Signify reports second quarter sales of EUR 1.6 billion,
operational profitability of 10.9% and a free cash flow of EUR 104
million
Press Release
July 23, 2021
Signify reports second quarter sales of EUR 1.6 billion,
operational profitability of 10.9% and a free cash flow of EUR 104
million
Second quarter 20211
- Signify's installed base of connected light points increased
from 83 million in Q1 21 to 862 million in Q2 21
- Sales of EUR 1,609 million; 9.6% nominal sales growth and CSG
of 14.1%
- LED-based sales represented 82% of total sales (Q2 2020:
80%)
- Adj. EBITA margin improved by 190 bps to 10.9%
- Net income increased to EUR 82 million (Q2 20: EUR 81
million)
- Free cash flow of EUR 104 million (Q2 20: EUR 158 million)
- Net debt/EBITDA ratio of 1.7x (Q2
20: 2.4x)
Eindhoven, the Netherlands – Signify (Euronext:
LIGHT), the world leader in lighting, today announced the company’s
second quarter 2021 results.
“In the second quarter we saw an acceleration of the pace of
recovery in comparison to the first three months of the year. We
successfully executed our strategy as demand for our connected
lighting offers and our growth platforms remained strong. The
consumer segment held its momentum and demand for conventional
products proved resilient. The professional lighting segment showed
sequential improvements, while still impacted by both extended
lockdowns and supply constraints. Overall, we managed to improve
the operating margin by 190 basis points and generated a solid free
cash flow. We again progressed on our Brighter Lives, Better World
2025 program, well on track to achieving our four key objectives.
Looking back at the first half year, we are pleased with the pace
of our recovery in a volatile and disrupted environment, achieving
more than 8 percent comparable sales growth with an operating
margin improvement of 230 basis points and generating EUR 272
million of free cash flow,” said CEO Eric Rondolat.
“While we are seeing increasing COVID-19 cases, new variants
leading to continued lockdowns in parts of the world and supply
constraints continuing to impact us into the second half of the
year, we are confident that the measures we have taken will enable
us to counter those challenges and deliver our guidance for the
year.”
Brighter Lives, Better World 2025
In the second quarter of the year, Signify continued on the
journey to achieving its ambitious goals for the Brighter Lives,
Better World 2025 sustainability program, progressing on all four
commitments that contribute to doubling its positive impact on
environment and society:
- Double the pace of the Paris
agreement:Cumulative carbon reduction over value chain was
33 million tonnes, ahead of track for the 2025 target of 340
million tonnes. This is mainly caused by an accelerated shift to
energy efficient and connected LED lighting in the first two
quarters of 2021, decreasing our carbon emissions in the use
phase.
- Double our Circular revenues to 32%:Circular
revenues increased to 24%, compared to the 2019 baseline of 16%. We
are on track for the 2025 target of 32%. This is mainly due to our
strong portfolio of serviceable luminaires and the further
expansion of our 3D printing footprint.
- Double our Brighter lives revenues to
32%:Brighter lives revenues were 25%, progressing well
towards the 2025 target of 32%. We had several customer wins that
contribute to our Brighter lives revenues, including 'quality of
light' EyeComfort products, horticulture lighting and UV-C
disinfection lighting.
- Double the percentage of women in leadership positions
to 34%:The percentage of women in leadership positions was
25%, on track to reach the 2025 target of 34%. This target is part
of a broader program, where we focus our efforts on attracting,
retaining and developing diverse talents, while ensuring equal
opportunities, fairness and impartiality for all.
In addition, Signify received recognition for its leadership in
sustainability, amongst which a first place ranking in our industry
and top 5% of the ESG Risk Ratings Universe from
Sustainalytics.
Outlook
Signify continues to expect comparable sales growth of 3% to 6%
for the full year 2021. In addition, Signify expects to achieve an
Adjusted EBITA margin of 11.5% to 12.5% and free cash flow to
exceed 8% of sales for the full year 2021. As previously stated,
the company reassesses its medium-term guidance after each
financial year.
