Slide 1: Q2 2020 results
Q2 2020 results July 24, 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 Business and operational performance by Eric Rondolat Financial performance by René van Schooten H1 20 highlights and 2020 outlook by Eric Rondolat Q&A 3
Slide 4: Q2 20 sales of EUR 1.5bn and operational profitability maintained at 9.0%
Q2 20 sales of EUR 1.5bn and operational profitability maintained at 9.0% Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 20 • Sales of EUR 1.5bn, nominal sales growth of -0.6% and CSG of -5.0% -4.2% -6.1% -22.5% -15.3% • LED-based sales represented 80% of total sales (Q2 19
Slide 5: Growing profit engines: CSG of -21.9% and Adjusted EBITA margin improvement of 100 bps
Growing profit engines: CSG of -21.9% and Adjusted EBITA margin improvement of 100 bps Adjusted EBITA Adjusted Q2 20 CSG % vs LY (EURm) vs LY (bps) (EURm) EBITA % Digital Solutions -22.4% 75 +20 9.6% +80 Digital Products -21.1% 44 -1 9.3% +110 Total -21.9% 119 +19 9.5% +100 5
Slide 6: Digital Solutions Adjusted EBITA margin improved by 80 bps
Digital Solutions Adjusted EBITA margin improved by 80 bps, mainly driven by an increase in gross margin and indirect cost savings Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 20 1.7% -5.6% -1.5% • Nominal sales increase of 23.6% as a result of the -14.2% consolidation of
Slide 7: Digital Solutions highlights
Digital Solutions highlights Partnered with NYPA to Rated as global leader in First lighting company Launched NatureConnect, connect half a million smart street lighting by with connected lighting a lighting innovation streetlights Guidehouse Insights security certification inspired by Nature • NYPA
Slide 8: Digital Products Adjusted EBITA margin improved by 110 bps
Digital Products Adjusted EBITA margin improved by 110 bps, as a result of positive price/mix impact and improved cost structure in connected home Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 20 1.8% 0.1% 0.1% • Comparable sales declined by 21.1% • LED-based sales account
Slide 9: Digital Products highlights
Digital Products highlights Introduced new Philips Launched Philips Hue Launched the Launched Meson Hue bulbs, fixtures and product portfolio in MasterConnect SNS210 Interlaced Optics in our updated lights Russia sensor emerging markets • Includes new Philips Hue • Provides Russian • Provides simple
Slide 10: Conventional Products Adjusted EBITA margin remained robust at 17.5%
Conventional Products Adjusted EBITA margin remained robust at 17.5% Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 20 • Comparable sales decreased by 25.2% -18.3% -17.8% -20.3% • Conventional Products showed a relatively solid -25.5% performance partly as a result of stron
Slide 11: Invested in UV-C to meet growing demand for disinfection
Invested in UV-C to meet growing demand for disinfection • The leader in UV-C light sources; at the forefront of UV technology for > 35 years • Boston University validated effectiveness of our light sources on inactivating the virus that causes COVID-19 • Acquired GLA to complement portfolio with up
Slide 12: Cooper Lighting and Klite integrations are well on track
Cooper Lighting and Klite integrations are well on track Cooper Lighting Accelerated cost synergies in the first year Planned cost synergies of > USD 60m per year, to be achieved over 3 years, have been accelerated in 1st year: • Bill of Material savings remain ahead of plan • Sourcing Optimization
Slide 13: Content
Content Business and operational performance by Eric Rondolat Financial performance by René van Schooten H1 20 highlights and 2020 outlook by Eric Rondolat Q&A 13
Slide 14: Signify Adj. EBITA margin: improvement driven by pricing and ongoing cost reductions
