Signify reports full-year sales of EUR 7.5 billion, operational
profitability of 10.1% and a free cash flow of EUR 445 million
Press Release
January 27, 2023
Signify reports full-year sales of EUR 7.5 billion,
operational profitability of 10.1% and a free cash flow of EUR 445
million
Full year 20221
- Signify's installed base of connected light points increased
from 96 million at YE 21 to 114 million at YE 22
- Sales of EUR 7,514 million; nominal sales increase of 9.5% and
CSG of 1.2%
- LED-based sales represented 83% of total sales (FY 21:
83%)
- Adj. EBITA margin of 10.1% (FY 21: 11.6%)
- Net income of EUR 532 million (FY 21: EUR 407 million)
- Free cash flow of EUR 445 million (FY 21: EUR 614 million)
- Net debt/EBITDA ratio of 1.3x (YE 21: 1.4x)
Fourth quarter 2022
- Sales of EUR 1,978 million; nominal sales decline of 1.5% and
CSG of -8.8%
- Adj. EBITA margin of 10.2% (Q4 21: 13.2%)
- Net income of EUR 86 million (Q4 21: EUR 170 million)
- Free cash flow of EUR 364 million (Q4 21: EUR 257 million)
Dividend
- Proposal to increase its cash
dividend to EUR 1.50 per share over 2022 (FY 21: EUR 1.45)
Eindhoven, the Netherlands – Signify (Euronext:
LIGHT), the world leader in lighting, today announced the company’s
fourth quarter and full-year 2022 results.
“2022 was a year of exceptionally challenging conditions. The
external environment grew increasingly more volatile throughout the
year, leading us to adapt the company and our objectives
accordingly. While margins and cash were impacted by inflation and
supply chain disruption respectively, our connected lighting
business and growth platforms grew to reach almost EUR 2 billion of
sales. The relevance of our products and solutions was further
heightened in 2022, as energy efficiency became even more urgent.
This strengthened our competitive position as we executed on our
strategic priorities. We brought new innovative and sustainable
lighting solutions to our customers and continued to make progress
towards doubling our impact on environment and society,” said Eric
Rondolat, CEO of Signify.
“Looking ahead, we expect volatility to persist in the first
half of 2023 and our performance to improve in the second half.
While top-line growth will be difficult to predict, our key
priority in 2023 will be to improve profitability and return to a
free cash flow level in line with previous years. We will intensify
our focus on managing the decline and profitability of our
Conventional Products business, while further driving the
transition to energy efficient, connected and sustainable lighting
solutions. As we move forward, we remain committed to our strategy
to invest and drive innovation in the lighting industry and so
create a more sustainable and connected future for all.”
Brighter Lives, Better World 2025
In the fourth quarter, Signify completed the second year of its
Brighter Lives, Better World 2025 sustainability program, making
continued progress towards doubling its positive impact on the
environment and society:
- Double the pace of the Paris agreement:The
cumulative carbon reduction over the value chain is on track to
reach the 2025 target. This is mainly driven by energy-efficient
and connected LED lighting, which reduce emissions in the use
phase.
- Double Circular revenues to 32%:Circular
revenues were 29% and are on track, mainly driven by serviceable
and circular luminaires.
- Double Brighter lives revenues to 32%:Brighter
lives revenues of 27%, on track to reach the 2025 target. The
consumer well-being and safety & security portfolios continue
to be the main contributors to Brighter lives revenues.
- Double the percentage of women in leadership to
34%:The percentage of women in leadership positions was
28%. An improvement versus the end of last year, yet slightly off
track to reach the 2025 target. This quarter, Signify focused on
improving inclusive hiring practices and internal talent
development. These actions help Signify realize its diversity
ambitions.
In the fourth quarter, Signify received several external
recognitions for its leadership in Sustainability and Climate
action. Signify was included on the CDP’s Climate A List, and was
included in the DJSI World Index for the 6th consecutive year.
