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    Eric Rondolat’s 2019 CEO message


    March 10, 2020

     

    2019 was a year of strengthening our industry leadership amid economic challenges

     

    I’m very proud of our employees and the progress we made in 2019 in improving our business, in developing new innovations and in making our business even more sustainable. We further increased our leadership in LED lighting, made some key moves in terms of acquisitions, strengthened the offerings of our growth platforms and boosted our sustainability profile, all while lowering our costs.” – Eric Rondolat, Signify CEO

    Eric Rondolat

    Dear Stakeholder,
     

    2019 was a year of rapid change and global uncertainty, due to political volatility, market instability and technological advancements. Against this backdrop we adapted effectively, making necessary adjustments, seizing ambitious inorganic growth opportunities and defining new possibilities for lighting through our technology.
     

    A spirit of change and development runs through our organization, powering our industry leadership and resilience. And with programs such as Horizon, we’re speeding up our transformation, bringing us closer to where we need to be to achieve our business ambition.

    A spirit of change and development runs through our organization, powering our industry leadership and resilience"

    Thanks to our continued dedication to simplification and cost reduction measures, our operational profitability continues to improve, and free cash flow is strong. Exciting developments in our growth platforms – connected systems, IoT platform services, horticulture, solar, and LiFi – continue to show that we’re leading the industry toward a new era. All of this, amid some challenging market conditions, increase my confidence that we’re on the right track.
     

    We announced several acquisitions this year: Klite in China for private and branded LED labels; WiZ in Hong Kong for WiFi-based connected lighting; US-based Once Inc. and iLOX in Germany for animal-centric lighting; and Cooper Lighting Solutions in the US for professional lighting in North America. These strategically sound moves contribute to differentiating us structurally, while enhancing our ability to serve our customers.

    Strategic focus


    We continue to execute against our strategic priorities, transforming our industry and building on our heritage.
     

    • We again increased our market share in conventional lamps, sustaining a high level of profitability, benefiting from our ‘last company standing’ strategy
    • Our LED sales increased by 6% to 78% of our total sales by the end of the year
    • Our connected install base surpassed more than 56 million light points globally through our professional and consumer lighting offerings
    • We installed 12 million connected light points, bringing the total to 56 million connected light points globally
    • Our continuous innovation and responsiveness to customer needs is demonstrated by the launch of BrightSites smart poles and the Philips Hue HDMI SyncBox, as well as the continued enhancements to our LiFi offering (to name but a few)
    • Our transformation program Horizon is speeding up our execution, and improving our top line, profitability and cash, and boosting our organizational health

    Horizon is speeding up our execution, boosting our organizational health, and improving our top line, profitability and cash."

    Our acquisitions


    We’ve taken several steps this year which illustrate our focus on strategic growth areas and attractive markets. We expanded our connected lighting offering through the acquisition of WiZ Connected, allowing us to extend our leadership in the smart home by stepping into the WiFi-based lighting market. This perfectly complements Signify’s existing offers and will help us to continue to deliver an experience rich in light and intuitive in use for our customers.
     

    As part of our commitment to agricultural lighting, we increased our exposure to the promising market of animal-centric lighting by acquiring experts Once Inc. and iLOX. These tailormade lighting systems improve the quality of life for livestock, which leads to healthier animals and enhanced production for the farmer.
     

    By acquiring a majority stake in Klite, we secured an independent supply chain in China and strengthened our position in the fast-growing private and branded label segments. This move strengthens our position in the supply chain of LED lamps and luminaires, and the enhanced distribution scale will help us deliver cost-efficient innovations to customers faster, including connected lighting offerings.

    By acquiring Cooper Lighting Solutions, we expect to strengthen our position in the attractive North American lighting market, with increased innovation power and more competitive offerings."

    Finally, by acquiring Cooper Lighting Solutions, we expect to strengthen our market position in the attractive North American lighting market, with increased innovation power and more competitive offerings. At a stroke, this major acquisition improves our business mix, with Professional revenues increasing from 42% to 53% of total sales, based on 2018 figures.

    Our financial performance


    In 2019 we increased our profitability for the sixth consecutive year, which resulted in an improvement of the adjusted EBITA margin of 400 basis points since 2013, as well as the highest level of free cash flow since our IPO. The profit and cash contribution of the growing profit engines increased in 2019 and now stands at more than twice the contribution of Lamps, as we continue to shift from conventional lamps to lighting products, systems and services. This strong performance has been achieved in a challenging macro-environment; lower activity in several markets – including India, Europe and the US.
     

    These positive indicators show the success of our strategy, even in the face of continued challenging market conditions. I’m confident that our relentless focus on our growing profit engines and new growth platforms will further strengthen our market leadership and progressively improve our growth profile.

