Signify reports second quarter sales of EUR 1.5 billion and operational profitability of 8.4%; Increases share repurchase program to EUR 300 million
Second quarter 2018¹
Sales of EUR 1,537 million; a comparable decrease of 3.4%
LED-based comparable sales growth of 4.7%, representing 70% of total sales (Q2 2017: 63%)
Adj. currency comparable indirect costs down EUR 46 million, a reduction of 8%; or 150 basis points of sales
Adj. EBITA of EUR 130 million (Q2 2017: EUR 159 million), impacted by currency effects of EUR -22 million
Adj. EBITA margin of 8.4% (Q2 2017: 9.4%), including a currency impact of -80 basis points
Net income of EUR 29 million (Q2 2017: EUR 73 million), reflecting higher restructuring costs, lower profitability and a real estate gain in Q2 2017
Free cash flow of EUR -31 million (Q2 2017: EUR -44 million excluding real estate proceeds)
Share repurchase program for 2018 increased from EUR 150 million to EUR 300 million
Half year 2018 highlights¹
Sales of EUR 3,038 million, a comparable decrease of 3.4%; LED-based comparable sales growth of 5.3%
Strong reduction in currency comparable indirect costs of EUR 84 million, or 120 basis points of sales
Adjusted EBITA margin of 7.7% (H1 2017: 8.4%), including a currency impact of -60 basis points
Working capital improved by 70 basis points to 10.5% of sales
Free cash flow of EUR -37 million, an improvement compared with EUR -62 million, excluding real estate proceeds in H1 2017
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s 2018 second quarter results. “In the second quarter, profitability improved in Lamps, LED and Professional while the performance in Home remained weak. We significantly reduced our cost base and working capital, thereby structurally improving our cash generation,” said CEO Eric Rondolat. “However, given the slow start to the year and as we expect ongoing challenging market conditions, we have decided to revise our sales outlook for the year. We expect our sales growth performance to improve in the second half, but this will not be enough to deliver positive comparable sales growth for the full year. At the same time, we confirm our profitability and cash flow outlook for the year as our teams remain focused on relentlessly executing our strategy, driving down our cost base while investing in innovation and growth opportunities.”
Outlook
Given the slow start to the year in Home, more challenging market and competitive dynamics in some geographies, as well as global scarcity in certain electronic components, Signify has decided to revise its sales outlook for 2018. The company expects its comparable sales growth in the second half to improve compared with the first half, however, the improvement is not expected to be sufficient to deliver positive comparable sales growth for the full year. Taking into account the anticipated cost savings in the second half of 2018, the company maintains its earlier outlook to improve the Adjusted EBITA margin from 9.6% in 2017 to 10.0-10.5% in 2018, albeit at the lower end of the range. The company also continues to expect to generate a solid free cash flow in 2018, which will be somewhat lower than the level in 2017 due to higher restructuring payments.