Outlook
Signify continues to aim for growth, both organic and through
selected acquisitions. Given the volatility of the current macro
environment, Signify does not provide a comparable sales growth
guidance for 2023. The company will focus its efforts on improving
its Adjusted EBITA margin and free cash flow. Signify expects for
2023:
- An Adjusted EBITA margin in the
range of 10.5-11.5%
- Free cash flow between 6-8% of
sales
Capital allocation
Signify proposes a cash dividend of EUR 1.50 per share for 2022,
in line with its policy to pay an increasing annual cash dividend
per share year on year. The dividend proposal will be subject to
approval at the Annual General Meeting of Shareholders (AGM) to be
held on May 16, 2023. Further details will be provided in the
agenda for the AGM.
In 2022, Signify reduced its net debt/EBITDA ratio to 1.3x.
Excluding the acquisitions of Fluence and Pierlite, Signify reached
its goal of reducing its net debt/EBITDA ratio to 1.0x at the end
of 2022, down from 2.7x after the acquisition of Cooper Lighting in
March 2020. Signify remains committed to maintaining a robust
capital structure and an investment grade credit rating.
Signify will continue to invest in organic and inorganic growth
opportunities in line with its strategic priorities.
Financial review
Fourth quarter |
|
Twelve months |
2021 |
2022 |
change |
in millions of EUR, except percentages |
2021 |
2022 |
change |
|
|
-8.8 % |
Comparable sales growth |
|
|
1.2 % |
|
|
4.7 % |
Effects of currency movements |
|
|
6.0 % |
|
|
2.6 % |
Consolidation and other changes |
|
|
2.4 % |
2,008 |
1,978 |
-1.5 % |
Sales |
6,860 |
7,514 |
9.5 % |
794 |
734 |
-7.6 % |
Adjusted gross margin |
2,702 |
2,806 |
3.8 % |
39.5 % |
37.1 % |
|
Adj. gross margin (as % of sales) |
39.4 % |
37.3 % |
|
|
|
|
|
|
|
|
-485 |
-485 |
|
Adj. SG&A expenses |
-1,748 |
-1,877 |
|
-74 |
-75 |
|
Adj. R&D expenses |
-284 |
-294 |
|
-559 |
-560 |
-0.2 % |
Adj. indirect costs |
-2,032 |
-2,171 |
-6.9 % |
27.8 % |
28.3 % |
|
Adj. indirect costs (as % of sales) |
29.6 % |
28.9 % |
|
|
|
|
|
|
|
|
265 |
202 |
-24.0 % |
Adjusted EBITA |
795 |
762 |
-4.2 % |
13.2 % |
10.2 % |
|
Adjusted EBITA margin |
11.6 % |
10.1 % |
|
-29 |
-36 |
|
Adjusted items |
-159 |
82 |
|
237 |
166 |
-29.9 % |
EBITA |
636 |
844 |
32.8 % |
|
|
|
|
|
|
|
205 |
137 |
-33.4 % |
Income from operations (EBIT) |
514 |
718 |
39.8 % |
-4 |
-29 |
|
Net financial income/expense |
-24 |
-41 |
|
-31 |
-22 |
|
Income tax expense |
-83 |
-145 |
|
170 |
86 |
-49.5 % |
Net income |
407 |
532 |
31.0 % |
|
|
|
|
|
|
|
257 |
364 |
|
Free cash flow |
614 |
445 |
|
1.34 |
0.67 |
|
Basic EPS (€) |
3.18 |
4.18 |
|
36,824 |
34,619 |
|
Employees (FTE) |
36,824 |
34,619 |
|
Full yearNominal sales increased by 9.5% to EUR
7,514 million, including a positive currency effect of 6.0%,
largely driven by the appreciation of the USD, and a positive
impact of 2.4% from the consolidation of Fluence and Pierlite.
Comparable sales growth was 1.2%, benefiting from traction in the
professional segment, partly offset by China, which was impacted by
COVID-related measures, and softness in the consumer segment.
