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Signify reports first quarter sales of EUR 1.7 billion, operational profitability of 8.9% and a free cash flow of EUR 51 million<\/strong><\/h4>\n<\/p>\n
First quarter 20231<\/sup><\/strong><\/p>\n <\/p>\n Eindhoven, the Netherlands\u00a0<\/strong>\u2013\u00a0<\/strong>Signify<\/a>\u00a0(Euronext: LIGHT), the world leader in lighting, today announced the company\u2019s first quarter 2023 results.<\/p>\n \u201cLargely in line with expectations, Q1 2023 saw persistent weakness in the consumer segment and in the indoor professional business, as well as a slowdown in OEM sales. At the same time, we made progress with our 2023 priorities, such as continued price discipline and effective COGS management, which resulted in an improvement in our gross margin. The Adjusted EBITA margin performance of our Conventional Products division returned to historical levels. The company\u2019s free cash flow further recovered, driven by working capital improvements. While our adjusted EBITA margin was impacted by lower fixed cost absorption, we remain steadfastly focused on applying our customary cost discipline,\u201d said Eric Rondolat, CEO of Signify.<\/p><\/blockquote>\n \u201cWhile we expect the remainder of H1 2023 to remain challenging, we continue to see the potential for an improved second half. Given the structural improvements in our gross margin and free cash flow generation, as well as our intensified measures to reduce fixed costs, we confirm our guidance for the full year.\u201d<\/p><\/blockquote>\n <\/p>\n Brighter Lives, Better World 2025<\/strong><\/p>\n In the first quarter of the year, Signify was on track for all of its\u00a0Brighter Lives, Better World 2025 sustainability program<\/a>\u00a0commitments that contribute to doubling its positive impact on the environment and society.<\/p>\n Cumulative carbon reduction over the value chain is on track. This is mainly driven by energy-efficient and connected LED lighting, which drive emission reductions in the use phase.<\/p>\n Circular revenues were 29%, stable versus the previous quarter, yet on track to reach the 2025 target. Circular revenues continue to be driven by serviceable and circular luminaires.<\/p>\n Brighter lives revenues were 27%, on track to reach the 2025 target. The main contribution continues to be the consumer well-being and Safety & security portfolios.<\/p>\n The percentage of women in leadership positions was 29%, an increase versus the previous quarter and on track to reach the 2025 target. The improvement was mainly driven by new external hires and the internal promotion of women.<\/p>\n <\/p>\n <\/p>\n Outlook<\/strong><\/p>\n Signify confirms its guidance for 2023. The company continues to focus its efforts on improving the Adjusted EBITA margin and free cash flow. Signify expects for 2023:<\/p>\n <\/p>\n For the full and original version of the press release click here<\/a><\/p>\n For the presentation click here<\/a><\/p>\n <\/p>\n Conference call and audio webcast<\/strong><\/p>\n Eric 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 first quarter 2023 results. A live audio webcast of the conference call will be available via the\u00a0Investor Relations website<\/a>.<\/p>\n <\/p>\n Financial calendar<\/strong><\/p>\n May 16, 2023: Annual General Meeting<\/p>\n May 18, 2023: Ex-dividend date<\/p>\n May 19, 2023: Dividend record date<\/p>\n June 5, 2023: Dividend payment date<\/p>\n July 28, 2023: Second quarter and half-year results 2023<\/p>\n October 27, 2023: Third quarter results 2023<\/p>\n 1\u00a0<\/sup>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.<\/p>\n <\/p>\n <\/p>\n Financial review<\/strong><\/p>\n <\/p>\n First quarter<\/p>\n Nominal sales decreased by 6.1% to EUR 1,678 million, including a positive currency effect of 0.9% and a positive effect of 2.1% from the consolidation of Fluence, Pierlite and Intelligent Lighting Controls. Comparable sales declined by 9.1%, driven by continued weakness in the indoor professional business, the consumer segment and the OEM channel. In China, the market was still impacted by COVID-related disruptions, but the company started to see increased economic activity following the reopening.<\/p>\n The Adjusted gross margin increased by 100 bps to 39.3%, mainly driven by continued price discipline and effective COGS management. Adjusted indirect costs as a percentage of sales increased by 240 bps to 31.9%, as the reduction of indirect costs was not sufficient to compensate lower sales.