Slide 1: Q4 & Full Year 2019 results
Q4 & Full Year 2019 results January 31, 2020
Slide 2: Important information
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 projectio
Slide 3: Content
Content Summary performance 2019 by Eric Rondolat Financial performance for Q4 19 by Stéphane Rougeot FY 19 highlights by Eric Rondolat Outlook & conclusion by Eric Rondolat Q&A 3
Slide 4: Summary financial & business performance 2019
Summary financial & business performance 2019 • LED-based comparable sales grew by 1.4% in FY 19 and represented 78% of sales • Signify’s installed base of connected light points increased from 44m at YE18 to 56m at YE19 % • • Adj. EBITA margin improved by 30 bps to 10.4%, including a currency impac
Slide 5: Content
Content Summary performance 2019 by Eric Rondolat Financial performance for Q4 19 by Stéphane Rougeot FY 19 highlights by Eric Rondolat Outlook & conclusion by Eric Rondolat Q&A 5
Slide 6: The growing profit engines reported a CSG of -0.7% and Adjusted EBITA margin improvement
The growing profit engines reported a CSG of -0.7% and Adjusted EBITA margin improvement of 180 bps in Q4 19 Adjusted EBITA Adjusted Q4 19 CSG % vs LY (EURm) vs LY (bps) (EURm) EBITA % LED -2.9% 77 +8 14.3% -10 Professional -1.5% 92 +7 12.7% +70 Home 9.5% 38 +22 19.8% +1,090 Total -0.7% 207 +36 14.2
Slide 7: LED Adjusted EBITA margin remained solid at 14.3%
LED Adjusted EBITA margin remained solid at 14.3% Sales (in EURm) & comparable sales growth (in %) Key observations for Q4 19 • Nominal sales increased by 12.3% reflecting the 0.2% 0.9% -0.2% -1.8% -2.9% consolidation of the Klite acquisition • Comparable sales decreased by 2.9% • LED lamps delivere
Slide 8: LED business highlights
LED business highlights Launched the WiZMote Introduced remote Launched first Launched first D4i driver control device for quick control-based fan ceiling generation of round (Xitanium SR 165W C170 access and control category in China shape Industry drivers sXt D4i) • Plug & play connected • New tec
Slide 9: Professional Adjusted EBITA margin improved by 70 bps, mainly driven by indirect cost savings
Professional Adjusted EBITA margin improved by 70 bps, mainly driven by indirect cost savings Sales (in EURm) & comparable sales growth (in %) Key observations for Q4 19 • CSG of -1.5%, mainly due to 1.7% -1.5% -1.5% • Challenging market conditions, most notably in India -6.9% -5.6% and China • Lowe
Slide 10: Professional business highlights
Professional business highlights Launched tailor-made Extended the reach of Provided Australis Launched Interact 3D-printed luminaires Trulifi through three Seafoods with Industry in collaboration for circular economy new partnerships aquaculture LED lighting with Pilkington • Reduces carbon • With
Slide 11: Home Adjusted EBITA margin more than doubled to 19.8%
Home Adjusted EBITA margin more than doubled to 19.8% Sales (in EURm) & comparable sales growth (in %) Key observations for Q4 19 24.4% 19.0% • CSG of +9.5%, mainly driven by • Particularly strong performance in Europe 191 176 • Successful introduction of innovative offers 115 107 108 9.5% -2.6% -3.
Slide 12: Home business highlights
Home business highlights Introduced voice control Launched Philips Hue Expanded Philips Hue Added Jung, Voltus and for Philips Hue Play outdoor range with low- outdoor range with new Insta to our Friends of HDMI Sync box voltage lighting options wall and pathway lights Hue program • Allows easy voic
Slide 13: Cash engine – Lamps Adjusted EBITA margin remained solid at 17.3%
Cash engine – Lamps Adjusted EBITA margin remained solid at 17.3% Sales (in EURm) & comparable sales growth (in %) Key observations for Q4 19 • Comparable sales decreased by 18.3% -17.9% -19.3% -18.3% • Lamps continues to deliver on its ‘last man standing’ -20.3% strategy -25.5% • Continued market s
Slide 14: Signify Adj. EBITA margin: improvement driven by ongoing cost reductions
Signify Adj. EBITA margin: improvement driven by ongoing cost reductions Adjusted EBITA (in EURm) as % of sales 12.4% +80 bps 13.2% 10 2 232 214 (8) 25 (71) 60 Q4 18 Volume / Mix Price CoGS Indirect Costs Currency Scope/Other Q4 19 14
Slide 15: WoCa decreased by 220 bps as % of sales
WoCa decreased by 220 bps as % of sales, reflecting continued focus on improving WoCa, with lower receivables and higher payables Working capital1 (in EURm & as % of sales) Inventories (in EURm & as % of sales) 15.9% 16.5% 9.3% 9.4% 14.9% 14.0% 8.0% 6.2%2 587 503 588 388 943 999 1.030 874 +20 bps Q1
Slide 16: Net debt decreased by EUR 239m, driven by strong FCF
Net debt decreased by EUR 239m, driven by strong FCF In EURm 857 215 618 1 69 4 30 152 26 FCF: EUR +308m Net debt EBITDA Change in Net capex Change in Interest & Tax Other FCF items Other* Net debt end of Q3 19 working capital provisions end of Q4 19 *Other includes cash used for acquisition of busi
Slide 17: Content
Content Summary performance 2019 by Eric Rondolat Financial performance for Q4 19 by Stéphane Rougeot FY 19 highlights by Eric Rondolat Outlook & conclusion by Eric Rondolat Q&A 17
Slide 18: Growing profit engines significantly improved profitability and FCF
