Signify reports first quarter sales of EUR 1.7 billion, operational profitability of 8.9% and a free cash flow of EUR 51 million

Signify reports first quarter sales of EUR 1.7 billion, operational profitability of 8.9% and a free cash flow of EUR 51 million

Press Release

May 3, 2023


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Signify reports first quarter sales of EUR 1.7 billion, operational profitability of 8.9% and a free cash flow of EUR 51 million

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First quarter 20231

  • Signify’s installed base of connected light points increased from 114 million in Q4 22 to 117 million in Q1 23
  • On track to double the pace of the Paris Agreement
  • Sales of EUR 1,678 million; nominal sales decline of -6.1% and CSG of -9.1%
  • LED-based sales represented 82% of total sales (Q1 22: 84%)
  • Adj. EBITA margin of 8.9% (Q1 22: 10.5%)
  • Net income of EUR 28 million (Q1 22: EUR 87 million)
  • Free cash flow of EUR 51 million (Q1 22: EUR -189 million)

Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s first quarter 2023 results.

“Largely in line with expectations, Q1 2023 saw persistent weakness in the consumer segment and in the indoor professional business, as well as a slowdown in OEM sales. At the same time, we made progress with our 2023 priorities, such as continued price discipline and effective COGS management, which resulted in an improvement in our gross margin. The Adjusted EBITA margin performance of our Conventional Products division returned to historical levels. The company’s free cash flow further recovered, driven by working capital improvements. While our adjusted EBITA margin was impacted by lower fixed cost absorption, we remain steadfastly focused on applying our customary cost discipline,” said Eric Rondolat, CEO of Signify.

“While we expect the remainder of H1 2023 to remain challenging, we continue to see the potential for an improved second half. Given the structural improvements in our gross margin and free cash flow generation, as well as our intensified measures to reduce fixed costs, we confirm our guidance for the full year.”

Brighter Lives, Better World 2025

In the first quarter of the year, Signify was on track for all of its Brighter Lives, Better World 2025 sustainability program commitments that contribute to doubling its positive impact on the environment and society.

  • Double the pace of the Paris Agreement:
    Cumulative carbon reduction over the value chain is on track. This is mainly driven by energy-efficient and connected LED lighting, which drive emission reductions in the use phase.
  • Double our Circular revenues to 32%:
    Circular revenues were 29%, stable versus the previous quarter, yet on track to reach the 2025 target. Circular revenues continue to be driven by serviceable and circular luminaires.
  • Double our Brighter lives revenues to 32%:
    Brighter lives revenues were 27%, on track to reach the 2025 target. The main contribution continues to be the consumer well-being and Safety & security portfolios.
  • Double the percentage of women in leadership positions to 34%:
    The percentage of women in leadership positions was 29%, an increase versus the previous quarter and on track to reach the 2025 target. The improvement was mainly driven by new external hires and the internal promotion of women.


Signify confirms its guidance for 2023. The company continues to focus its efforts on improving the 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

Financial review

  First quarter
in millions of EUR, except percentages         2022         2023 change
Comparable sales growth             (9.1%)
Effects of currency movements             0.9%        
Consolidation and other changes             2.1%        
Sales         1,788         1,678         (6.1%)        
Adjusted gross margin         684         659         (3.6%)        
Adj. gross margin (as % of sales)         38.3        %         39.3        %  
Adj. SG&A expenses         -456         -461  
Adj. R&D expenses         -72         -74  
Adj. indirect costs         -528         -535         -1.4        %
Adj. indirect costs (as % of sales)         29.5        %         31.9        %  
Adjusted EBITA         187         149         (20.2%)        
Adjusted EBITA margin         10.5%         8.9%  
Adjusted items         -41         -67  
EBITA         146         83         (43.4%)        
Income from operations (EBIT)         115         61         (47.2%)
Net financial income/expense         -6         -30  
Income tax expense         -22         -3  
Net income         87         28         (67.9%)
Free cash flow         -189         51  
Basic EPS (€)         0.69         0.20  
Employees (FTE)         36,884         34,408  

First quarter
Nominal sales decreased by 6.1% to EUR 1,678 million, including a positive currency effect of 0.9% and a positive effect of 2.1% from the consolidation of Fluence, Pierlite and Intelligent Lighting Controls. Comparable sales declined by 9.1%, driven by continued weakness in the indoor professional business, the consumer segment and the OEM channel. In China, the market was still impacted by COVID-related disruptions, but the company started to see increased economic activity following the reopening.

The Adjusted gross margin increased by 100 bps to 39.3%, mainly driven by continued price discipline and effective COGS management. Adjusted indirect costs as a percentage of sales increased by 240 bps to 31.9%, as the reduction of indirect costs was not sufficient to compensate lower sales.

Adjusted EBITA decreased to EUR 149 million. The Adjusted EBITA margin decreased by 160 bps to 8.9%, mainly due to under-absorption of fixed costs and an adverse currency effect from the weakening of emerging market currencies, the strengthening of the US Dollar, and a one-off impact from the implementation of a new hedging policy.

Restructuring costs were EUR 47 million and were mainly related to Conventional Products. These restructuring costs were in line with the strategy to adjust Conventional Products’ footprint to declining sales. Acquisition-related charges were EUR 3 million and incidental items were EUR 16 million, mainly related to additions to environmental provisions.

Net income decreased to EUR 28 million, mainly due to lower income from operations and higher financial expenses, partly offset by lower income tax expense due to lower taxable income and a release of tax liabilities. The higher financial expenses were mainly related to a non-cash fair value adjustment of the Virtual Power Purchase Agreements due to lower energy prices, and higher interest costs.

The number of employees (FTE) decreased from 36,884 at the end of Q1 22 to 34,408 at the end of Q1 23. The year-on-year decrease is mostly related to a reduction of factory personnel due to lower production volumes. In general, 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 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 first quarter 2023 results. A live audio webcast of the conference call will be available via the Investor Relations website.

Financial calendar
May 16, 2023          Annual General Meeting
May 18, 2023         Ex-dividend date
May 19, 2023         Dividend record date
June 5, 2023          Dividend payment date
July 28, 2023          Second quarter and half-year results 2023
October 27, 2023     Third quarter results 2023

For further information, please contact:
Signify Investor Relations
Thelke Gerdes
Tel: +31 6 1801 7131
E-mail: [email protected]

Signify Corporate Communications
Leanne Carmody
Tel: +31 6 3928 0201

E-mail: [email protected]

Abigail Levene
Tel: +31 6 2939 3895
E-mail: [email protected]

About Signify
Signify (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 our operations 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 & Uncertainties
This 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 Information
All 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 Measures
Certain 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 2022.

All 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 2022.

Market Abuse Regulation
This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

© 2023 Benzinga does not provide investment advice. All rights reserved.

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