<\/p>\n Adjusted EBITA decreased to EUR 149 million. The Adjusted EBITA margin decreased by 160 bps to 8.9%, mainly due to under-absorption of fixed costs and an adverse currency effect from the weakening of emerging market currencies, the strengthening of the US Dollar, and a one-off impact from the implementation of a new hedging policy.<\/p>\n Restructuring costs were EUR 47 million and were mainly related to Conventional Products. These restructuring costs were in line with the strategy to adjust Conventional Products’ footprint to declining sales. Acquisitionrelated charges were EUR 3 million and incidental items were EUR 16 million, mainly related to additions to environmental provisions.<\/p>\n Net income decreased to EUR 28 million, mainly due to lower income from operations and higher financial expenses, partly offset by lower income tax expense due to lower taxable income and a release of tax liabilities.<\/p>\n The higher financial expenses were mainly related to a non-cash fair value adjustment of the Virtual Power Purchase Agreements due to lower energy prices, and higher interest costs<\/p>\n The number of employees (FTE) decreased from 36,884 at the end of Q1 22 to 34,408 at the end of Q1 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.<\/p>\n <\/p>\n <\/p>\n Digital Solutions<\/strong><\/p>\n First quarter<\/p>\n Nominal sales decreased by 3.0% to EUR 951 million, including a positive currency effect of 1.7% and a positive effect of 4.0% from the consolidation of Fluence, Pierlite and Intelligent Lighting Controls. Comparable sales declined by 8.7% on the back of a high base of comparison (Q1 22: +16.9%), and weaker indoor professional and horticulture sales. The Adjusted EBITA margin declined by 100 bps to 8.7%, as gross margin improvements were more than offset by under-absorption of fixed costs and an adverse currency effect.<\/p>\n <\/p>\n Digital Products<\/strong><\/p>\n First quarter<\/p>\n Nominal sales decreased by 10.6% to EUR 537 million, including a negative currency effect of 0.4%. Comparable sales declined by 10.1%, due to continued weakness in the consumer connected and OEM businesses, which was partly compensated by higher sales of LED lamps and luminaires. The Adjusted EBITA margin declined by 450 bps to 8.3%, mainly reflecting under-absorption of fixed costs due to lower sales volumes, partly offset by a positive impact from price and sales mix.<\/p>\n <\/p>\n Conventional Products<\/strong><\/p>\n First quarter<\/p>\n Nominal sales decreased by 7.6% to EUR 186 million, including a positive currency effect of 0.9%. Comparable sales declined by 8.5%, as lower volumes were partially compensated by price increases. The Adjusted EBITA margin increased by 650 bps to 22.5%, mainly reflecting strong price discipline and a benefit from one offs. EBITA included EUR 47 million of adjusted items, mainly related to restructuring charges and additions to environmental provisions.<\/p>\n <\/p>\n Other<\/strong><\/p>\n First quarter<\/p>\n ‘Other’ represents amounts not allocated to operating segments and includes costs related both to central R&D activities to drive innovation, and to Group enabling functions. Adjusted EBITA was EUR -19 million (Q1 22: EUR -17 million) and EBITA was EUR -22 million (Q1 22: EUR -18 million). Restructuring costs increased to EUR 3 million (Q1 22: EUR 1 million) and incidental items were a net benefit of EUR 1 million.<\/p>\n Update US legal case<\/p>\n In reference to the legal case disclosed in its Q3 2022 press release, Signify received a decision from the trial judge on April 26th, reducing the jury\u2019s award from USD 100 million to approximately USD 46 million and Signify\u2019s allocated share to approximately USD 42 million. Both the legal provision and the insurance cover asset have been updated in the balance sheet of the company as per 31 March 2023 without any net P&L impact.<\/p>\n Signify has a comprehensive global liability insurance and has confirmation that the case is fully covered without reservation of rights, including interest and other costs. Signify will continue to exercise all its rights to appeal this verdict.<\/p>\n <\/p>\n Sales by market<\/strong><\/p>\n First quarter<\/p>\n In the first quarter, most markets saw continued weakness in the consumer segment and softness in the indoor professional segment, in addition to a high base of comparison. In Europe, comparable sales declined by 6.2%, mainly due to Germany, the Benelux and the UK. In the Americas, comparable sales declined by 10.9%, mainly due to the US and Canada. In the Rest of the World, comparable sales declined by 6.8%, as most markets declined. China was still impacted by COVID-related disruptions. Global businesses’ comparable sales declined by 16.4%, mainly due to Klite.