Signify Adj. EBITA margin: improvement driven by pricing and ongoing cost reductions Adjusted EBITA (in EURm) as % of sales 9.0% 9.0% 133 (140) 45 133 86 (8) (28) 45 301 131 Q2 2019 Volume / Mix Price CoGS Indirect Costs Currency Scope/ Other Q2 2020 1Non-structural cost savings related to solidarit
Slide 15: Comparable indirect costs decreased by 19.1%
Comparable indirect costs decreased by 19.1%, adjusted for currencies and changes in scope 30.4% Key observations as % of sales +150 bps 31.9% • At a very early stage of the COVID-19 In EURm 468 outbreak, a broad range of mitigating actions 449 -86 67 to preserve profitability were identified Adj. R
Slide 16: WoCa decreased by 170 bps as % of sales
WoCa decreased by 170 bps as % of sales, mainly due to solid inventory management, lower receivables and higher payables Working capital1 (in EURm & as % of sales) Inventories (in EURm & as % of sales) 16.5% 9.4% 13.62% 13.3%3 14.3%3 6.0%2 6.1%3 6.3%3 588 388 470 452 1.030 874 1.019 1.032 -160 bps Q
Slide 17: Net debt decreased by EUR 104m, mainly as a result of strong FCF generation
Net debt decreased by EUR 104m, mainly as a result of strong FCF generation In EURm 1,810 -173 1,706 13 -3 53 -22 5 23 FCF: EUR +158m Net debt EBITDA Change in Net capex Change in Interest & Tax Other Other* Net debt end of Q1 20 working provisions FCF items end of Q2 20 Net leverage capital Net lev
Slide 18: Content
Content Business and operational performance by Eric Rondolat Financial performance by René van Schooten H1 20 highlights and 2020 outlook by Eric Rondolat Q&A 18
Slide 19: Strong progress made in H1 20 on cost reductions and FCF generation
Strong progress made in H1 20 on cost reductions and FCF generation Adjusted indirect costs Adjusted EBITA (in EURm and % of sales) (in EURm and % of sales) Free Cash Flow (in EURm) 270 EUR 40m delayed tax payments and 33.6%1 8.5% real estate proceeds 32.1% 8.4% 175 30.9% 7.7% 976 914 7741 235 247 2
Slide 20: Continuous commitment to Sustainability
Continuous commitment to Sustainability H1 2020 result Achievement 2020 target 83.1% Increasing energy Sustainable Sustainable revenues 80% revenues efficiency of portfolio LED lamps & 2.580 billion 129% of our commitment (cumulative from 2015) completed >2 billion luminaires delivered Gross 146 kt
Slide 21: Outlook
Outlook • Considering the persistent uncertainty about the future course of the pandemic, and the length and depth of the impact on the global economy, Signify still doesn’t provide financial guidance at this point in time • However, Signify is confident in the underlying resilience of its businesse
Slide 22: Q&A
Q&A 22
Slide 23: Currency movements negatively impacted sales and Adjusted EBITA
Currency movements negatively impacted sales and Adjusted EBITA Q2 20 Sales FX Footprint (% of total) Key observations • Negative FX effect on sales of -80 bps, largely driven Other EUR by CNY and emerging market currencies depreciation Currencies 23% 27% • Negative FX effect on Adjusted EBITA of EU
Slide 24: Net income increased to EUR 81m
Net income increased to EUR 81m, mainly as a result of lower restructuring costs & other incidentals, and one-time non-cash tax benefits From Adj. EBITA to net income (in EURm) Key observations Q2 19 Q2 20 Adj. EBITA 133 133 - Restructuring -14 -2 1 - Acquisition related charges -1 -15 1 Related to
Slide 25: Free Cash Flow of EUR 158m
Free Cash Flow of EUR 158m Free cash flow (in EURm) Key observations Q2 19 Q2 20 • Free cash flow increased by EUR 37m to EUR 158m, Income from operations 80 87 reflecting the consolidation of Cooper Lighting, lower Depreciation and amortization 67 86 cash tax paid, and proceeds from the sale of rea
Slide 26: Signify
Sianty