Slide 1: Q3 2019 results
Q3 2019 results October 25, 2019
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 Business and operational performance by Eric Rondolat Financial performance by Stéphane Rougeot Outlook and conclusion by Eric Rondolat Q&A 3
Slide 4: Third quarter sales of EUR 1.5bn and operational profitability of 11.0%
Third quarter sales of EUR 1.5bn and operational profitability of 11.0% Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 19 • CSG decreased by 5.0% due to: • Challenging macro environment with lower market activity -3.2% -3.3% -7.3% -6.1% -5.0% in Europe, US, Greater China, a
Slide 5: Growing profit engines: CSG of 1.0% and Adjusted EBITA margin improvement of 80 bps
Growing profit engines: CSG of 1.0% and Adjusted EBITA margin improvement of 80 bps Adjusted EBITA Adjusted Q3 19 CSG % vs LY (EURm) vs LY (bps) (EURm) EBITA % LED 0.9% 56 +3 12.3% +30 Professional 1.7% 86 +7 12.3% +60 Home -3.1% -3 +5 -2.6% +430 Total 1.0% 139 +14 11.0% +80 5
Slide 6: LED Adjusted EBITA margin improved by 30 bps, driven by ongoing procurement savings
LED Adjusted EBITA margin improved by 30 bps, driven by ongoing procurement savings Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 19 • Comparable sales increased by 0.9% 0.9% -1.9% 0.2% -0.2% -1.8% • LED lamps delivered a solid performance • LED electronics continued to be
Slide 7: LED business highlights
LED business highlights Introduced Wi-Fi based Introduced easy-to- Launched CertaDrive, Launched a new family smart lighting in the US install T Beamer LED first round-shape of RDL plug and play and India batten in India dimmable point driver constant voltage drivers • Offers easy-to-install • Simpl
Slide 8: Professional Adjusted EBITA margin improved by 60 bps
Professional Adjusted EBITA margin improved by 60 bps, mainly driven by procurement and indirect cost savings Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 19 • CSG of 1.7%, mainly driven by 1.7% 0.4% -1.5% • Solid performance in China and the Middle East -6.9% -5.6% • Par
Slide 9: Professional business highlights
Professional business highlights Made Norwegian IT Installed Trulifi at press Helping AppHarvest to Installed Interact Sports systems integrator center of German increase efficiency and at the Orange Atea’s office smart football club HSV boost yields Velodrome in Marseille • Combines Cisco’s • Newly
Slide 10: Home – strict application of our commercial policies and investments made
Home – strict application of our commercial policies and investments made to prepare the launch of innovative offerings in Q4 Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 19 24.4% • CSG of -3.1%, due to 19.0% • Lower performance in the US driven by a strict 176 applicatio
Slide 11: Home business highlights
Home business highlights Introduced the Philips Provided consumers Launched new range of Extended existing range Hue Play HDMI Sync box with new smart Philips Hue Filament of smart home lighting accessories bulbs products • Provides easy way to • Smart button: Allows • Offers consumers • Philips Hue
Slide 12: Cash engine – Lamps Adjusted EBITA margin remained solid at 19.4%
Cash engine – Lamps Adjusted EBITA margin remained solid at 19.4% Sales (in EURm) & comparable sales growth (in %) Key observations for Q3 19 -11.1% • Comparable sales decreased by 25.5% due to a very high comparison base related to the halogen bulb ban in -19.3% -17.9% -20.3% Europe in Q3 18 -25.5%
Slide 13: Agreement to acquire Cooper Lighting Solutions
Agreement to acquire Cooper Lighting Solutions to strengthen our position in the attractive North American lighting market Signify to acquire Cooper Lighting Solutions for USD 1.4bn in cash • Expanding our position in the attractive North American lighting market • Increasing innovation power and mo
Slide 14: Content
Content Business and operational performance by Eric Rondolat Financial performance by Stéphane Rougeot H1 19 highlights and 2019 outlook by Eric Rondolat Q&A 14
Slide 15: Signify Adj. EBITA margin reduction, mainly due to lower sales volumes in Lamps
Signify Adj. EBITA margin reduction, mainly due to lower sales volumes in Lamps Adjusted EBITA (in EURm) as % of sales 12.0% -100 bps 11.0% 191 -24 -69 22 -2 0 169 50 Q3 18 Volume / Mix Price CoGS Indirect Costs Currency Other Q3 19 15
Slide 16: Adjusted currency comparable indirect costs decreased by 5%
Adjusted currency comparable indirect costs decreased by 5% 28.7% 28.7% Key observations as % of sales • Indirect cost reduction of EUR 22m In EURm 458 -22 442 • Negative currency impact of EUR 6m Adj. R&D 70 6 65 • Continue to execute initiatives to further reduce the indirect cost base Adj. SG&A 3
Slide 17: WoCa decreased by 70bps as % of sales
WoCa decreased by 70bps 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% 8.4% 13.8% 8.0% 536 587 503 588 -70 bps 878 943 999 1.030 + 130
Slide 18: Net debt decreased by EUR 8m
Net debt decreased by EUR 8m In EURm 865 857 -188 14 38 28 69 8 23 FCF: EUR +45m Net debt EBITDA Change in Net capex Change in Interest & Tax Other FCF items Other* Net debt end of Q2 19 working capital provisions end of Q3 19 18 *Other includes finance lease new borrowing (EUR 21m) and FX effect on
Slide 19: Content
Content Business and operational performance by Eric Rondolat Financial performance by Stéphane Rougeot Outlook and conclusion by Eric Rondolat Q&A 19
Slide 20: Revised 2019 outlook
Revised 2019 outlook • Continuing deteriorating market conditions are impacting sales in H2 • Remain confident that the Adjusted EBITA margin for 2019 will improve, albeit % somewhat less than previously anticipated • Adjusted EBITA margin now expected to be in the range of 10.3% to 10.6% • The CSG
Slide 21: Q&A
Q&A 21
Slide 22: Currency movements positively impacted sales and negatively impact Adjusted EBITA
Currency movements positively impacted sales and negatively impact Adjusted EBITA Q3 19 Sales FX Footprint (% of total) Key observations • Positive FX effect on sales of +1.4%, largely driven by US dollar appreciation Other EUR • Negative FX effect on Adjusted EBITA of EUR -2m, 30% Currencies and -3
Slide 23: Net income decreased by EUR 19m to EUR 74m
Net income decreased by EUR 19m to EUR 74m, mainly due to lower operational profitability and higher restructuring costs From Adjusted EBITA to net income (in EURm) Key observations Q3 18 Q3 19 Adjusted EBITA 191 169 - Restructuring -17 -24 - Acquisition related charges 0 -1 - Other incidental items
Slide 24: Free Cash Flow of EUR 45m
Free Cash Flow of EUR 45m Free cash flow (in EURm) Key observations Q3 18 Q3 19 • Free cash flow of EUR 45m versus EUR 64m last year Income from operations 143 114 • Included a negative effect from the phasing of payables Depreciation and amortization 57 74 and receivables of around EUR -60m, as pre
Slide 25: Sianty
Sianty