<\/p>\n <\/p>\n Working capital<\/strong><\/p>\n First quarter<\/p>\n Working capital slightly increased from a recurring seasonal low of EUR 564 million at the end of December 2022 to EUR 617 million at the end of March 2023. The higher working capital is driven by a reduction in payables, only partly offset by lower receivables and lower inventories. As a percentage of last twelve-month sales, working capital increased by 80 bps to 8.3%. Including last twelve-month sales pro forma for Fluence and Pierlite, working capital increased by 90 bps to 8.3%.<\/p>\n Compared with March 2022, working capital increased by EUR 58 million. This increase is mainly related to lower payables and other working capital items, partly offset by lower inventories and receivables. As a percentage of last twelve-month sales, working capital increased by 40 bps to 8.3%. Including last twelve-month sales pro forma for Fluence and Pierlite, working capital also increased by 40 bps.<\/p>\n <\/p>\n Cash flow analysis<\/strong><\/p>\n First quarter<\/p>\n Free cash flow was EUR 51 million, mainly due to a lower cash outflow from working capital, which benefited from improved demand planning reliability and stricter inventory discipline. The increase in additions to provisions was mostly related to restructuring provisions in Conventional Products. Free cash flow included a restructuring payout of EUR 21 million (Q1 22: EUR 14 million).<\/p>\n <\/p>\n Net debt and total equity<\/strong><\/p>\n First quarter<\/p>\n Compared with the end of December 2022, both the cash and gross debt positions remained relatively stable. The cash position increased by EUR 17 million to EUR 694 million, while gross debt declined by EUR 8 million to EUR 2,025 million. As a result, net debt decreased by EUR 25 million to EUR 1,331 million. Total equity slightly reduced to EUR 3,053 million at the end of March 2023 (Q4 22: EUR 3,065 million), primarily due to currency translation results, partly offset by net income.<\/p>\n Compared with the end of March 2022, the cash position increased by EUR 68 million, while gross debt increased by EUR 21 million. As a result, the net debt decreased by EUR 47 million year on year. At the end of March 2023, the net debt\/EBITDA ratio was 1.4x (Q1 22: 1.6x).<\/p>\n <\/p>\n Other information<\/strong><\/p>\n Appendix A \u2013 Selection of financial statements<\/p>\n Appendix B \u2013 Reconciliation of non-IFRS financial measures<\/p>\n Appendix C \u2013 Financial glossary<\/p>\n <\/p>\n <\/p>\n Appendix A \u2013 Financial statement information<\/strong><\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n Appendix B – Reconciliation of non-IFRS financial measures<\/strong><\/p>\n <\/p>\n <\/p>\n <\/p>\n Appendix C \u2013 Financial glossary<\/strong><\/p>\n Acquisition-related charges<\/strong> <\/p>\n Net leverage ratio<\/strong> [\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_empty_space height=”50px”][\/vc_column][\/vc_row][vc_row el_class=”bg_wt_rc”][vc_column][vc_column_text]<\/p>\n <\/p>\n More information on Signify:<\/strong>\u00a0See the full profile on EMR Executive Services<\/p>\n More information on Eric Rondolat (CEO, Signify):<\/strong>\u00a0See the full profile on EMR Executive Services<\/p>\n More information on Javier van Engelen (CFO, Signify):<\/strong>\u00a0See the full profile on EMR Executive Services<\/p>\n More information on Signify’s Sustainability Program (Brighter Lives, Better World 2025):<\/strong>\u00a0See the full profile on EMR Executive Services +\u00a0https:\/\/www.signify.com\/global\/sustainability\/brighter-lives-better-world-2025<\/a><\/p>\n More information on Maurice Loosschilder (Head of Sustainability, Signify):\u00a0<\/strong>See the full profile on EMR Executive Services<\/p>\n <\/p>\n <\/p>\n EMR Additional Notes:\u00a0<\/strong><\/p>\n [\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":" [vc_row][vc_column][vc_column_text] Signify reports first quarter sales of EUR 1.7 billion, operational profitability of 8.9% and a free cash flow of EUR 51 million First quarter 20231 […]<\/p>\n","protected":false},"author":5,"featured_media":7845,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[71],"tags":[],"acf":{"select_date":null},"aioseo_notices":[],"yoast_head":"\n\n
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\nCosts \u00a0that \u00a0are \u00a0directly \u00a0triggered \u00a0by \u00a0the \u00a0acquisition of \u00a0a \u00a0company, \u00a0such \u00a0as \u00a0transaction \u00a0costs, \u00a0purchase accounting related \u00a0costs \u00a0and \u00a0integration-related expenses.
