Signify Reports Comparable Sales Growth +3.2%, Nominal Sales Growth +12%

First quarter 2021¹

• Signify’s installed base of connected light points increased from 77 million in Q4 20 to 83 million in Q1 21
• Sales of EUR 1,599 million; 12.0% nominal sales growth and CSG of 3.2%
• LED-based sales represented 82% of total sales (Q1 2020: 79%²)
• Adj. EBITA margin improved by 290 bps to 10.8%
• Net income increased to EUR 60 million (Q1 20: EUR 27 million)
• Free cash flow increased to EUR 168 million (Q1 20: EUR 112 million)
• Net debt/EBITDA ratio of 1.4x (Q1 20: 2.7x)

Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s first quarter 2021 results.

“Our first quarter performance demonstrates the execution of our strategy, as we report growth driven by our connected businesses and our growth platforms. The adaptive measures we took in 2020, combined with continued pricing discipline, cost and working capital management, resulted in improvements in our operating margin and free cash flow. Our teams have also begun to execute our new ‘Brighter Lives, Better World 2025’ sustainability program, which aims to double our positive impact on the environment and society in 2025,” said CEO Eric Rondolat.

“While we see signs of an economic recovery, supply chain performance is being challenged by component shortages, which are impacting the first half, and will, to a lesser extent, impact the second half of the year. We expect the continued vaccination rollouts and easing of lockdowns to drive an upswing in demand for our professional portfolio in the second half of the year. We are therefore aiming for mid-single digit full-year comparable sales growth and further year-on-year operating margin improvements, driven by our digital businesses.”

Brighter Lives, Better World 2025

In the first quarter of the year, Signify made its first steps to achieve the ambitious goals it set for the Brighter Lives, Better World 2025 sustainability program, making progress on all four commitments that contribute to doubling its positive impact on the environment and society. In addition, the CDP Awards 2021 recognized Signify’s leadership in Climate action, after the company had achieved carbon neutrality for all its operations in the world in 2020.

In Q1 2021, the company has started to make progress against its ambition of doubling its positive impact on the environment and society in 2025:

• Double the pace of the Paris agreement:
  Carbon reduction over value chain was 18 million tonnes, for which we set a 2025 target of 340 million tonnes

• Double our Circular revenues to 32%:
  Circular revenues were 19%, versus the 2019 baseline of 16% and the 2025 target of 32%

• Double our Brighter lives revenues to 32%:
  Brighter lives revenues were 23%, versus the 2019 baseline of 16% and the 2025 target of 32%

• Double the percentage of women in leadership positions to 34%:
  The percentage of women in leadership positions was 24%, versus the 2019 baseline of 17% and the 2025 target of 34%

Outlook

Following the operational performance in the first quarter and based on current visibility, Signify now anticipates comparable sales growth of 3% to 6% for the full year 2021. In addition, Signify expects to achieve an Adjusted EBITA margin of 11.5% to 12.5% and continues to expect free cash flow to exceed 8% of sales for the full year 2021. The company reassesses its medium-term guidance for the period 2021-2023 after each financial year.

Signify has refinanced EUR 350 million of its long-term debt with short-term loans with a maturity of December 2021 and is therefore fully committed to repaying EUR 350 million of debt in Q4 2021.

Financial review

* For comparability purposes please note that first quarter 2020 includes only 1 month of Cooper Lighting performance

First quarter

Sales amounted to EUR 1,599 million, a nominal increase of 12.0%, including a 6.4% negative currency effect. After adjusting for a 15.2% change in consolidation and other changes (mainly related to the consolidation of Cooper Lighting in 2020), comparable sales increased by 3.2%. The return to growth was driven by strong sales in the connected home category, the recovery in China as well as an improved performance in most of Europe, India and the Middle East. LED-based sales accounted for 82% of total sales (Q1 2020: 79%¹). The adjusted gross margin increased by 160 bps to 39.8%, largely driven by a positive mix effect from strong connected home sales, pricing discipline compensating the initial impact of material cost inflation, and the consolidation of Cooper Lighting. Adjusted indirect costs as percentage of sales decreased by 120 bps to 31.0%, supported by continued spending discipline and positive operating leverage. Adjusted EBITA amounted to EUR 172 million, representing a EUR 60 million increase versus the same period last year. The Adjusted EBITA margin improved by 290 bps to 10.8%, with gross margin and SG&A efficiency equally contributing to the improvement. Total restructuring costs of EUR 47 million mainly related to the restructuring of the central organization. Acquisition-related charges were EUR 14 million and incidental items generated a EUR 4 million benefit. As a result of the higher income from operations, net income improved from EUR 27 million to EUR 60 million compared to the first quarter of last year.

¹ This 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.
² 2020 includes pro-forma Cooper Lighting for January and February.

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

Conference call and audio webcast

Eric Rondolat (CEO) and Javier van Engelen (CFO) will host a conference call for analysts and institutional investors at 9:00 a.m. CET to discuss the 2021 first quarter results. A live audio webcast of the conference call will be available via the Investor Relations website.

Financial calendar 2021

May 18, 2021   –   Annual General Meeting

May 20, 2021   –   Ex-dividend date

May 21, 2021   –   Dividend record date

June 1, 2021   –   Dividend payment date

July 23, 2021   –   Second quarter results 2021

October 29, 2021   –   Third quarter results 2021