Philips Reports Quarterly 3% Sales Gain; Focuses on Cost Cutting

February 2

Philips Lighting reports 0.5% full year comparable sales growth, 10% operational profitability and EUR 403 million free cash flow

Full year 2017 highlights

  • Sales of EUR 6,965 million, with an increase in comparable sales of 0.5% (2016: -2.4%)
  • Total LED-based comparable sales growth of 19%, representing 65% of total sales (2016: 55%)
  • Adjusted EBITA of EUR 699 million (2016:EUR 645 million)
  • Adjusted EBITA margin improvement of 90 basis points to 10.0% (2016: 9.1%)
  • Net income of EUR 281 million (2016:EUR 185 million)
  • Free cash flow of EUR 403 million (2016:EUR 418 million)

Fourth quarter 2017 highlights

  • Sales of EUR 1,892 million, with an increase in comparable sales of 3.0% (2016: -3.2%)
  • Total LED-based comparable sales growth of 19%, now representing 68% of total sales (Q4 2016: 59%)
  • Adjusted EBITA of EUR 207 million (Q4 2016: EUR 188 million)
  • Adjusted EBITA margin improvement of 120 basis points to 10.9% (Q4 2016: 9.7%)
  • Net income of EUR 38 million (Q4 2016: EUR 63 million)
  • Free cash flow of EUR 434 million (Q4 2016: EUR 272 million)

Shareholder return

  • In 2017, EUR 429 million was used for share repurchases and to pay dividend related to 2016
  • Propose to pay a cash dividend of EUR 1.25 per share in 2018, representing an increase of 14% and a pay-out ratio of 45%
  • Intention to repurchase shares for an amount of up to EUR 150 million in 2018, by participating in share disposals by its main shareholder

Eindhoven, the Netherlands – Philips Lighting (LIGHT.AS), the world leader in lighting, today announced the company`s fourth quarter and full year results 2017. “In line with our objectives, Philips Lighting returned to comparable sales growth in 2017 driven by the growth of LED and connected lighting Systems & Services, which demonstrates the successful execution of our strategy,” said CEO Eric Rondolat. “We also further increased our operational profitability with significant improvements in LED, Professional and Home and we delivered a solid free cash flow. This will enable us to continue to invest in growth opportunities, provide a return to shareholders and optimize our balance sheet. Our team remains focused on achieving our medium-term outlook.”

Financial review

Fourth quarter Twelve months
2016 2017 change in € million, except percentages 2016 2017 change
  3.0% Comparable sales growth     0.5%
  -4.6% Effects of currency movements   -1.6%
  -0.6% Consolidation and other changes   -1.0%
1,934 1,892 -2.2% Sales 7,115 6,965 -2.1%
744 731 -1.8% Adjusted gross margin 2,763 2,752 -0.4%
38.5% 38.6%   Adj. gross margin (as % of sales) 38.8% 39.5%  
-507 -471 Adj. SG&A expenses -1,917 -1,857
-86 -80 Adj. R&D expenses -340 -334
-593 -551 7.1% Adj. indirect costs -2,257 -2,191 2.9%
30.7% 29.1%   Adj. indirect costs (as % of sales) 31.7% 31.5%  
188 207 10.1% Adjusted EBITA 645 699 8.4%
9.7% 10.9%   Adjusted EBITA margin (%) 9.1% 10.0%  
-52 -88 Adjusted items -166 -128
136 119 -12.2% EBITA 479 571 19.3%
109 75 -31.6% Income from operations (EBIT) 369 441 19.5%
-12 -12 Net financial income/expense -67 -43
-35 -25 Income tax expense -119 -117
63 38 -40.3% Net income 185 281 52.0%
 
272 434 Free cash flow 418 403
0.43 0.30 Basic EPS (€) 1.26 2.04
34,256 32,130 461010 Employees (FTE) 34,256 32,130

Outlook

In 2018, we aim to improve our Adjusted EBITA margin to 10.0-10.5%, in line with our medium-term outlook. 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, with a soft start in the first quarter. 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.

Financial calendar 2018

February 27, 2018 Annual report 2017
April 26, 2018 First quarter results 2018
May 15, 2018 Annual General Meeting of Shareholders
July 27, 2018 Half year results 2018
October 26, 2018 Third quarter results 2018

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

For the presentation click here