\nAdjusted EBITA<\/strong>
\nEBITA \u00a0excluding \u00a0restructuring \u00a0costs, \u00a0acquisition related charges, and other incidental charges.
\nAdjusted EBITA margin<\/strong>
\nAdjusted \u00a0EBITA \u00a0divided \u00a0by \u00a0sales \u00a0to \u00a0third \u00a0parties (excluding intersegment).
\nAdjusted gross margin<\/strong>
\nGross \u00a0margin, \u00a0excluding \u00a0restructuring \u00a0costs, acquisition-related \u00a0charges, \u00a0and \u00a0other \u00a0incidental items attributable to cost of sales.
\nAdjusted indirect costs<\/strong>
\nIndirect \u00a0costs, \u00a0excluding \u00a0restructuring \u00a0costs, acquisition-related \u00a0charges, \u00a0and \u00a0other \u00a0incidental items attributable to indirect costs.
\nAdjusted R&D expenses<\/strong>
\nResearch \u00a0and \u00a0development \u00a0expenses, \u00a0excluding restructuring costs, acquisition-related charges, and other incidental items attributable \u00a0to \u00a0research and development expenses.
\nAdjusted SG&A expenses<\/strong>
\nSelling, \u00a0general \u00a0and \u00a0administrative \u00a0expenses, excluding \u00a0restructuring \u00a0costs, \u00a0acquisition-related charges, and \u00a0other incidental items attributable to selling, general and administrative expenses.
\nBrighter lives revenues<\/strong>
\nPercentage \u00a0of \u00a0total \u00a0revenues \u00a0coming \u00a0from \u00a0all products, \u00a0systems \u00a0and \u00a0services \u00a0contributing \u00a0to Food \u00a0availability, \u00a0Safety \u00a0& security, \u00a0or \u00a0Health \u00a0& well-being.
\nChanges in scope<\/strong>
\nConsolidation effects related to acquisitions.<\/strong>
\nCircular revenues<\/strong>
\nPercentage \u00a0of \u00a0total \u00a0revenues \u00a0coming \u00a0from products, \u00a0systems \u00a0and \u00a0services \u00a0designed \u00a0for \u00a0a circular \u00a0economy, categorized as \u00a0serviceable luminaires \u00a0(incl. \u00a03D-printing), \u00a0circular \u00a0components, intelligent systems, or circular services.
\nComparable sales growth (CSG)<\/strong>
\nThe period-on-period growth in sales excluding the effects \u00a0of \u00a0currency \u00a0movements \u00a0and \u00a0changes \u00a0in consolidation and other changes.
\nEBIT<\/strong>
\nIncome from operations.
\nEBITA<\/strong>
\nIncome \u00a0from \u00a0operations \u00a0excluding \u00a0amortization and \u00a0impairment \u00a0of \u00a0acquisition-related \u00a0intangible assets and goodwill.
\nEBITDA<\/strong>
\nIncome \u00a0from \u00a0operations \u00a0excluding \u00a0depreciation, amortization, \u00a0and \u00a0impairment \u00a0of \u00a0non-financial assets.
