Philips Lighting reports full year operating profit margin increase of 180 basis points to 9.1% and free cash flow of EUR 418 million

Full year 2016 highlights
Sales of EUR 7,115 million, with comparable sales of -2.4% (2015: -3.5%)
Continued year-on-year improvement in operational profitability
Adjusted EBITA of EUR 645 million (2015: EUR 547 million)
Adjusted EBITA margin improvement of 180 basis points to 9.1% (2015: 7.3%)
Net income of EUR 185 million (2015: EUR 240 million), including EUR 143 million charges not applicable in 2015 for brand license, separation costs and financial expenses
Free cash flow of EUR 418 million (2015: EUR 632 million) or 5.9% of sales

Fourth quarter 2016 highlights
Sales amounted to EUR 1,934 million, with comparable sales of -3.2% (Q4 2015: -2.7%)
Total LED-based sales growth of 16%, now representing 59% of total sales
Continued year-on-year improvement in operational profitability
Adjusted EBITA of EUR 188 million (Q4 2015: EUR 159 million)
Adjusted EBITA margin improvement of 190 basis points to 9.7% (Q4 2015: 7.8%)
Net income of EUR 63 million, including EUR 41 million charges not applicable in 2015 for brand license, separation costs and financial expenses
Free cash flow of EUR 272 million

Shareholder return
Proposed cash dividend of EUR 1,10 per share, a pay-out ratio of 52%
Additional capital up to EUR 300 million to be returned to shareholders over the period 2017-2018 by participating in share disposals by our main shareholder.

Eindhoven, the Netherlands - Philips Lighting (Euronext Amsterdam: LIGHT) today announced the company's fourth quarter and full year results 2016. "In 2016, our businesses performed in accordance with their strategic objectives, despite challenging conditions in some markets. We are pleased with the significant increase in profitability and solid free cash flow in our first year as a standalone company. These results mark a continued progression to achieve our strategic goals and medium term financial objectives," said CEO Eric Rondolat. "Our team remains focused on the opportunities ahead and is committed to meeting the needs of our customers through innovation, while executing concrete actions to continue improving our growth profile."

Key figures
Fourth quarter Twelve months

2015 2016 Change in € million, unless otherwise indicated 2015 2016 change
2,045 1,934 -5.4% Sales 7,465 7,115 -4.7%
-3.2% Comparable sales growth -2.4%
753 744 -1.2% Adjusted gross margin 2,731 2,763 1.2%
159 188 18.2% Adjusted EBITA 547 645 17.9%
105 136 29.5% EBITA 438 479 9.4%
79 109 38.0% Income from operations (EBIT) 331 369 11.5%
42 63 50.0% Net income 240 185 -22.9%
% of sales
36.8% 38.5% Adjusted gross margin 36.6% 38.8%
7.8% 9.7% Adjusted EBITA margin 7.3% 9.1%
478 272 Free cash flow 632 418
0.43 Basic EPS (€) 1.26
37,399 34,256 Employees (FTE) 37,399 34,256


Outlook
In 2017, we expect further improvement in our Adjusted EBITA margin by approximately 50-100 basis points, in line with our medium term outlook to gradually improve the Adjusted EBITA margin to 11-13%. We also remain committed to delivering solid free cash flow. While we are cautious given global economic uncertainty, we remain committed to our ambition to return to positive comparable sales growth in the course of this year.

2016 dividend proposal and capital return to shareholders
We propose a dividend of EUR 1.10 per share in cash, which represents a pay-out ratio of 52% of continuing net income. The dividend payment is subject to approval by the Annual General Meeting of Shareholders (AGM) to be held on 9 May 2017. Further details will be given in the agenda for the AGM.

Given our capital position whilst maintaining a compatible investment-grade profile, and in line with our capital allocation policy, we will return additional capital to our shareholders. Over the period 2017-2018, we will return up to EUR 300 million, by participating in share disposals by our main shareholder.


Philips Lighting proposes two new Supervisory Board members

Eindhoven, The Netherlands - Philips Lighting (Euronext Amsterdam ticker: LIGHT) today announced that its Supervisory Board will propose the appointment of two new members, Ms. Jill Lee and Mr. Gerard van de Aast.

The company also announced that, after having guided Philips Lighting through a successful transition into a listed standalone company, Mr. Kees van Lede will step down from the Supervisory Board at the end of 2017, at his own request.


The appointments will be voted on at the Annual General Meeting of Shareholders (AGM) to be held on May 9, 2017. If approved, Philips Lighting's Supervisory Board will expand from five to seven members until Van Lede steps down. Lee and Van de Aast will attend Supervisory Board meetings as observers until the AGM vote.

Lee (Singaporean, 53) has been a non-executive director on the Board of industrial company Sulzer since 2011, and she presently serves as the chairwoman of the Audit Committee. Lee also holds an executive role in industrial company ABB as the Group Senior Vice-President and Head of Next Level Program. Prior, Lee held a number of executive positions at industrial company Siemens. Lee spent several years heading CFO functions in China, followed by global strategic positions in Germany and Switzerland. She is a member on the advisory board of Nanyang Business School in Singapore.

Van de Aast (Dutch, 59) is currently the chairman of the Supervisory Board of Nederlandse Spoorwegen (Dutch Railways) and a member of the Supervisory Board of engineering and consulting agency Witteveen+Bos and of Heisterkamp Transportation Solutions. Prior, Van de Aast was CEO on the Management Boards of technical services provider Imtech and of construction services business VolkerWessels. He also held executive positions with Reed Elsevier and Compaq, and a non-executive position at Océ N.V.

Van Lede (Dutch, 74) joined the Supervisory Board as from its establishment as a result of the Initial Public Offering of Philips Lighting in May 2016. He is currently chairman of both the Audit Committee and the Remuneration Committee.


tijd 11.18
Philips Lighting EUR 22,90 -23ct vol. 280.000