Signify Reports 2018 4Q and Full-Year Results

Full year 2018¹

• Signify’s installed base of connected light points increased from 30 million at YE 17 to 44 million at YE 18
• LED-based sales grew by 2.5% on a comparable basis to 71% of sales (FY 17: 65%); CSG total Signify -4.4%
• Adj. indirect costs down EUR 224 million on a currency comparable basis, a reduction of 10%, or 180 bps of sales
• Adj. EBITA margin improved by 50 bps to 10.1%, despite a negative currency impact of -50 bps
• Net income of EUR 261 million (FY 17: EUR 281 million including net real estate gains of EUR 52 million)
• Working capital improved by 20 bps to 8.4% of sales
• Free cash flow of EUR 306 million (FY 17: EUR 403 million, which included EUR 56 million real estate proceeds and EUR 40 million lower restructuring cash-out)

Fourth quarter 2018¹

• LED-based sales grew by 0.2% on a comparable basis; CSG total Signify -7.3% (Q4 17: 3.0%)
• Adj. indirect costs down EUR 83 million on a currency comparable basis, a reduction of 15%, or 250 bps of sales
• Adj. EBITA margin improved by 150 bps to 12.4%, despite a negative currency impact of -50 bps
• Net income improved to EUR 119 million compared with EUR 38 million last year
• Free cash flow of EUR 279 million (Q4 17: EUR 434 million)

Shareholder returns

• In 2018, EUR 462 million of capital was returned through share repurchases and ordinary dividends
• Propose to pay a cash dividend of EUR 1.30 per share over 2018, an increase of 4% and a pay-out ratio of 46%
• Signify will have returned EUR 1.1 billion to shareholders since IPO, including 2018 dividend

Eindhoven, the Netherlands – Signify (Euronext: LIGHT) Friday announced the company’s fourth quarter and full-year results 2018. “We continued to make solid progress with our simplification and cost reduction actions in 2018, resulting in a substantial increase in profitability and strong free cash flow delivery. In line with our strategy, our growing profit engines – LED, Professional and Home – have strongly contributed to these improvements and our LED-based sales have grown by 2.5%, now representing 71% of total revenues,” said CEO Eric Rondolat. “While market conditions are challenging, we continue to focus on new growth platforms to strengthen our market leadership and progressively improve our growth profile. With our proposal to increase our dividend to EUR 1.30 per share, we will have returned more than EUR 1 billion to shareholders over the last three years. Looking forward, I’m confident we have built a solid foundation to deliver in 2019 on the mid-term targets set at the time of the IPO.”

Outlook

In 2019, our growing profit engines (LED, Professional and Home combined) are expected to deliver a comparable sales growth in the range of 2 to 5%. Our cash engine, Lamps, is expected to decline at a slower pace than the market, in the range of -21 to -24% on a comparable basis. For total Signify, we aim to reach an Adjusted EBITA margin in 2019 within the range of 11 to 13% set at the time of the IPO in May 2016. We expect free cash flow in 2019 to be above 5% of sales.