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Signify N.V.
Earnings Release • Jan 26, 2024
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Earnings Release
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Press Release
January 26, 2024
Signify reports full-year sales of EUR 6.7 billion, operational profitability of 10.0% and a free cash flow of 8.7% of sales
Full year 20231
- Signify's installed base of connected light points increased from 114 million at YE 22 to 124 million at YE 23
- On track for three Brighter Lives, Better World 2025 sustainability program commitments
- Sales of EUR 6,704 million; nominal sales decline of -10.8% and CSG of -8.3%
- LED-based sales represented 85% of total sales (FY 22: 83%)
- Adj. EBITA margin of 10.0% (FY 22: 10.1%)
- Net income of EUR 215 million (FY 22: EUR 532 million incl. one-time effects of EUR 184 million)
- Free cash flow of EUR 586 million (FY 22: EUR 445 million), representing 8.7% of sales
Fourth quarter 2023
- Sales of EUR 1,734 million; nominal sales decline of -12.3% and CSG of -7.7%
- Adj. EBITA margin of 12.1% (Q4 22: 10.2%)
- Net income of EUR 59 million (Q4 22: EUR 86 million)
- Free cash flow of EUR 295 million (Q4 22: EUR 364 million)
Dividend
• Proposal to increase its cash dividend to EUR 1.55 per share over 2023 (FY 22: EUR 1.50)
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company's fourth quarter and full-year 2023 results.
"In Q4, our gross margin was again strong, confirming our improving operational performance. This brought our adjusted EBITA margin into double digits for the full year. While we continued to face adverse market conditions in some geographies and in the consumer and OEM segments, we have gained share with our professional connected systems. We over-delivered against our free cash flow guidance, with close to EUR 600m in cash, representing 8.7% of sales. We are also proud to have surpassed the circular revenues sustainability target two years ahead of schedule. I would like to thank our employees and partners for their continued hard work and dedication to help us achieve these results," said Eric Rondolat, CEO of Signify.
"While we anticipate challenging conditions will persist through the year ahead, I am confident in our strategy and in our proven ability to adapt. In the past quarter, we introduced a new operating model and measures that will enhance our performance and deliver annualized savings in excess of EUR 200 million. We will continue to protect our gross margin and enhance our focus on costs. We have developed strategic advantages that will help us to gain share and improve profitability while generating a strong free cash flow in 2024."
Brighter Lives, Better World 2025
Signify completed the third year of its Brighter Lives, Better World 2025 sustainability program, making continued progress towards doubling its positive impact on the environment and society by the end of 2025. Signify is on track to deliver on three of its sustainability program commitments:
Double the pace of the Paris agreement
Signify is on track to reduce emissions across the entire value chain by 40% against the 2019 baseline - double the pace required by the Paris Agreement. This is driven by Signify's leadership in energy efficient and connected LED lighting solutions, which significantly reduce emissions during the use phase.
Double Circular revenues
Circular revenues increased to 33%, up 1% over the third quarter, surpassing the 2025 target of 32%. The main contribution was from serviceable luminaires, with a strong performance from both consumer and professional.
Double Brighter lives revenues
Brighter lives revenues remained at 31%, on track to reach the 2025 target of 32%. This includes a strong contribution from professional luminaires that support the well-being of wildlife.
Double the percentage of women in leadership
The percentage of women in leadership positions remained at 29%, slightly off track versus the 2023 target. Signify continues its actions to increase representation through focused hiring practices for diversity across all levels, and through retention and engagement actions to reduce attrition.
In the fourth quarter, Signify received several external recognitions for its leadership in Sustainability. Signify was included in the DJSI World Index for the 7th consecutive year, was included in the DJSI Europe Index for the 6th time, and achieved the EcoVadis Platinum rating for the 4th consecutive year.
Outlook
For 2024, Signify expects:
- An Adjusted EBITA margin improvement of up to 50 bps, including first benefits from the announced restructuring program
- Free cash flow generation of 6-7% of sales, including an incremental and non-recurring negative impact of around EUR 150 million related to the restructuring program and a reduction of US pension liabilities
Capital allocation
Signify proposes a cash dividend of EUR 1.55 per share for 2023, in line with its policy to pay an increasing annual cash dividend per share year on year. The dividend proposal is subject to approval at the Annual General Meeting of Shareholders (AGM) to be held on May 14, 2024. Further details will be provided in the agenda for the AGM.
In line with its aim to maintain a robust capital structure and an investment grade credit rating, Signify expects to further deleverage its gross debt and reduce its US pension liabilities in 2024.
Signify will continue to invest in organic and inorganic growth opportunities in line with its strategic priorities.
