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April 29, 2022
Signify reports first quarter sales of EUR 1.8 billion, CSG of 6.4% and an operational profitability of 10.5%
First quarter 20221
Signify's installed base of connected light points increased from 96 million in Q4 21 to 100 million in Q1 22
Sales of EUR 1,788 million; nominal sales increase of 11.8% and CSG of 6.4%
LED-based sales represented 84% of total sales (Q1 21: 82%)
Adj. EBITA margin of 10.5% (Q1 21: 10.8%)
Net income of EUR 87 million (Q1 21: EUR 60 million)
Free cash flow of EUR -189 million (Q1 21: EUR 168 million)
Net debt/EBITDA ratio of 1.6x (Q1 21: 1.4x)
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s first quarter 2022 results.
“Our main priority in the first quarter was to safeguard and support our Ukrainian employees and their families to the best extent possible. We are happy to report that all of our people are safe, and we were proud to see the very strong engagement from our colleagues and the Signify Foundation in supporting the people and communities so desperately affected by the war. Investments in Russia were stopped and all new business was paused since February 25th. We were also impacted by the return of lockdowns in China towards the end of the quarter. Throughout these challenging conditions, Signify continued to see strong momentum in the professional channel in the US and in most of the other geographies. We grew by 6.4% in the first quarter and maintained a strong double-digit adjusted EBITA margin. Global supply chain disruptions, which brought longer supplier lead times and higher levels of inventory, have negatively affected our cash flow. We expect this to positively readjust as the year progresses,” said CEO, Eric Rondolat.
“Given the world’s growing need for sustainable, connected and energy efficient lighting, we remain more focused than ever on our strategic priorities. For the remainder of the year, we anticipate a lower performance from our consumer-focused business due to inflationary headwinds. At the same time, we still expect strong demand for our professional business, driven by ongoing investments in the energy transition. Moving forward, our guidance for the year remains within reach, assuming the Chinese market and global supply chain dynamics do not deteriorate further.”
Brighter Lives, Better World 2025
In the first quarter of the year, Signify was on track for most 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 on track. This is mainly due to the accelerated shift to energy efficient and connected LED lighting, which decreases carbon emissions in the use phase, and Signify's ongoing efforts to decarbonize its supply chain.
Double our Circular revenues to 32%:
Circular revenues increased to 30%, well on track to reach the target. This positive trend is attributable to the recent upgrade of a family of luminaires, which are now serviceable, and to the further expansion of the serviceable portfolio in outdoor luminaires.
Double our Brighter lives revenues to 32%:
Brighter lives revenues were 27%, on track to reach the target. The main contributions come from the consumer well-being portfolio, as well as UV-C disinfection and emergency lighting.
Double the percentage of women in leadership positions to 34%:
The percentage of women in leadership positions was 26%, slightly off track, yet Signify expects to see further progress during the year. In Q1, Signify conducted the first all-employee session of the Powering Inclusion Series with more than 5,000 participants across the company, and celebrated International Women's Day with its global #BreakTheBias campaign. Signify participated in the UN Global Compact’s Target Gender Equality event to share its mentoring practices for improving diverse representation in its organization.
Following the solid performance in the first quarter, the strong order intake and the continued momentum in the professional segment, Signify maintains its guidance for 2022. This assumes that the Chinese market and global supply chain dynamics do not deteriorate further.
Comparable sales growth in the range of 3-6%
Continued Adjusted EBITA margin improvement of up to 50 bps
Free cash flow in excess of 8% of sales
in millions of EUR, except percentages
Comparable sales growth
Effects of currency movements
Consolidation and other changes
Adjusted gross margin
Adj. gross margin (as % of sales)
Adj. SG&A expenses
Adj. R&D expenses
Adj. indirect costs
Adj. indirect costs (as % of sales)
Adjusted EBITA margin
Income from operations (EBIT)
Net financial income/expense
Income tax expense
Free cash flow
Basic EPS (€)
Sales increased by 11.8% to EUR 1,788 million, with a comparable sales growth of 6.4%. Nominal sales growth included a positive currency effect of 5.2%, mainly attributable to the appreciation of the USD, and a positive impact from consolidation and other changes of 0.2%. LED-based sales increased from 82% in Q1 21 to 84% in Q1 2022.
During the quarter, energy prices increased significantly. Together with higher transportation costs, the increase in energy costs impacted the adjusted gross margin, mainly in Conventional Products due to its energy intensive production processes. As a result of these cost increases, the Adjusted gross margin decreased by 150 bps to 38.3%, yet on the back of a high comparison base in Q1 2021. The company is implementing further price increases to compensate for these effects.
Adjusted indirect costs as a percentage of sales decreased by 150 bps to 29.5%, driven by operating leverage and structural cost savings.
Adjusted EBITA increased by 8.6% to EUR 187 million. The Adjusted EBITA margin was 10.5%, remaining above 10% for the second consecutive year. The Adjusted EBITA margin decline of 30 bps reflects the high comparison base of the previous year, a negative currency effect of 130 bps and higher COGS, which were partly compensated by price increases, positive sales mix and operating leverage.
Restructuring costs were EUR 4 million, acquisition-related charges were EUR 7 million and incidental items were EUR 29 million, largely attributable to impairments related to Signify's operations in Russia and Ukraine.
Net income increased by EUR 27 million to EUR 87 million, mainly reflecting higher income from operations and lower net financial expenses, partly reduced by impairments related to our operations in Russia and Ukraine.
¹ 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.
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 first quarter 2022 results. A live audio webcast of the conference call will be available via the Investor Relations website.
Financial calendar 2022
May 17, 2022 Annual General Meeting
May 19, 2022 Ex-dividend date
May 20, 2022 Dividend record date
May 31, 2022 Dividend payment date
July 29, 2022 Second quarter and half-year results 2022
October 28, 2022 Third quarter results 2022
For further information, please contact:
Signify Investor Relations
Tel: +31 6 1801 7131
Signify Corporate Communications
Tel: +31 6 3928 0201
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 2021 sales of EUR 6.9 billion, we have approximately 37,000 employees and are present in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We achieved carbon neutrality in 2020, have been in the Dow Jones Sustainability World Index since our IPO for five 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.
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, 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 2021 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 2021.
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.