Slide 1: Q2 2019 results
PS (S)ignify Q2 2019 results July 26, 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 H1 19 highlights and 2019 outlook by Eric Rondolat Q&A 3
Slide 4: Second quarter sales of EUR 1.5bn and operational profitability of 9.0%
Second quarter sales of EUR 1.5bn and operational profitability of 9.0% Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 19 • CSG decreased by 6.1% due to: -3.4% -3.2% -3.3% • Lower level of market activity, most notably in Europe -6.1% -7.3% • Non-recurring country-specific
Slide 5: Growing profit engines: CSG of -2.3% and Adjusted EBITA margin improvement of 200 bps
Growing profit engines: CSG of -2.3% and Adjusted EBITA margin improvement of 200 bps Adjusted EBITA Adjusted Q2 19 CSG % vs LY (EURm) vs LY (bps) (EURm) EBITA % LED -1.8% 53 +6 12.0% +140 Professional -5.6% 55 +1 8.8% +40 Home 19.0% -8 +17 -7.8% +2,010 Total -2.3% 100 +24 8.5% +200 5
Slide 6: LED Adjusted EBITA margin improved by 140 bps
LED Adjusted EBITA margin improved by 140 bps, driven by ongoing procurement savings and lower indirect costs Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 19 • Comparable sales declined by 1.8% 0.0% -1.9% 0.2% -0.2% -1.8% • LED lamps delivered a solid performance • LED el
Slide 7: LED business highlights
LED business highlights Launched UniversalFit Launched flagship dual Launched FlexTune Launched best-in-class TLED in the Americas zone Ceiling in China system for tunable white drivers for linear applications in Europe • Leverages best • Showcases distinctive • Provides design • Combines latest dig
Slide 8: Professional Adjusted EBITA margin improved by 40 bps
Professional Adjusted EBITA margin improved by 40 bps, mainly driven by procurement and indirect cost savings Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 19 3.6% • CSG of -5.6%, due to a lower level of market activity in 0.4% -1.5% Europe, and the impact of non-recurring
Slide 9: Professional business highlights
Professional business highlights Launched Trulifi: the Launched BrightSites: Added new Philips Installed Philips SunStay world’s fastest enabling the smart city GreenPower LEDs to solar street lights in park commercial LiFi systems infrastructure horticulture portfolio in Seville • Provides highly r
Slide 10: Home – continued strong growth and improvement in profitability versus last year
Home – continued strong growth and improvement in profitability versus last year Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 19 24.4% 19.0% • CSG of 19%, on the back of strong performance in Europe driven by robust demand for connected offers -1.4% -2.6% -5.9% 176 89 110
Slide 11: Home business highlights
Home business highlights Launched Philips Hue Released ‘Zones’ as part Added Lutron to the Added Feller’s Smart Bluetooth, making smart of the updated Philips Friends of Hue program Light Control to the lighting more accessible Hue app Friends of Hue program • Enables direct light • Allows consumers
Slide 12: Cash engine – Lamps Adjusted EBITA margin remained solid at 19.5%
Cash engine – Lamps Adjusted EBITA margin remained solid at 19.5% Sales (in EURm) & comparable sales growth (in %) Key observations for Q2 19 -11.1% • Comparable sales decreased by 20.3% -16.4% -19.3% -17.9% • Continued market share gains -20.3% 351 361 345 309 286 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Adju
Slide 13: Acquisition of 51% stake in Klite further strengthens our strategic position in LED market
Acquisition of 51% stake in Klite further strengthens our strategic position in LED market Signify announced the acquisition of Klite: • We agreed to acquire a 51% stake in leading provider of high-quality and cost- efficient LED lamps and luminaires • Manufactures a wide range of LED lamps and lumi
Slide 14: Acquisition of ONCE & iLOX to capture growth potential in animal-centric lighting
Acquisition of ONCE & iLOX to capture attractive growth potential in animal- centric lighting Signify announced the acquisition of ONCE and iLOX: • Market leaders in design & manufacturing of animal-centric lighting systems • Animal-centric lighting reduces stress and improves feed conversion, resul
Slide 15: Successful integration of LiteMagic
