Signify reports Q1 sales of €1.427 billion, accelerating UV-C business development

Signify recently announced its financial results for the first quarter of 2020. Sales in Q1 reached €1.427 billion, a decrease of 3.5%. After adjusting for currency effects of 1.3% and consolidation (primarily related to the Acquisition of Cooper Lighting and GE Current) and other changes of 10.6%, comparable sales decreased by 15.3%. LED-based sales accounted for 78% of total sales. Adjusted gross margin increased by 50 basis points to 38.2%.

Other Key Data:

Net revenue was €27 million (Q1 19: €44 million);

Free cash flow doubled to €112 million (Q1 19: €55 million);

The installed base of connected lighting points increased from 56 million in Q4 2019 to 60 million in Q1 2020;

CSG's profit growth engine: -14.5%; CSG's overall average is -15.3;

Adjusted indirect costs decreased by €56 million, or -11.1%, excluding currency effects and changes in scope;

Adjusted EBITA was €112 million, compared to €115 million in the same period last year;

Adjusted EBITA margin increased by 10 basis points to 7.9%, with currency effects having a neutral impact;

The EBITA margin of the continuously growing profit engine increased by 100 basis points to 7.7%;

Completed the acquisition of Cooper Lighting; integration is proceeding smoothly and synergies are expected;

Among them, LED sales were €426 million, a comparable decrease of 16.2%, as both LED lamps and LED electronics were affected by the pandemic; professional products business sales reached €639 million, with a nominal increase of 6.7% due to the integration of Cooper Lighting, but a comparable decrease of 14.2%, mainly due to the outbreak of COVID-19; home products business was €103 million, a comparable decrease of 8.0%...

"We mobilized our global teams early and took extensive actions to address the unprecedented situation caused by the COVID-19 pandemic. I am pleased with the successful measures we have taken to protect the health and safety of our employees and those around them. We have largely restored our supply chain to minimize the impact on our customers. Despite the decline in demand, we quickly implemented a series of special initiatives that enabled us to increase our operating margin and double our free cash flow," said CEO Eric Rondolat. "We aim to leverage these achievements to manage our second-quarter performance, as we expect demand to be further affected. In addition, we are taking extra measures to safeguard our profitability and cash flow. We have also begun exploring new business opportunities arising from this situation while maintaining close relationships with our customers. I believe all these measures will help us strengthen our market position."

Q1 Update Related to COVID-19:

Employee health and safety are the company's top priority

Support local partners and communities: Donate UV-C lamps and (solar) luminaires

The company's global manufacturing capacity has recovered to over 80%.

Implemented extensive mitigation measures from Q1 to maintain profitability and free cash flow

It is reported that Signify implemented various mitigation measures in the first quarter to maintain profitability. These measures included reducing sales, travel, and procurement expenses. A series of actions were also taken to protect cash flow, including strict working capital management, reduction of uncommitted and unnecessary capital expenditures, and withdrawal of the dividend proposal. Additionally, mitigation measures are being accelerated and expanded, including a 20% salary reduction for the leadership team in the second quarter.

It is worth mentioning that Eric Rondolat also stated that the company is now vigorously promoting the development and production of UV sterilization lamps, which is one of the many ways to maintain business growth during the ongoing pandemic. "We are exploring new opportunities arising from this, on the one hand through new business opportunities such as producing UV-C lamps," said CEO Eric Rondolat. Signify intends to continue producing specialty lamps as a major source of revenue after the crisis.