Analysis of Signify Q4 and Full Year 2022 Results: Seeing Ongoing Headwinds on Multiple Fronts, Focus is now on Improving Profitability and Cash Flow

Signify (Euronext: LIGHT.AS) released Q4 2022 results late last week, reporting revenue of $2.147B (EUR 1.978B) – a decline in comparable sales growth over Q4 last year of -8.8%.  Profit also declined to 10.2% Adjusted EBITA compared to 13.2% in Q4 2021.  The decline in Adjusted EBITA was attributed to the impact of lower volumes not covering fixed costs, along with negative impact of foreign exchange as the Euro weakened versus the US Dollar and Chinese RMB.

Full year 2022 results for Signify came in at $8.16B (EUR 7.514B), a comparable sales growth (CSG) of +1.2% over FY2021.  Adjusted EBITA margin for the full year FY2022 was 10.1% versus FY2021 at 11.6%.  Free cash flow for the full year 2022 was $483M (EUR 445M) versus FY2021 at $666M (EUR 614M). These full year results were below the guidance given in early Q4 FY2022 which reduced the full year outlook for CSG from the range of 3 – 6% down to 2 – 3%, and left Adjusted EBITA target range at 11 – 11.4%.

CEO Eric Rondolat set the context of the full year results in his opening comments on the earnings call, stating “2022 has been a year with a challenging external environment, which became increasingly volatile throughout the year.”  He noted in the Q&A session with analysts that during this time of high volatility in the end markets, Signify’s “priority will be to recover what we have lost in terms of operating margin and to also rebuild our cash position in 2023.”


Signify Sales Q4 2022 Sales


Comparable Sales Growth % (CSG) over Q4 2021 Q4 2022 Earnings % (Adj EBITA) Q4 2021 Earnings % (Adj EBITA)
Digital Solutions $1.2B  USD

(EUR 1.1B)

-5.8% 9.7% 14.1%
Digital Products $718M USD

(EUR 661M)

-12.9% 14.1% 15.5%
Conventional Products $220M USD

(EUR 203M)

-11.4% 12.9% 16.9%

Total Q4 FY2022

$2.15B USD

(EUR 1.98B)

-8.8% 10.2% 13.2%


CFO Javier van Engelen cited four drivers for the “Q4  under delivery versus our expectations…continued disruptions in China due to the Zero COVID policy, a slowdown in the OEM channel, lower sales in professional indoor lighting and the continued softness in the consumer segment.”  The declines in China came up several times during the earnings call Q&A, with CEO Rondolat noting in one response that Signify’s Klite operation in China was at one point “extremely impacted in Q4…more than 70% of the people were touched by COVID and we could not operate the plant normally.”

While improvements in the supply chain were noted, CEO Rondolat made it clear that the improvements are gradual and Signify expects reductions of supply chain lead times to more normalized levels in 2023.  Asked about market dynamics and construction activity during the Q&A, CEO Rondolat responded that the professional side of the business could be split into the two buckets: the first bucket, infrastructure investment, and the second bucket – the rest of the non-residential construction.  He sees the infrastructure bucket as having positive traction, with a very good dynamic in the US and in Europe, while the non-residential construction market features delayed projects as the companies involved face P&L pressure.

On the outlook for 2023, Signify took the unusual step of not guiding on comparable sales growth at this time, citing the volatility that is expected to persist in 2023.  The company committed to a focus on “improving our profitability and returning to free cash flow generation in line with the previous years.”  Adjusted EBITA margin for 2023 is expected in the range of 10.5% to 11.5% and free cash flow in the range of 6% to 8% of sales.  Signify has proposed a cash dividend of EUR 1.50 per share for 2022, subject to approval at their Annual General Meeting of Shareholders to be held on May 16, 2023.

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Signify Q4 and Full Year 2022 Results Report:

Signify Q4 2022 Analyst Presentation:

Signify Q4 2022 YouTube Highlights Video: