Press Release
July 23, 2021
Signify reports second quarter sales of EUR 1.6 billion, operational profitability of 10.9% and a free cash flow of EUR 104 million
Second quarter 20211
- Signify's installed base of connected light points increased from 83 million in Q1 21 to 862 million in Q2 21
- Sales of EUR 1,609 million; 9.6% nominal sales growth and CSG of 14.1%
- LED-basedsales represented 82% of total sales (Q2 2020: 80%)
- Adj. EBITA margin improved by 190 bps to 10.9%
- Net income increased to EUR 82 million (Q2 20: EUR 81 million)
- Free cash flow of EUR 104 million (Q2 20: EUR 158 million)
- Net debt/EBITDA ratio of 1.7x (Q2 20: 2.4x)
Eindhoven, the Netherlands - Signify (Euronext: LIGHT), the world leader in lighting, today announced the company's second quarter 2021 results.
"In the second quarter we saw an acceleration of the pace of recovery in comparison to the first three months of the year. We successfully executed our strategy as demand for our connected lighting offers and our growth platforms remained strong. The consumer segment held its momentum and demand for conventional products proved resilient. The professional lighting segment showed sequential improvements, while still impacted by both extended lockdowns and supply constraints. Overall, we managed to improve the operating margin by 190 basis points and generated a solid free cash flow. We again progressed on our Brighter Lives, Better World 2025 program, well on track to achieving our four key objectives. Looking back at the first half year, we are pleased with the pace of our recovery in a volatile and disrupted environment, achieving more than 8 percent comparable sales growth with an operating margin improvement of 230 basis points and generating EUR 272 million of free cash flow," said CEO Eric Rondolat.
"While we are seeing increasing COVID-19 cases, new variants leading to continued lockdowns in parts of the world and supply constraints continuing to impact us into the second half of the year, we are confident that the measures we have taken will enable us to counter those challenges and deliver our guidance for the year."
-
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.
2Excludes 2 million connected light points for Telensa, as acquisition closed on July 1, 2021
Brighter Lives, Better World 2025
In the second quarter of the year, Signify continued on the journey to achieving its ambitious goals for the Brighter Lives, Better World 2025 sustainability program, progressing on all four commitments that contribute to doubling its positive impact on environment and society:
-
Double the pace of the Paris agreement:
Cumulative carbon reduction over value chain was 33 million tonnes, ahead of track for the 2025 target of 340 million tonnes. This is mainly caused by an accelerated shift to energy efficient and connected LED lighting in the first two quarters of 2021, decreasing our carbon emissions in the use phase. - Double our Circular revenues to 32%:
Circular revenues increased to 24%, compared to the 2019 baseline of 16%. We are on track for the 2025 target of 32%. This is mainly due to our strong portfolio of serviceable luminaires and the further expansion of our 3D printing footprint. - Double our Brighter lives revenues to 32%:
Brighter lives revenues were 25%, progressing well towards the 2025 target of 32%. We had several customer wins that contribute to our Brighter lives revenues, including 'quality of light' EyeComfort products, horticulture lighting and UV-C disinfection lighting. - Double the percentage of women in leadership positions to 34%:
The percentage of women in leadership positions was 25%, on track to reach the 2025 target of 34%. This target is part of a broader program, where we focus our efforts on attracting, retaining and developing diverse talents, while ensuring equal opportunities, fairness and impartiality for all.
In addition, Signify received recognition for its leadership in sustainability, amongst which a first place ranking in
our industry and top 5% of the ESG Risk Ratings Universe from Sustainalytics.
Outlook
Signify continues to expect 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 free cash flow to exceed 8% of sales for the full year 2021. As previously stated, the company reassesses its medium-term guidance after each financial year.