    Solar streetlight at night

    Our commitment to innovation


    In 2019, we invested 4.3% of our sales in R&D, the cornerstone of our business. As part of our commitment to unlocking the extraordinary potential of light, we launched Trulifi, our own high-speed LiFi technology. This enables highly reliable, secure and fast wireless communication that leverages existing and future lighting infrastructure.
     

    Together with Vodafone we’re planning to link the best of 5G and LiFi technology, extending the benefits of these technologies from outdoors to indoors, while we also partner with Latécoère to bring LiFi connectivity to commercial airplanes, and with Ellamp to enable bus and train passengers to reap the benefits of LiFi to the fullest.

    We’re expanding growth areas like aquacultural, horticultural and solar lighting with best-in-class products and systems, as well as a partnership model that leverages our unparalleled expertise, to ensure our customers achieve the best possible results, tailored to their specific needs"

    As part of our commitment to sustainable innovation, we launched a 3D printing service that enables customers to custom-design or tailor their luminaires. We then 3D print and deliver their luminaires, saving on time, energy, waste and packaging. All these luminaires are recyclable, as part of our move to a circular economy.
     

    Additionally, we’re expanding growth areas like aquacultural, horticultural and solar lighting with best-in-class products and systems, as well as a partnership model that leverages our unparalleled expertise, to ensure our customers achieve the best possible results, tailored to their specific needs.

    Our commitment to sustainability


    Thanks to the efforts and collaborations of our teams around the world, we’re on track to achieving our Brighter Lives, Better World commitments and are taking urgent action to contribute to the United Nations Sustainable Development Goals.
     

    At the end of 2019, 15 of our 19 markets were carbon neutral and we’re proud to already generate more than 80% of our revenues from sustainable products and systems. For the third year in a row, we’ve been recognized as the Industry Leader in the Electrical Components and Equipment category of the Dow Jones Sustainability Index.
     

    And we continue to push for more ambitious action. At Climate Week 2019, I called upon companies and countries to join the 3% Club, a group of 15 countries and 10 companies who are driving an increase of 3% energy efficiency each year using existing, cost-effective technologies and policy instruments.

    Our commitment to our customers


    Customer satisfaction is one of our four company values, and at the core of our Road to Excellence, a company-wide journey to streamline our business processes and allow for better cooperation. This will ensure faster and more accurate reaction to customer needs and already led to a 10% increase in customer NPS over the year. This resulted in a customer NPS of 35 at the end of Q4.
     

    The use of digital tools will allow us to anticipate future needs, giving us a competitive advantage by adjusting our business processes. This focus on prevention is the key success factor in the year 2019 and one major part of our Quality Culture. Additionally, we have worked on the further maturation of the organization by driving the EFQM model into our DNA.

    Our commitment to people development


    In 2019 we rolled out Learning@Signify as our new global learning platform, as part of our commitment to foster a learning culture and help our employees skill up and reskill. By year-end 59% of our employees were active users. We’ve also strengthened detailed succession plans to help develop and promote people internally. This year, 70% of our leadership positions were staffed internally, demonstrating success in our efforts to build a strong internal succession pipeline.

    This year, 70% of our leadership positions were staffed internally, demonstrating success in our efforts to build a strong internal succession pipeline"

    We continued with our quarterly employee survey to measure employee engagement. Our Employee NPS has improved, from 15 in Q4 2018 to 20 in Q4 2019, with participation levels of 83% in Q4.

    Our Board of Management


    Stéphane Rougeot, who joined Signify in September 2016, has decided to leave the company for personal reasons. I would like to personally thank Stéphane for having been such a strong partner and for being instrumental in driving the many improvements at Signify over the past 3.5 years. I’m very pleased that René van Schooten, who knows Signify very well and served in this capacity during the IPO, takes over the CFO role. I am also happy that Maria Letizia Mariani has been proposed as a member of the Board of Management where she will bring extensive business and commercial experience.

    Our thanks


    On behalf of our Board of Management and our leadership team I extend my sincere gratitude to our employees, who show unwavering dedication to transforming our business and unlocking the extraordinary potential of light for brighter lives and a better world.
     

    I also thank our customers for their trust and loyalty, which motivates us to do our best work every day. And finally, I thank our shareholders for their confidence in us and in our strategy.
     

    We’re currently leading the next wave of lighting transformation, turning connected light sources into data collection points, and continuing to shape the future of our industry.

     

    Eric Rondolat

    CEO Signify

    About the author:

    Eric Rondolat

    Eric Rondolat

     

    Signify CEO

    For further information, please contact:

    Head of Corporate Content, Signify
    Neil Pattie
    Tel: + 31 6 15 08 48 17
    Email: neil.pattie@signify.com

    About Signify

     

    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. With 2019 sales of EUR 6.2 billion, we have approximately 32,000 employees and are present in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We 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.

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