The Adjusted gross margin declined by 210 bps to 37.3%, mainly
due to an adverse currency impact as price increases largely
compensated input and energy cost inflation throughout the year.
Adjusted indirect costs as a percentage of sales decreased by 70
bps to 28.9%, mainly driven by indirect cost savings.
Adjusted EBITA declined by 4.2% to EUR 762 million. Digital
Solutions and Digital Products further increased their combined
share of Signify's Adjusted EBITA excluding 'Other' to 86% (2021:
82%). The Adjusted EBITA margin declined by 150 bps to 10.1%,
mainly driven by the lower gross margin.
Total restructuring costs were EUR 64 million,
acquisition-related charges were EUR 27 million and other
incidental items were a net benefit of EUR 173 million. The other
incidental items were mainly related to the gain on the disposal of
non-strategic real estate assets. Net income increased by 31.0% to
EUR 532 million, mainly driven by the gain on the disposal of
non-strategic real estate assets, partly offset by a higher income
tax expense, due to higher taxable income, and higher net financial
expenses.
Fourth quarterNominal sales declined by 1.5% to
EUR 1,978 million, with a comparable sales decline of 8.8%. The
decline is mainly attributable to a further deterioration of the
Chinese market due to COVID-related disruptions, a weaker indoor
professional business, continued softness in the consumer segment
and lower growth in the OEM channel than anticipated. Nominal sales
included a positive currency effect of 4.7%, mainly from the
appreciation of the USD versus Q4 21, and a positive impact of 2.6%
from the consolidation of Fluence and Pierlite.
The Adjusted gross margin decreased by 240 bps to 37.1%, mainly
driven by an adverse currency impact. Price increases continued to
offset higher input costs and the surge in energy costs. On a
sequential basis, the gross margin has stabilized since Q2 22.
Adjusted indirect costs as a percentage of sales increased by 50
bps to 28.3%, as indirect cost savings did not fully compensate
lower sales volumes.
Adjusted EBITA decreased to EUR 202 million. The Adjusted EBITA
margin decreased to 10.2%, mainly due to a negative currency impact
of 150 bps and fixed cost under-absorption due to lower sales
volumes. The negative currency impact was the combination of both
the year-on-year weakening of the EUR versus the USD and CNY, and a
continued, yet temporary, FX hedging headwind.
Total restructuring costs were EUR 47 million,
acquisition-related charges were EUR 4 million and various
incidental items were a net benefit of EUR 15 million. Net income
decreased to EUR 86 million, as a result of lower income from
operations and higher financial expenses. The higher financial
expenses were mainly impacted by the Virtual Power Purchase
Agreements, higher interest costs and the recognition of a monetary
loss due to hyperinflation in Turkey.
The number of employees (FTE) decreased from 36,824 at the end
of Q4 21 to 34,619 at the end of Q4 22. The year-on-year decrease
is mostly related to factory personnel. The number of FTEs is
affected by fluctuations in volume and seasonality.
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.
For the full and original version of the press release click
hereFor the presentation click here
Conference call and audio
webcastEric 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 fourth
quarter and full-year 2022 results. A live audio webcast of the
conference call will be available via the Investor Relations
website.