2
Financial review
Second quarter | Six months | |||||
2020 | 2021 | change | in millions of EUR, except percentages | 2020 | 2021 | change |
14.1% | Comparable sales growth | 8.4% | ||||
-4.5% | Effects of currency movements | -5.5% | ||||
0.0% | Consolidation and other changes | 8.0% | ||||
1,469 | 1,609 | 9.6% | Sales | 2,896 | 3,209 | 10.8% |
567 | 638 | 12.5% | Adjusted gross margin | 1,112 | 1,275 | 14.7% |
38.6% | 39.7% | Adj. gross margin (as % of sales) | 38.4% | 39.7% | ||
-401 | -423 | Adj. SG&A expenses | -794 | -847 | ||
-67 | -70 | Adj. R&D expenses | -134 | -142 | ||
-468 | -493 | -5.4% | Adj. indirect costs | -928 | -989 | -6.6% |
31.9% | 30.6% | Adj. indirect costs (as % of sales) | 32.0% | 30.8% | ||
133 | 175 | 32.0% | Adjusted EBITA | 245 | 347 | 41.8% |
9.0% | 10.9% | Adjusted EBITA margin | 8.5% | 10.8% | ||
-13 | -39 | Adjusted items | -55 | -97 | ||
119 | 136 | 13.8% | EBITA | 189 | 251 | 32.3% |
87 | 106 | 21.5% | Income from operations (EBIT) | 130 | 191 | 46.7% |
-16 | -7 | Net financial income/expense | -26 | -16 | ||
10 | -17 | Income tax expense | 4 | -32 | ||
81 | 82 | 0.8% | Net income | 108 | 142 | 31.3% |
158 | 104 | Free cash flow | 270 | 272 | ||
0.62 | 0.65 | Basic EPS (€) | 0.85 | 1.12 | ||
35,789 | 39,143 | Employees (FTE) | 35,789 | 39,143 |
* For comparability purposes please note that FY 2020 includes only 10 months of Cooper Lighting performance
Second quarter
Sales increased by 9.6% to EUR 1,609 million, including 4.5% negative currency effects. Comparable sales increased by 14.1%, driven by continued strong demand for connected lighting offers and traction on the consumer side. The adjusted gross margin increased by 110 bps to 39.7%, driven by both carefully balancing pricing decisions versus cost increases, and a favorable mix. Adjusted indirect costs increased by EUR 25 million, mainly reflecting last year's positive effect of solidarity measures by our employees, and government contributions. Adjusted EBITA amounted to EUR 175 million, a 32.0% increase compared to the same period last year. The Adjusted EBITA margin improved by 190 bps to 10.9%, mainly driven by a gross margin improvement and operating leverage.
Total restructuring costs were EUR 9 million, acquisition-related charges were EUR 13 million and other incidental costs were EUR 16 million, mainly related to environmental provisions for inactive sites and transformation costs. Net income increased to EUR 82 million, as higher operational profitability in 2021 was offset by the impact of a significant one-time tax benefit in the second quarter of 2020. Free cash flow was EUR 104 million, reflecting a healthy balance between profitability and some reinvestment in continued top line recovery.
3
Digital Solutions
Second quarter | Six months | |||||
2020 | 2021 | change | in millions of EUR, unless otherwise indicated | 2020* | 2021 | change |
12.6% | Comparable sales growth | 5.1% | ||||
781 | 837 | 7.2% | Sales | 1,420 | 1,631 | 14.8% |
75 | 89 | 19.2% | Adjusted EBITA | 118 | 161 | 36.5% |
9.6% | 10.7% | Adjusted EBITA margin | 8.3% | 9.9% | ||
59 | 72 | 21.9% | EBITA | 77 | 120 | 55.6% |
29 | 44 | 51.5% | Income from operations (EBIT) | 23 | 65 | 184.8% |
* For comparability purposes please note that first quarter 2020 includes only 1 month of Cooper Lighting performance
Second quarter
Sales increased by 7.2% to EUR 837 million, with a comparable sales growth of 12.6%, demonstrating a sequential improvement that is only partially offset by supply constraints. Adjusted EBITA increased to EUR 89 million, resulting in an Adjusted EBITA margin of 10.7%, supported by operating leverage.
Digital Products
Second quarter | Six months | |||||
2020 | 2021 | change | in millions of EUR, unless otherwise indicated | 2020 | 2021 | change |
20.4% | Comparable sales growth | 17.9% | ||||
473 | 553 | 16.9% | Sales | 1,002 | 1,128 | 12.6% |
44 | 66 | 50.3% | Adjusted EBITA | 91 | 148 | 62.1% |
9.3% | 12.0% | Adjusted EBITA margin | 9.1% | 13.1% | ||
43 | 63 | 45.1% | EBITA | 81 | 138 | 70.1% |
41 | 61 | 47.4% | Income from operations (EBIT) | 77 | 135 | 74.3% |
Second quarter
Sales increased by 16.9% to EUR 553 million, with a comparable sales growth of 20.4%. The segment continued to benefit from strong consumer demand for connected products, even if also hampered by supply constraints. The Adjusted EBITA margin improved by 270 basis points to 12.0%, mainly driven by a solid gross margin improvement behind a continued strong demand for connected home lighting.
