Second quarter 20221
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s second quarter 2022 results.
“In the second quarter, we continued to deliver top-line growth. This was driven by strong traction of the professional segment, which more than compensated headwinds from the lockdowns in China, the effect of the war in Ukraine on our Eastern European market, and a weaker consumer environment. This top-line increase – achieved despite a challenging comparison base – illustrates our improved profile for growth, fueled by the continuing shift towards connected lighting. At the same time, currency movements and inflationary pressures affected our gross margin and adjusted EBITA, although the impact on the latter was partially compensated by cost management. We maintain our CSG guidance for the full year, given continued momentum in the professional segment and our solid order book. The challenging external environment has led us to revise our outlook for the adjusted EBITA margin. In addition, persistent supply chain disruption and long supplier lead times will impact our free cash flow performance,” said CEO Eric Rondolat.
“We are taking adaptive measures and expect margin headwinds to ease in the second half of the year. Cash flow generation will normalize once supplier lead times shorten. We remain firmly committed to investing in our business and driving our long-term growth objectives. Our extensive portfolio of sustainable and connected lighting solutions uniquely positions Signify to capture the heightened demand for energy efficient lighting.”
Brighter Lives, Better World 2025
In the second quarter of the year, Signify was on track for three of its Brighter Lives, Better World 2025 sustainability program commitments that contribute to doubling its positive impact on the environment and society.
• Double the pace of the Paris Agreement: Cumulative carbon reduction over the value chain is ahead of track. This is mainly driven by the sales of energy-efficient and connected LED lighting, which drive emissions reduction in the use phase.
• Double Circular revenues to 32%: Circular revenues increased to 31%, well on track for the 2025 target of 32%. This positive trend continues to be driven by the upgrade of luminaires to serviceable luminaires.
• Double Brighter lives revenues to 32%: Brighter lives revenues of 26% were off track, yet Signify remains confident that it will achieve the 2025 target of 32%.
• Double the percentage of women in leadership positions to 34%: The percentage of women in leadership positions was 27%, on track. This quarter, Signify continued to drive actions to achieve its 2025 commitment, including inclusive job posting and diverse hiring panels. In addition, Signify conducted training sessions together with Hult International Business School. These training sessions equip teams with the right tools to realize the company's diversity ambitions.
Signify maintains its CSG guidance of 3-6% for the year, driven by continued momentum in the professional segment and its solid order book.
The company revises its Adjusted EBITA margin guidance for the full year to 11.0-11.4%, reflecting the lower margin performance in Q2 2022.
Signify also revises its 2022 free cash flow guidance to 5-7% of sales, including the proceeds from real estate divestments. Signify expects to return to the target of over 8% as soon as supplier lead times ease and no longer require the company to carry higher inventory.
Conference call and audio webcast
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 second quarter 2022 results. A live audio webcast of the conference call will be available via the Investor Relations website.
Financial calendar 2022
October 28, 2022: Third quarter results 2022
January 27, 2023: Fourth quarter and full-year results 2022
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, in particular the impacts of the Russia-Ukraine conflict, the impacts of COVID-19, supply chain constraints, component shortages, cost inflation, 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.
Looking ahead to the second half of 2022, the Group's key concerns are about the further impact of the Russia-Ukraine conflict, the high level of inflation, the worsening global macro-economic conditions, the continued supply chain constraints, and the uncertainties related to the resurgence of the COVID-19 pandemic in the global and domestic markets in which it operates. The main challenge remains the visibility on how these topics will develop.
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 2021.
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 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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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 2021, we had sales of EUR 6.9 billion, approximately 37,000 employees and a presence in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We achieved carbon neutrality in 2020 and have been named Industry Leader in the Dow Jones Sustainability Index for three 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.