Growing profit engines significantly improved profitability and FCF Adj. EBITA margin (%) Adj. EBITA contribution (in EUR m) Free Cash Flow (in EUR m) LED, Professional & Home LED, Professional & Home vs cash engine +180 bps 10.4% 559 8.6% 222 302 370 308 222 425 525 -87 -100 2018 2019 2018 2019 201
Slide 19: Market dynamics impacted top-line in FY19, solid improvements in margins
Market dynamics impacted top-line in FY19, solid improvements in margins Growing profit engines Cash engine LED CSG & Adj. EBITA margin (%) Professional CSG & Adj. EBITA margin (%) Home CSG & Adj. EBITA margin (%) Lamps FCF (in EUR m) CSG 0.4% -1.1% CSG -0.4% -1.7% CSG -3.8% 11.3% 3.8% 308 9.5% 10.0
Slide 20: Adj. indirect costs excl. currency/scope effect decreased by EUR 125m in FY19
Adj. indirect costs excl. currency/scope effect decreased by EUR 125m in FY19 Adj. indirect cost savings per quarter (in EUR m) Key observations • EUR 125m saved in FY19, down 6.6%, or 70 bps of sales, excl. FX/scope • Progress made in 2019: 29.8% 33 28 29.0% • Market organization rightsizing 16 6 •
Slide 21: Signify has substantially improved its business and financial profile
Signify has substantially improved its business and financial profile Successful transition Substantial Transition to an asset- from conventional to improvement in Strong FCF generation light business model LED profitability Total LED sales Adjusted EBITA margin Gross capex as % of sales FCF as % of
Slide 22: Signify is well on track to achieve its 2020 Sustainability targets
Signify is well on track to achieve its 2020 Sustainability targets 2019 result Achievement 2020 target 82.5% Increasing energy Sustainable Sustainable revenues 80% revenues efficiency of portfolio LED lamps & 2.3 billion 117% of our commitment (cumulative from 2015) completed >2 billion luminaires
Slide 23: Signify offers an attractive dividend yield of 4.8%
Signify offers an attractive dividend yield of 4.8% Propose 2019 dividend of EUR 1.35 to be paid in cash in 2020 Dividend 2019 (in EURm) Key observations FY 2019 • In 2020, we propose to pay a dividend over 2019 of EUR 1.35 per share, an increase of 3.8% Net income attributable to shareholders 267 •
Slide 24: EUR 1.2bn returned to shareholders since IPO, incl. proposed 2019 dividend
EUR 1.2bn returned to shareholders since IPO, incl. proposed 2019 dividend Cash available Return to shareholders since IPO (in EURm) • Continued free cash flow generation 1,656 • Managing our financial ratios to maintain a financing structure compatible with an investment-grade profile 1,225 Share r
Slide 25: Substantial acquisitions made in 2019 to strengthen our business and financial profile
Substantial acquisitions made in 2019 to strengthen our business and financial profile • Extends Signify’s leadership in connected • Enables Signify to capture attractive lighting by stepping into the Wi-Fi based growth in agricultural lighting smart lighting market • Closed Q2 2019 • Closed Q2 2019
Slide 26: Content
Content Summary performance 2019 by Eric Rondolat Financial performance for Q4 19 by Stéphane Rougeot FY 19 highlights by Eric Rondolat Outlook & conclusion by Eric Rondolat Q&A 26
Slide 27: Outlook 2020
Outlook 2020 % • Signify aims to achieve a further improvement in the Adjusted EBITA margin • Free cash flow expected to be at least 6% of sales • The outlook excludes the announced acquisition of Cooper Lighting Solutions • An update on the outlook will be provided after the closing of Cooper Light
Slide 28: Adaptation of business structure to strengthen customer centricity
Adaptation of business structure to strengthen customer centricity • Adapt the business structure to enable: • Stronger customer focus • Enhanced specialization • Increased execution speed • Consolidation of 4 BGs to 3 divisions • Focus our business around our customers and create one global operati
Slide 29: Q&A
Q&A 29
Slide 30: 78% of sales is LED-based and growing by 1.4% on a comparable basis
78% of sales is LED-based and growing by 1.4% on a comparable basis LED-based sales continue to grow by CAGR of 20% (in % of total sales) LED-based sales of EUR 4.8bn in FY 19, CSG of 1.4% 78% BG LED 71% 39% 65% (CSG -1.1%) 55% LED Professional 43% 51% 34% (CSG 0.5%) 26% LED Home 10% (CSG 14.8%) 201
Slide 31: Currency movements had a positive impact on sales and Adjusted EBITA
Currency movements had a positive impact on sales and Adjusted EBITA Q4 19 Sales FX Footprint (% of total) Key observations • Currency movements positively impacted sales and Adjusted EBITA EUR Other 31% • Sales impact of +2.0%, mainly driven by US dollar Currencies 36% appreciation • Adjusted EBITA
Slide 32: Net income reduced to EUR 98m, mainly due to higher restructuring costs
Net income reduced to EUR 98m, mainly due to higher restructuring costs, acquisition related charges, and other incidental items From Adjusted EBITA to net income (in EURm) Key observations Q4 18 Q4 19 Adjusted EBITA 214 232 - Restructuring -27 -42 1 - Acquisition related charges -1 -11 1 Includes c
Slide 33: Free Cash Flow of EUR 308m
Free Cash Flow of EUR 308m Free cash flow (in EURm) Key observations Q4 18 Q4 19 • Free cash flow of EUR 308m, including a positive impact Income from operations 173 138 of EUR 18m related to IFRS 16 Depreciation and amortization 58 77 • Free cash flow in Q4 19 included lower restructuring Additions
Slide 34: Sianty
Sianty