Signify reports third quarter sales of EUR 1.6 billion, improvement in operational profitability by 150 bps to 12.0% and free cash flow to EUR 64 million

Third quarter 20181
Sales of EUR 1,594 million; a comparable sales growth of -3.2%
LED-based sales represented 70% of total sales (Q3 2017: 68%) and grew by 0.1% on a comparable basis
Currency comparable adj. indirect costs down EUR 58 million, a reduction of 11%, or 260 basis points of sales
Adj. EBITA of EUR 191 million (Q3 2017: EUR 176 million), impacted by currency effects of EUR -14 million
Adj. EBITA margin of 12.0% (Q3 2017: 10.5%), including a currency impact of -60 basis points
Net income of EUR 93 million (Q3 2017: EUR 110 million including a net real estate gain of EUR 21 million), with EUR 8 million higher restructuring costs compared with last year
Working capital improved by 240 basis points to 10.1% of sales
Free cash flow of EUR 64 million (Q3 2017: EUR -5 million including EUR 21 million real estate proceeds)

Eindhoven, the Netherlands - Signify (Euronext: LIGHT), the world leader in lighting, today announced the company's 2018 third quarter results. "We substantially improved our profitability and free cash flow in the third quarter, while our sales performance was impacted by more challenging market conditions in several geographies and a strong base of comparison. We are pleased with the progress of our simplification and cost reduction actions which contributed to our operating margin and cash performances," said CEO Eric Rondolat. "Meanwhile, we continue to invest in growth and innovation to capture the strategic opportunities of smart and connected lighting and our teams remain focused on strengthening our leadership in changing market conditions."

Outlook
The company expects its comparable sales growth in the second half of the year to be similar to the first half. Taking into account the solid progress in cost savings, the company remains confident that it will be able to improve the Adjusted EBITA margin to the lower end of the 10.0-10.5% range. The company also continues to expect to generate a solid free cash flow in 2018, which will be somewhat lower than the level in 2017 due to higher restructuring payments.

Financial review
Changes to financial reporting
Since the first quarter of 2018, Signify reports and discusses its financial performance based on the portfolio changes that were announced in the first quarter of 2018. In March 2018, the company provided an update to show the effect of changes to the business portfolio as well as changes to the allocation methods of centrally-managed costs and to the threshold for other incidental items as adjusting items when presenting certain non-IFRS measures such as Adjusted EBITA. More details can be found on page 9 in the full and original version of the press release on.

https://www.signify.com/static/quarterlyresults/2018/q3_2018/signify-third-quarter-results-2018-report.pdf


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