Financial review
Second quarter |
|
Six months |
2020 |
2021 |
change |
in millions of EUR, except percentages |
2020 |
2021 |
change |
|
|
14.1 |
% |
Comparable sales growth |
|
|
8.4 |
% |
|
|
-4.5 |
% |
Effects of currency movements |
|
|
-5.5 |
% |
|
|
0.0 |
% |
Consolidation and other changes |
|
|
8.0 |
% |
1,469 |
1,609 |
9.6 |
% |
Sales |
2,896 |
3,209 |
10.8 |
% |
567 |
638 |
12.5 |
% |
Adjusted gross margin |
1,112 |
1,275 |
14.7 |
% |
38.6% |
39.7% |
|
Adj. gross margin (as % of sales) |
38.4% |
39.7% |
|
|
|
|
|
|
|
|
-401 |
-423 |
|
Adj. SG&A expenses |
-794 |
-847 |
|
-67 |
-70 |
|
Adj. R&D expenses |
-134 |
-142 |
|
-468 |
-493 |
-5.4 |
% |
Adj. indirect costs |
-928 |
-989 |
-6.6 |
% |
31.9% |
30.6% |
|
Adj. indirect costs (as % of sales) |
32.0% |
30.8% |
|
|
|
|
|
|
|
|
133 |
175 |
32.0 |
% |
Adjusted EBITA |
245 |
347 |
41.8 |
% |
9.0% |
10.9% |
|
Adjusted EBITA margin |
8.5% |
10.8% |
|
-13 |
-39 |
|
Adjusted items |
-55 |
-97 |
|
119 |
136 |
13.8 |
% |
EBITA |
189 |
251 |
32.3 |
% |
|
|
|
|
|
|
|
87 |
106 |
21.5 |
% |
Income from operations (EBIT) |
130 |
191 |
46.7 |
% |
-16 |
-7 |
|
Net financial income/expense |
-26 |
-16 |
|
10 |
-17 |
|
Income tax expense |
4 |
-32 |
|
81 |
82 |
0.8 |
% |
Net income |
108 |
142 |
31.3 |
% |
|
|
|
|
|
|
|
158 |
104 |
|
Free cash flow |
270 |
272 |
|
0.62 |
0.65 |
|
Basic EPS (€) |
0.85 |
1.12 |
|
35,789 |
39,143 |
|
Employees (FTE) |
35,789 |
39,143 |
|
* For comparability purposes please note that FY 2020 includes
only 10 months of Cooper Lighting performance
Second quarterSales increased by 9.6% to EUR
1,609 million, including 4.5% negative currency effects. Comparable
sales increased by 14.1%, driven by continued strong demand for
connected lighting offers and traction on the consumer side. The
adjusted gross margin increased by 110 bps to 39.7%, driven by both
carefully balancing pricing decisions versus cost increases, and a
favorable mix. Adjusted indirect costs increased by EUR 25 million,
mainly reflecting last year's positive effect of solidarity
measures by our employees, and government contributions. Adjusted
EBITA amounted to EUR 175 million, a 32.0% increase compared to the
same period last year. The Adjusted EBITA margin improved by 190
bps to 10.9%, mainly driven by a gross margin improvement and
operating leverage.
Total restructuring costs were EUR 9 million,
acquisition-related charges were EUR 13 million and other
incidental costs were EUR 16 million, mainly related to
environmental provisions for inactive sites and transformation
costs. Net income increased to EUR 82 million, as higher
operational profitability in 2021 was offset by the impact of a
significant one-time tax benefit in the second quarter of 2020.
Free cash flow was EUR 104 million, reflecting a healthy balance
between profitability and some reinvestment in continued top line
recovery.
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.² Excludes 2 million connected light points for
Telensa, as acquisition closed on July 1, 2021
For the full and original version of the press release click
hereFor the presentation click here
Conference 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 2021 second quarter results. A live audio webcast of the
conference call will be available via the Investor Relations
website.
Financial calendar 2021October
29, 2021 Third quarter results 2021January 28,
2022 Fourth quarter and full year results
2021
For further information, please
contact:Signify Investor RelationsThelke
GerdesTel: +31 6 1801 7131E-mail: thelke.gerdes@signify.com
Signify Corporate
CommunicationsElco 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 2020 sales of EUR 6.5 billion, we have approximately
39,000 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 four
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 &
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 2020 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 2020.
Looking ahead to the second half of 2021, the Group's key
concerns are about both the supply chain constraints and shortage
of certain components, and the uncertainties related to the
COVID-19 pandemic in the global and domestic markets in which it
operates. The main challenge remains the visibility on how quickly
the general lighting market may recover to (pre-COVID-19) 2019
levels. This is relevant to the Group as a large part of its
business relates to the professional market which has been, and
continues to be, significantly impacted by government lockdowns.
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 2020.
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 2020 and Semi-Annual Report 2021.
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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