Successful integration of LiteMagic Signify acquired LiteMagic on August 1, 2018 • Offers a broad portfolio of cost competitive façade luminaires and controls in China • Combines Signify’s global brand power, technology-driven product portfolio and global network with LiteMagic’s flexible product cu
Slide 16: 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 16
Slide 17: 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 8.4% +60 bps 9.0% 130 -33 37 6 -2 133 -59 53 Q2 18 Volume / Mix Price CoGS Indirect Costs Currency Other Q2 19 17
Slide 18: Adjusted currency comparable indirect costs decreased by 8%
Adjusted currency comparable indirect costs decreased by 8% Adjusted indirect costs Last twelve months adjusted indirect costs (in EURm and as % of sales) (in EURm and as % of sales) 31.1% -70 bps 30.4% 478 449 Adj. R&D 73 32.0% -37 9 31.5% 67 31.0% 2,259 2,193 29.8% 2,051 29.2% Adj. SG&A 405 1,897
Slide 19: WoCa decreased by 250bps as % of sales
WoCa decreased by 250bps as % of sales, reflecting continued focus on improving WoCa and includes phasing of payables & receivables Working capital1 (in EURm & as % of sales) Inventories (in EURm & as % of sales) 10.1% 15.2% 15.9% 9.3% 14.9% 8.4% 13.8% 8.0% 994 878 943 999 659 536 587 503 + 60 bps -
Slide 20: Net debt increased by EUR 76m, mainly due to dividend distribution
Net debt increased by EUR 76m, mainly due to dividend distribution, partly offset by strong free cash flow generation In EURm 865 789 30 164 -147 -56 8 26 24 27 FCF: EUR +121m Net debt EBITDA Change in Net capex Change in Interest & Tax Other Dividend Other* Net debt end of Q1 19 working provisions
Slide 21: 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 21
Slide 22: Growing profit engines improved profitability by 200 bps in H1 2019
Growing profit engines improved profitability by 200 bps in H1 2019, with each Business Group contributing CSG (%) Adj. EBITA margin (%) Adj. EBITA contribution (%) LED, Professional & Home LED, Professional & Home LED, Professional & Home 7.7% 7.6% 60% 6.5% 5.6% 46% 44% 2.0% -0.7% H1 17 H1 18 H1 19
Slide 23: Solid progress made in H1 19 on improving profitability and FCF generation
Solid progress made in H1 19 on improving profitability and FCF generation Adjusted indirect costs Adjusted EBITA Free Cash Flow (in EURm and % of sales) (in EURm and % of sales) (in EURm) 33.0% 175 32.1% 8.4% 8.4% 141** 30.9% 7.7% -37 1.119 976 914 286 235 247 -62* H1 17 H1 18 H1 19 H1 17 H1 18 H1
Slide 24: Project Horizon is the next phase on our Road to Excellence
Project Horizon is the next phase on our Road to Excellence, aimed at driving growth, profitability, cash and execution capabilities Key drivers Examples of Initiatives Expected impact • Address potential market white spaces and drive sales in key growth areas • Higher revenues • Improve sales perfo
Slide 25: 2019 Outlook confirmed
2019 Outlook confirmed • Our growing profit engines (LED, Professional and Home combined), are expected to deliver a CSG 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,
Slide 26: Q&A
Q&A 26
Slide 27: Currency movements positively impacted sales and Adjusted EBITA
Currency movements positively impacted sales and Adjusted EBITA Q2 19 Sales FX Footprint (% of total) Key observations • Positive FX effect on sales of +1.7%, largely driven by US dollar appreciation EUR • Positive FX effect on Adjusted EBITA of EUR 6m, and Other 29% Currencies +20 bps on the Adjust
Slide 28: Net income improved by EUR 21m to EUR 50m
Net income improved by EUR 21m to EUR 50m From Adjusted EBITA to net income (in EURm) Key observations Q2 18 Q2 19 Adjusted EBITA 130 133 - Restructuring -35 -14 - Acquisition related charges 0 -1 - Other incidental items -17 -13 EBITA 77 104 Amortization -23 -24 EBIT 54 80 Net financial income / ex
Slide 29: Free Cash Flow of EUR 121m
Free Cash Flow of EUR 121m Free cash flow (in EURm) Key observations Q2 18 Q2 19 • Free cash flow of EUR 121m versus EUR -31m last year, Income from operations 54 80 mainly driven by reduction in working capital which Depreciation and amortization 58 67 included the impact of phasing of payables and
Slide 30: More than 75% of total sales is LED-based
More than 75% of total sales is LED-based LED-based sales accounted for 76% of total sales in H1 19 LED-based sales of EUR 2.2bn in H1 19, CSG of +1.9% (in % of total sales) 76% LED Home 71% 9% 65% (CSG 28.7%) 55% BG LED 43% 40% 34% (CSG -1.0%) 26% LED Professional 51% 2013 2014 2015 2016 2017 2018
Slide 31: Sianty
Sianty