\nEffects \u00a0of \u00a0changes \u00a0in \u00a0consolidation \u00a0and \u00a0other changes<\/strong>
\nIn \u00a0the \u00a0event \u00a0a \u00a0business \u00a0is \u00a0acquired \u00a0(or \u00a0divested), the \u00a0impact \u00a0of \u00a0the \u00a0consolidation \u00a0(or \u00a0deconsolidation) on the Group\u2019s figures is included (or excluded) in the calculation of the comparable sales growth \u00a0figures. \u00a0Other \u00a0changes \u00a0include regulatory changes \u00a0and \u00a0changes \u00a0originating \u00a0from \u00a0new accounting standards.
\nEffects of currency movements<\/strong>
\nCalculated \u00a0by \u00a0translating \u00a0the \u00a0foreign \u00a0currency financials \u00a0of \u00a0the \u00a0previous \u00a0period \u00a0and \u00a0the \u00a0current period \u00a0into \u00a0euros \u00a0at \u00a0the \u00a0same \u00a0average \u00a0exchange rates.
\nEmployees<\/strong>
\nEmployees \u00a0of \u00a0Signify \u00a0at \u00a0the \u00a0end \u00a0of \u00a0the \u00a0period, expressed on a full-time equivalent (FTE) basis.
\nFree cash flow<\/strong>
\nNet cash provided by operating activities minus net capital \u00a0expenditures. \u00a0Free \u00a0cash \u00a0flow \u00a0includes interest paid and income taxes paid.
\nGross margin<\/strong>
\nSales minus cost of sales.
\nIncidental charges<\/strong>
\nAny item with an income statement impact (loss or gain) that is deemed to be both significant and not part \u00a0of \u00a0normal \u00a0business \u00a0activity. \u00a0Other \u00a0incidental items may extend over several quarters within the same financial year.
\nIndirect costs<\/strong>
\nThe \u00a0sum \u00a0of \u00a0selling, \u00a0general \u00a0and \u00a0administrative expenses and R&D expenses.
\nNet capital expenditures<\/strong>
\nAdditions of intangible assets, capital expenditures on \u00a0property, \u00a0plant \u00a0and \u00a0equipment \u00a0and \u00a0proceeds from disposal of property, plant and equipment.
\nNet debt<\/strong>
\nShort-term \u00a0debt, \u00a0long-term \u00a0debt \u00a0minus \u00a0cash \u00a0and cash equivalents.<\/p>\n
\nThe \u00a0ratio \u00a0of \u00a0consolidated \u00a0reported \u00a0net \u00a0debt \u00a0to consolidated \u00a0reported \u00a0EBITDA \u00a0for \u00a0the \u00a0purpose \u00a0of calculating the financial covenant.
\nR&D expenses<\/strong>
\nResearch and development expenses.
\nRestructuring costs<\/strong>
\nThe \u00a0estimated \u00a0costs \u00a0of \u00a0initiated \u00a0reorganizations which \u00a0have \u00a0been \u00a0approved \u00a0by \u00a0the \u00a0company, \u00a0and generally involve the realignment of certain parts of the \u00a0organization. \u00a0Restructuring \u00a0costs \u00a0include \u00a0costs for \u00a0employee \u00a0termination \u00a0benefits \u00a0for \u00a0affected employees \u00a0and \u00a0other \u00a0costs \u00a0directly \u00a0attributable \u00a0to the restructuring, such as impairment of assets and inventories.
\nSG&A expenses<\/strong>
\nSelling, general and administrative expenses.
\nWorking capital<\/strong>
\nThe \u00a0sum \u00a0of \u00a0inventories, \u00a0trade \u00a0and \u00a0other receivables, \u00a0other \u00a0current \u00a0assets, \u00a0derivative financial \u00a0assets minus \u00a0the \u00a0sum \u00a0of \u00a0trade \u00a0and \u00a0other payables, \u00a0derivative \u00a0financial \u00a0liabilities \u00a0and \u00a0other current \u00a0liabilities \u00a0(excluding \u00a0dividend-related payables).[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\nSource<\/strong>
\nSignify\u00a0<\/i><\/a><\/h5>\nEMR Analysis<\/strong><\/h4>\n
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