Conventional Products
Second quarter | Six months | |||||
2020 | 2021 | change | in millions of EUR, unless otherwise indicated | 2020 | 2021 | change |
4.7% | Comparable sales growth | -1.2% | ||||
211 | 213 | 1.2% | Sales | 468 | 440 | -5.9% |
37 | 40 | 7.4% | Adjusted EBITA | 82 | 86 | 5.2% |
17.5% | 18.6% | Adjusted EBITA margin | 17.6% | 19.6% | ||
45 | 35 | -21.7% | EBITA | 84 | 88 | 5.4% |
45 | 35 | -21.7% | Income from operations (EBIT) | 84 | 88 | 5.4% |
Second quarter
Sales increased by 1.2% to EUR 213 million, with a comparable growth of 4.7%, mainly as a result of the market recovery and traction across most of its segments. The division continues to deliver market share gains and to generate a solid free cash flow. The Adjusted EBITA margin increased by 110 bps to 18.6%, mainly driven by pricing discipline and operational efficiencies.
4
Other
Second quarter
'Other' represents amounts not allocated to the operating segments and includes costs related both to central R&D activities to drive innovation, and to group enabling functions. Adjusted EBITA amounted to EUR -20 million (Q2 20: EUR -23 million). EBITA amounted to EUR -34 million (Q2 20: EUR -28 million). Restructuring costs and other incidentals were EUR 14 million (Q2 20: EUR 4 million) during the quarter.
Sales by market
Second quarter | Six months | |||||||
2020 | 2021 | Change | CSG | in millions of EUR, except percentages | 2020 | 2021 | change | CSG |
406 | 477 | 17.5% | 17.5% | Europe | 908 | 999 | 10.1% | 11.2% |
619 | 623 | 0.7% | 9.4% | Americas | 1,104 | 1,211 | 9.7% | 0.3% |
323 | 377 | 17.0% | 20.8% | Rest of the world | 647 | 747 | 15.4% | 21.8% |
122 | 133 | 8.9% | 8.1% | Global businesses | 237 | 251 | 6.1% | 5.0% |
1,469 | 1,609 | 9.6% | 14.1% | Total | 2,896 | 3,209 | 10.8% | 8.4% |
Americas includes Cooper Lighting from March 1, 2020, and Global businesses includes Klite
Wiz Connected is included in Market Groups Europe, Americas and Rest of the world (was previously part of Global businesses)
Second quarter
In the second quarter most markets benefited from a low comparison base, as the impact of COVID-19 came into full effect during the second quarter of last year. In the second quarter of this year, comparable sales in Europe grew by 17.5%, as most markets accelerated their recovery. In the Americas, comparable sales grew by 9.4%. The Rest of the world grew by 20.8%, as the underlying recovery path showed robustness across most geographies.
Working capital
in millions of EUR, unless otherwise indicated | 30 Jun,2020 | 31 Mar, 2021 | 30 Jun, 2021 |
Inventories | 1,032 | 946 | 1,120 |
Trade and other receivables | 1,096 | 1,074 | 1,056 |
Trade and other payables | -1,659 | -1,784 | -1,935 |
Other working capital items | -17 | -1 | 29 |
Working capital | 452 | 236 | 269 |
As % of LTM* sales | 7.3% | 3.5% | 4.0% |
- LTM: Last Twelve Months
Second quarter
Working capital decreased by EUR 183 million year on year to EUR 269 million, mainly driven by higher payables, partly offset by higher inventories and other working capital items. As a percentage of sales, working capital improved by 330 bps to 4.0% of sales. When including last twelve-month sales pro-forma Cooper Lighting and Klite, working capital improved by 230 bps.
5
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Signify NV published this content on 23 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 July 2021 05:07:07 UTC.