Slide 1: Q3 2021 results
Q3 2021 results October 29, 2021
Slide 2: Important information
Important information Forward-looking statements This release contains forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify, including statements regarding strategy, estimates of sales growth and future operational results. By their natur
Slide 3: Content
Content Business and operational performance by Eric Rondolat Financial performance by Javier van Engelen 2021 outlook by Eric Rondolat Q&A 3
Slide 4: Third quarter 2021 highlights
Third quarter 2021 highlights • Improving market demand in line with our Strategic priorities • Order book increase of 90% in Q3 21 vs. Q3 20 • Continued supply chain disruptions, caused by electronic component shortages and logistics challenges impacting top line by more than 100 million • Comprehe
Slide 5: Q3 21 sales of EUR 1.6 billion, adj. EBITA margin 11.1%, free cash flow EUR 85m
Signify reported a Q3 21 sales of EUR 1.6 billion, an adj. EBITA margin of 11.1% and a free cash flow of EUR 85m Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 21 CSG -8.3% -4.8% -5.9% 3.2% 14.1% • Installed base of connected light points increased from 86m in Q2 21 to 92m
Slide 6: Strong customer demand against components shortages and supply chain disruptions
Strong customer demand against the backdrop of components shortages and global supply chain disruptions Order book development E-Components Scarcity 10% of the world’s shipping capacity taken out due to port congestion issues +90.2% Yantian closure (10 days) Ningbo terminal closure (10 days) Shangha
Slide 7: Positive price and sales mix more than offset structural COGS inflation
Positive price and sales mix more than offset structural COGS inflation Net price trajectory Q3 net price/mix versus COGS 12 Structural COGS (mostly higher input 30 -35 costs) -8 12 -17 -28 -30 -23 Transitory COGS -22 (increased logistics -49 costs & occasional -57 -59 spot buys) -57 -69 -71 -76 -78
Slide 8: Digital Solutions reported a CSG of -7.3% and adj. EBITA margin of 10.5%
Digital Solutions reported a CSG of -7.3% and an adj. EBITA margin of 10.5% Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 21 CSG -11.2% -7.3% -10.2% -1.8% 12.6% • Comparable sales growth of -7.3% • Division most exposed to component shortages and logistics disruptions 916
Slide 9: Digital Solutions highlights
Digital Solutions highlights Expanding our smart Improving occupant Helping largest Belgian Expanding UV-C offering cities offering by experience at tomato grower to boost for professionals with acquiring Telensa Honeywell’s Charlotte HQ production new UV-C devices • Adds a narrow-band and • Integra
Slide 10: Digital Products reported a CSG of 2.5% and adj. EBITA margin of 13.0%
Digital Products reported a CSG of 2.5% and an adj. EBITA margin of 13.0% Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 21 CSG -2.0% 2.5% 2.5% 15.7% 20.4% • Comparable sales growth of 2.5% • Most segments continued to grow • Sales of connected home products held back by su
Slide 11: Digital Products highlights
Digital Products highlights Helping consumers save Blending light, color & Offering more options to Servicing customers with on electricity usage with sound with new Philips equip homes with Wifi broader range of ceiling Philips Ultra Efficient LEDs Hue innovations WiZ smart lighting lighting produc
Slide 12: Conventional Products reported a CSG of -13.2% and adj. EBITA of 18.8%
Conventional Products reported a CSG of -13.2% and an adj. EBITA of 18.8% Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 21 CSG -11.0% -13.2% -11.6% -6.1% 4.7% • Comparable sales growth of -13.2% • In line with long-term trajectory • High comparison base for UV-C 233 202 24
Slide 13: Brighter Lives, Better World 2025
Brighter Lives, Better World 2025 Q3 2021 results Doubling our positive impact on the environment and society 2019 Q3 2021 2025 Baseline Result Target Carbon reduction over value chain Better World Climate action 0 48 MT 340 MT against Paris Agreement Circular economy Circular revenues 16% 24% 32% F
Slide 14: Content
Content Business and operational performance by Eric Rondolat Financial performance by Javier van Engelen 2021 outlook by Eric Rondolat Q&A 14
Slide 15: Adj. EBITA margin strong with pricing/mix more than offsetting structural inflation
Adj. EBITA margin strong with pricing/mix more than offsetting structural inflation; indirect costs largely offsetting volume and transitory cost impact In EURm / as % of sales 11.5% -40 bps 11.1% 199 12 -35 182 -38 30 -4 2 37 -22 EUR +7m Q3 20 Volume Mix Price CoGS CoGS Indirect Costs Currency Scop
Slide 16: Improvement of working capital position
Improvement of working capital position as increase in payables and receivables more than offsets increase in goods in transit In EURm / as % of sales 6.4%1 -170 bps 4.7% -86 301 -315 443 316 -28 Q3 20 Inventories Trade & other Trade & other payables Other working Q3 21 receivables capital items 16
Slide 17: Leverage ratio from 2.2x in Q3 20 to 1.8x in Q3 21
Leverage ratio from 2.2x in Q3 20 to 1.8x in Q3 21, and stable vs. Q2 21 after dividend tax payment, leases and M&A In EURm 1,589 1,411 1,375 64 57 -195 13 -10 66 15 26 FCF: EUR +85m Net debt Net debt EBITDA Change in Net capex Change in Interest & Tax Other Dividend1 Other2 Net debt end of Q3 20 en
Slide 18: Content
Content Business and operational performance by Eric Rondolat Financial performance by Javier van Engelen 2021 outlook by Eric Rondolat Q&A 18
Slide 19: Outlook 2021
Outlook 2021 • Supply chain disruptions will continue to have an impact over the coming months % • Signify expects to end at the lower end of its 2021 guidance ranges: • 3-6% comparable sales growth • Adj. EBITA margin of 11.5-12.5% • Free cash flow exceeding 8% of sales 19
Slide 20: Q&A
Q&A
Slide 21: Currency movements had a minor negative impact on sales and Adjusted EBITA
Currency movements had a minor negative impact on sales and Adjusted EBITA Q3 21 Sales FX Footprint (% of total) Key observations • Currency movements negatively impacted sales and Adjusted EBITA Other Currencies, EUR, 24% • Sales impact of -0.3%, mainly from US dollar 30% depreciation. • Adjusted E
Slide 22: Net income increase to EUR 94m
Net income increase to EUR 94m, as lower EBIT was more than offset by lower financial expenses and lower income tax expense From Adjusted EBITA to net income (in EURm) Key observations Q3 20 Q3 21 1 Mainly related to Cooper Lighting Adjusted EBITA 199 182 - Restructuring -25 -19 Non-recurring by nat
Slide 23: Free Cash Flow of EUR 85m
Free Cash Flow of EUR 85m Free cash flow (in EURm) Key observations Q3 20 Q3 21 • Free cash flow of EUR 85m Income from operations 131 118 • Reflecting lower income from operations and an Depreciation and amortization 82 77 outflow from working capital, as inventories temporarily Additions to (relea
Slide 24: Signify
Sianty