First quarter 2018 highlights¹
Sales of EUR 1,501 million, a comparable decrease of 3.5%
Total LED-based comparable sales growth of 5.6%, representing 68% of total sales (Q1 2017: 61%)
Adjusted EBITA of EUR 106 million (Q1 2017: EUR 127 million)
Adjusted EBITA margin decreased 50 basis points to 7.0%; improvements in Lamps, LED and Professional offset by Home
Cost reduction initiatives on track; adjusted indirect costs down 13%
Net income of EUR 20 million (Q1 2017: EUR 61 million) reflecting higher restructuring costs, lower profitability and a one-off real estate gain in Q1 2017
Free cash flow of EUR -6 million (Q1 2017: EUR -17 million excluding real estate proceeds)

Eindhoven, the Netherlands - Philips Lighting (Euronext: LIGHT), the world leader in lighting, today announced the company's 2018 first quarter results. "As previously indicated, the first quarter marks a soft start to the year, mainly due to a weak performance in Home, most notably in the United States. Our other three businesses further improved their operational profitability, particularly Professional which increased its adjusted EBITA margin by 310 basis points," said Eric Rondolat, CEO of Philips Lighting. "I am pleased with the progress made on the cost side with a 13% reduction in our indirect cost base, and with our free cash flow performance after a strong fourth quarter. Our focus remains on implementing our strategy toward the shift to LED, Systems & Services."


Financial review
First quarter
in € million, except percentages
2017 2018 change
Comparable sales growth -3.5%
Effects of currency movements -7.1%
Consolidation and other changes -0.6%
Sales 1,690 1,501 -11.2%
Adjusted gross margin 670 580 -13.5%
Adj. gross margin (as % of sales) 39.7% 38.6%
Adj. SG&A expenses -483 -417
Adj. R&D expenses -88 -81
Adj. indirect costs -570 -498 12.8%
Adj. indirect costs (as % of sales) 33.8% 33.2%
Adjusted EBITA 127 106 -16.8%
Adjusted EBITA margin (%) 7.5% 7.0%
Adjusted items -4 -43
EBITA 122 62 -48.9%
Income from operations (EBIT) 94 39 -58.2%
Net financial income/expense -11 -9
Income tax expense -23 -10
Net income 61 20 -67.0%
Free cash flow 2 -6
Basic EPS (€) 0.43 0.15
Employees (FTE) 34,379 31,615

Outlook
We aim to improve our Adjusted EBITA margin from 9.6% to 10.0-10.5%. We will continue to focus on our cost reduction initiatives, and expect to benefit from higher savings as of the second half of 2018. We also aim to deliver positive comparable sales growth for the full year on the basis of a strong second half. We expect to generate solid free cash flow in 2018, which is, however, expected to be somewhat lower than the level in 2017 due to higher restructuring payments.

Changes to financial reporting

As of the first quarter of 2018, Philips Lighting reports and discusses its financial performance based on the recently announced portfolio changes to further align the organizational structure with the strategy. 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.

Financial calendar 2018

May 15, 2018: Annual General Meeting of Shareholders

July 27, 2018: Half year results 2018

October 26, 2018: Third quarter results 2018


tijd 09.22
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