Financial calendarFebruary 28,
2023 Annual Report 2022May 3, 2023
First
quarter results 2023 May 16,
2023 Annual
General MeetingMay 18,
2023 Ex-dividend
dateMay 19,
2023 Dividend
record dateJune 5,
2023 Dividend
payment dateJuly 28, 2023
Second quarter and half-year results 2023 October 27,
2023 Third quarter results
2023
For further information, please
contact:Signify Investor RelationsThelke
GerdesTel: +31 6 1801 7131E-mail: thelke.gerdes@signify.com
Signify Corporate
CommunicationsLeanne CarmodyTel: +31 6 3928 0201
E-mail: leanne.carmody@signify.com
Abigail LeveneTel: +31 6 2939 3895E-mail:
abigail.levene@signify.com
About SignifySignify (Euronext:
LIGHT) is the world leader in lighting for professionals and
consumers and lighting for the Internet of Things. Our Philips
products, Interact connected lighting systems and data-enabled
services, deliver business value and transform life in homes,
buildings and public spaces. In 2022, we had sales of EUR 7.5
billion, approximately 35,000 employees and a presence in over 70
countries. We unlock the extraordinary potential of light for
brighter lives and a better world. We achieved carbon neutrality in
2020, have been in the Dow Jones Sustainability World Index since
our IPO for six consecutive years and were named Industry Leader in
2017, 2018 and 2019. News from Signify is located at the Newsroom,
Twitter, LinkedIn and Instagram. Information for investors can be
found on the Investor Relations page.
Important information
Forward-Looking Statements and Risks &
UncertaintiesThis document and the related oral
presentation contain, and responses to questions following the
presentation may contain, forward-looking statements that reflect
the intentions, beliefs or current expectations and projections of
Signify N.V. (the “Company”, and together with its subsidiaries,
the “Group”), including statements regarding strategy, estimates of
sales growth and future operational results.
By their nature, these statements involve risks and
uncertainties facing the Company and its Group companies, and a
number of important factors could cause actual results or outcomes
to differ materially from those expressed in any forward-looking
statement as a result of risks and uncertainties. Such risks,
uncertainties and other important factors include but are not
limited to: adverse economic and political developments, in
particular the impacts of the Russia-Ukraine conflict, the energy
crisis in Europe, the impacts of COVID-19, supply chain
constraints, component shortages, cost inflation, rapid
technological change, competition in the general lighting market,
development of lighting systems and services, successful
implementation of business transformation programs, impact of
acquisitions and other transactions, reputational and adverse
effects on business due to activities in Environment, Health &
Safety, compliance risks, ability to attract and retain talented
personnel, adverse currency effects, pension liabilities, and
exposure to international tax laws.
Additional risks currently not known to the Group or that the
Group has not considered material as of the date of this document
could also prove to be important and may have a material adverse
effect on the business, results of operations, financial condition
and prospects of the Group or could cause the forward-looking
events discussed in this document not to occur. The Group
undertakes no duty to and will not necessarily update any of the
forward-looking statements in light of new information or future
events, except to the extent required by applicable law.
Market and Industry InformationAll references
to market share, market data, industry statistics and industry
forecasts in this document consist of estimates compiled by
industry professionals, competitors, organizations or analysts, of
publicly available information or of the Group’s own assessment of
its sales and markets. Rankings are based on sales unless otherwise
stated.
Non-IFRS Financial MeasuresCertain parts of
this document contain non-IFRS financial measures and ratios, such
as comparable sales growth, adjusted gross margin, EBITA, adjusted
EBITA, and free cash flow, and other related ratios, which are not
recognized measures of financial performance or liquidity under
IFRS. The non-IFRS financial measures presented are measures used
by management to monitor the underlying performance of the Group’s
business and operations and, accordingly, they have not been
audited nor reviewed. Not all companies calculate non-IFRS
financial measures in the same manner or on a consistent basis and
these measures and ratios may not be comparable to measures used by
other companies under the same or similar names. A reconciliation
of these non-IFRS financial measures to the most directly
comparable IFRS financial measures is contained in this document.
For further information on non-IFRS financial measures, see
“Chapter 18 Reconciliation of non-IFRS measures” in the Annual
Report 2021.
PresentationAll amounts are in millions of
euros unless otherwise stated. Due to rounding, amounts may not add
up to totals provided. All reported data are unaudited. Unless
otherwise indicated, financial information has been prepared in
accordance with the accounting policies as stated in the Annual
Report 2021 and the Semi-Annual Report 2022.
Market Abuse RegulationThis press release
contains information within the meaning of Article 7(1) of the EU
Market Abuse Regulation.
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