Signify reports first quarter sales of EUR 1.5 billion, operational profitability of 7.8% and free cash flow of EUR 55 million

First quarter 20191
Signify's installed base of connected light points increased from 34 million in Q1 18 to 47 million in Q1 19
CSG growing profit engines 1.1%; CSG total Signify -3.3%
LED-based comparable sales grew by 3.6% to 73% of sales (Q1 18: 68%)
Adj. indirect costs down EUR 39 million on a currency comparable basis, a reduction of 8%, or 170 bps of sales
Adj. EBITA margin improved by 80 bps to 7.8%, despite a negative currency impact of -130 bps
Net income more than doubled to EUR 44 million (Q1 18: EUR 20 million)
Total free cash flow of EUR 55 million (Q1 18: EUR -6 million)
Signify 2019 outlook confirmed

Eindhoven, the Netherlands - Signify (Euronext: LIGHT), the world leader in lighting, today announced the company's 2019 first quarter results. "We are satisfied with the 1.1% sales growth of our growing profit engines in the first quarter, against the backdrop of headwinds in China and Europe," said CEO Eric Rondolat. "Continued progress in our simplification actions resulted in a further improvement in our profitability, and our free cash flow remained solid. While market conditions remain challenging, we continue to invest in our growth platforms and rigorously improve our operational efficiency."

Outlook
We confirm our outlook that in 2019 our growing profit engines (LED, Professional and Home combined) are expected to deliver a comparable sales growth in the range of 2 to 5%. Our cash engine, Lamps, is expected to decline at a slower pace than the market, in the range of -21 to -24% on a comparable basis. For total Signify, we aim to reach an Adjusted EBITA margin in 2019 within the range of 11 to 13% set at the time of the IPO in May 2016. In 2019, we expect free cash flow, excluding the positive impact from IFRS 16, to be above 5% of sales.

Financial review
First quarter
in € million, except percentages
2018 2019 change
Comparable sales growth -3.3%
Effects of currency movements 1.1%
Consolidation and other changes 0.7%
Sales 1,501 1,478 -1.5%
Adjusted gross margin 580 557 -4.0%
Adj. gross margin (as % of sales) 38.6% 37.7%
Adj. SG&A expenses -417 -395
Adj. R&D expenses -81 -69
Adj. indirect costs -498 -464 6.7%
Adj. indirect costs (as % of sales) 33.2% 31.4%
Adjusted EBITA 106 115 8.8%
Adjusted EBITA margin 7.0% 7.8%
Adjusted items -43 -22
EBITA 62 93 49.3%
Income from operations (EBIT) 39 69 74.9%
Net financial income/expense -9 -9
Income tax expense -10 -16
Net income 20 44 119.1%

Free cash flow -6 55
Basic EPS (€) 0.15 0.35
Employees (FTE) 31,615 28,689


First quarter
Sales amounted to EUR 1,478 million. Adjusted for 1.1% positive currency effects, comparable sales decreased by 3.3%, with LED-based sales increasing by 3.6% and now accounting for 73% of sales. The adjusted gross margin declined by 90 bps to 37.7%, due to a currency effect of -140 bps, partly offset by ongoing procurement savings. Adjusted indirect costs decreased by EUR 34 million, or 180 bps as a percentage of sales, as a result of our ongoing cost reduction initiatives. Adjusted EBITA amounted to EUR 115 million, compared with EUR 106 million in the same period last year, and was negatively impacted by EUR 18 million of currency effects. The Adjusted EBITA margin improved by 80 bps to 7.8%, despite a currency effect of -130 bps. Total restructuring costs were EUR 20 million and other incidentals were EUR 2 million. Net income more than doubled from EUR 20 million last year to EUR 44 million in Q1 19, mainly as a result of better operational profitability and lower restructuring costs. Free cash flow amounted to EUR 55 million, including a positive impact of EUR 17 million related to IFRS 16.

¹This 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.

For the full and original version of the press release click here.

Conference call and audio webcast

Eric Rondolat (CEO) and Stéphane Rougeot (CFO) will host a conference call for analysts and institutional investors at 9:00 a.m. CET to discuss first quarter results. A live audio webcast of the conference call will be available via the Signify Investor Relations website.


Financial calendar
14 May 2019 Annual General Meeting of Shareholders
26 July 2019 Second quarter and half year results 2019
25 October 2019 Third quarter results 2019