% to
The Adjusted gross margin increased by 220 bps to 38.9% driven by effective COGS management and price discipline. Adjusted indirect costs as a percentage of sales increased by 250 bps to 31.8%, as indirect costs did not keep pace with lower sales.
Adjusted EBITA was
Restructuring costs were
Net income decreased to
The number of employees (FTE) decreased from 35,407 at the end of Q2 22 to 33,181 at the end of Q2 23. The year-on-year decrease is mostly related to a reduction of factory personnel due to lower production volumes. In general, the number of FTEs is 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.
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Conference call and audio webcast
Financial calendar 2023
October 27, 2023 Third quarter results 2023
January 26, 2024 Fourth quarter and full-year results 2023
For further information, please contact:
Signify Investor Relations
Tel: +31 6 1801 7131
E-mail: thelke.gerdes@signify.com
Tel: +31 6 3928 0201
E-mail: leanne.carmody@signify.com
Tel: +31 6 5252 5416
E-mail: tom.lodge@signify.com
About Signify
Signify (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. In 2022, we had sales of
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Presentation
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