Fourth quarter 20201
Full year 2020
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the
company’s 2020 full year results.
“While our industry was severely impacted by the pandemic, we managed to strengthen our financial performance. Our gross margin increased due to rigorous price and cost management, resulting in our seventh consecutive year of Adjusted EBITA margin improvement. From the start of the crisis, we were disciplined in working capital management, allowing us to generate a record-high free cash flow of EUR 817 million. As per our strategy, the contribution from our digital divisions increased substantially in 2020. In line with our governance principles, we decided to pay back both our employees and our shareholders, who have supported us since the beginning of the crisis. At the same time, we confirmed a continued deleveraging commitment. It was also a year in which we increased the installed base of connected light points to 77 million, illustrating the growing interest for connected lighting. Lastly, we overachieved on our 2020 sustainability goals, including carbon neutrality,” said CEO Eric Rondolat.
“The ongoing nature of the pandemic means we remain cautious about market developments in 2021 but we are confident in our ability to further adapt, as demonstrated throughout 2020. As outlined during our Capital Markets Day in December, we are optimizing our costs in several ways to enhance our competitiveness in a rapidly transforming Lighting industry. We are making our central organization leaner in order to reduce our indirect costs as a percentage of sales, which have increased due to the COVID-19 pandemic. Regrettably, these changes will result in a number of positions being lost and we will support impacted employees. At the same time, we will continue to innovate and develop our growth platforms to capture new business opportunities in line with our strategy. I see the further integrations of Cooper and Klite positively impacting our performance. 2021 is also the first year of our new sustainability program and marks a great opportunity to embark on the exciting journey to double our positive impact on the environment and society in the next five years.”
Environment, Society & Governance
Sustainability is central to Signify's strategy. It is the company's purpose to unlock the extraordinary potential of light for brighter lives and a better world. In 2020, Signify successfully completed its Brighter Lives, Better World 2020 sustainability program, even outperforming on many of its ambitious commitments.
In September 2020, Signify embarked on a course to have doubled its positive impact on the environment and
society in 2025 with the following ambitions:
Signify’s commitment is recognized in the Dow Jones Sustainability World Index and the CDP A-List for Climate.
Signify is committed to the following medium-term guidance for the period 2021-2023:
For 2021, Signify expects positive comparable sales growth, the level of which will depend on the recovery pattern in its markets. In addition, the company expects to continue its steady progress towards its mediumterm Adj. EBITA margin objective. Cash flow, following two years of significant structural working capital improvements, is expected to exceed 8% of sales. As guided for the mid-term, this includes a higher initial cash outflow for cost restructuring and continued post-merger integration activities.
Signify remains focused on maintaining a robust capital structure and is committed to an investment grade rating. The company plans to pay an increasing annual dividend per share in cash year-on-year and will continue to prioritize deleveraging to strengthen its balance sheet and return to a leverage ratio of reported net debt/EBITDA of less than 1x by the end of 2022. Signify will also continue to invest in R&D and other growth opportunities, while pursuing selective M&A opportunities in line with its strategic priorities.
In line with its commitment to its shareholders, Signify proposes to declare a cash dividend of EUR 1.40 per share for 2020. This is in addition to the previously proposed extraordinary cash dividend of EUR 1.35 per share, announced on January 13, 2021. The amount of extraordinary dividend is in line with the dividend proposal of EUR 1.35 for 2019, which was withdrawn to ensure the company's resilience and to strengthen its financial position during the COVID-19 crisis. Both dividend proposals will be subject to approval at the Annual General Meeting of Shareholders (AGM) to be held on May 18, 2021. Further details will be provided in the agenda for the AGM.
In addition to this, the company announced on January 13, 2021, that it intends to repay a minimum of EUR 350 million of debt in 2021, thereby confirming its commitment to further deleverage.
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 fourth quarter and full year results 2020. A live audio webcast of the conference call will be available via the Investor Relations website.
Financial calendar 2021
February 23, 2021: Annual Report publication
April 30, 2021: First quarter results 2021
May 18, 2021: Annual General Meeting
May 20, 2021: Ex-dividend date
May 21, 2021: Dividend record date
June 1, 2021: Dividend payment date
July 23, 2021: Second quarter results 2021
October 29, 2021: Third quarter results 2021
1This 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.
2Changes in scope relate to the consolidation of Cooper Lighting and Klite.
32019 includes pro-forma Cooper Lighting and WiZ.
42019 includes pro-forma Cooper Lighting.
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 2019 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 2019.
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 2019.
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 2019 and semi-annual report 2020.
Change in reporting segments
Effective Q2 2020, to further adapt to the industry transition and strengthen customer centricity, Signify changed the organizational structure, which included changing the previously four business groups (BG’s) to three divisions.
In line with this change, effective Q2 2020, Signify's operating segments are Digital Solutions, Digital Products, and Conventional Products. The segments are organized based on the nature of the products and services. ‘Other’ represents amounts not allocated to the operating segments and includes certain costs related to central R&D activities to drive innovation as well as group enabling functions.
Market Abuse Regulation
This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
Signify Investor Relations
Tel: + 31 6 1801 7131
Signify Corporate Communications
Elco van Groningen
Tel: +31 6 1086 5519
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 EUR 7.5 billion, approximately 35,000 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 our operations in 2020, have been in the Dow Jones Sustainability World Index since our IPO for six 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.