Financial review
| Fourth quarter | Twelve months | |||||
|---|---|---|---|---|---|---|
| 2022 | 2023 | change | in millions of EUR, except percentages | 2022 | 2023 | change |
| -7.7 % | Comparable sales growth | -8.3 % | ||||
| -4.9 % | Effects of currency movements | -3.3 % | ||||
| 0.2 % | Consolidation and other changes | 0.8 % | ||||
| 1,978 | 1,734 | -12.3 % | Sales | 7,514 | 6,704 | -10.8 % |
| 734 | 707 | -3.6 % | Adjusted gross margin | 2,806 | 2,660 | -5.2 % |
| 37.1 % | 40.8 % | Adj. gross margin (as % of sales) | 37.3 % | 39.7 % | ||
| -485 | -445 | Adj. SG&A expenses | -1,877 | -1,791 | ||
| -75 | -75 | Adj. R&D expenses | -294 | -284 | ||
| -560 | -520 | -7.2 % | Adj. indirect costs | -2,171 | -2,075 | -4.4 % |
| 28.3 % | 30.0 % | Adj. indirect costs (as % of sales) | 28.9 % | 31.0 % | ||
| 202 | 209 | 3.5 % | Adjusted EBITA | 762 | 670 | -12.0 % |
| 10.2 % | 12.1 % | Adjusted EBITA margin | 10.1 % | 10.0 % | ||
| -36 | -101 | Adjusted items | 82 | -221 | ||
| 166 | 108 | -34.7 % | EBITA | 844 | 449 | -46.8 % |
| 137 | 89 | -35.0 % | Income from operations (EBIT) | 718 | 369 | -48.6 % |
| -29 | -18 | Net financial income/expense | -41 | -102 | ||
| -22 | -12 | Income tax expense | -145 | -53 | ||
| 86 | 59 | -31.5 % | Net income | 532 | 215 | -59.6 % |
| 364 | 295 | Free cash flow | 445 | 586 | ||
| 0.67 | 0.44 | Basic EPS (€) | 4.18 | 1.61 | ||
| 34,619 | 31,920 | Employees (FTE) | 34,619 | 31,920 |
Full year
Nominal sales decreased by 10.8% to EUR 6,704 million, including a negative currency effect of 3.3%, mainly due to the depreciation of the USD and CNY, and a positive effect of 0.8% from the consolidation of Fluence, Pierlite and Intelligent Lighting Controls. Comparable sales declined by 8.3%, mainly due to weakness in consumer, OEM and indoor professional lighting. Outdoor professional lighting remained resilient throughout the year.
The Adjusted gross margin improved by 240 bps to 39.7%, mainly due to effective COGS management and positive sales mix. Adjusted indirect costs as a percentage of sales increased by 210 bps to 31.0%, mainly due to an under-absorption of fixed costs.
Adjusted EBITA was EUR 670 million. The Adjusted EBITA margin was 10.0%, broadly in line with 2022, as the gross margin improvement was offset by an under-absorption of fixed costs.
Restructuring costs were EUR 167 million, acquisition-related charges were EUR 14 million and incidental items had a net negative impact of EUR 40 million.
Net income decreased to EUR 215 million, mainly due to lower Adjusted EBITA, higher adjusted items and financial expenses, partly offset by lower income tax expense. Net income in 2022 included a one-time gain on the disposal of non-strategic real estate assets of EUR 184 million.
Fourth quarter
Nominal sales decreased by 12.3% to EUR 1,734 million, including a negative currency effect of 4.9%, mainly due to the depreciation of the US dollar, and a positive effect of 0.2% from acquisitions. Comparable sales declined by 7.7%, due to persistent weakness in most of Signify's end markets.
The Adjusted gross margin increased by 370 bps to 40.8%, mainly driven by effective COGS management and a positive sales mix effect. Adjusted indirect costs as a percentage of sales increased by 170 bps to 30.0%, mainly due to under-absorption of fixed costs.
Adjusted EBITA increased to EUR 209 million. The Adjusted EBITA margin increased by 190 bps to 12.1%, mainly driven by the continued recovery of gross margin.
Restructuring costs were EUR 83 million, reflecting an increase in provisions related to the recently announced structural cost reduction program. In addition, acquisition-related charges were EUR 5 million and incidental items had a net negative impact of EUR 13 million. The incidental items were largely related to a one-day FX loss from the devaluation of the Argentine peso by the Argentinian government.
Net income decreased to EUR 59 million, as higher adjusted EBITA, lower financial expenses and lower income tax expense were offset by the increase in restructuring costs.
The number of employees (FTE) decreased from 34,619 at the end of Q4 22 to 31,920 at the end of Q4 23. The year-on-year decrease is mostly related to a reduction of factory personnel due to lower production volumes. In general, the number of FTEs is affected by fluctuations in volume and seasonality.
Digital Solutions
| Fourth quarter | Twelve months | |||||
|---|---|---|---|---|---|---|
| 2022 | 2023 | change | in millions of EUR, unless otherwise indicated | 2022 | 2023 | change |
| -2.9 % | Comparable sales growth | -5.4 % | ||||
| 1,105 | 1,022 | -7.5 % | Sales | 4,231 | 3,937 | -6.9 % |
| 107 | 127 | 18.2 % | Adjusted EBITA | 424 | 422 | -0.5 % |
| 9.7 % | 12.4 % | Adjusted EBITA margin | 10.0 % | 10.7 % | ||
| 98 | 97 | -0.4 % | EBITA | 374 | 358 | -4.2 % |
| 70 | 79 | 13.3 % | Income from operations (EBIT) | 256 | 285 | 11.2 % |
Includes Intelligent Lighting Controls since March 1, 2023, Pierlite since April 29, 2022 and Fluence since May 2, 2022.
Full year
Nominal sales decreased by 6.9% to EUR 3,937 million, including a negative currency effect of 3.1% and a positive effect of 1.5% from the consolidation of Fluence, Pierlite and Intelligent Lighting Controls. Comparable sales decreased by 5.4%, against a high base of comparison of 7.8% growth in 2022. The Adjusted EBITA margin increased by 70 bps to 10.7%, mainly driven by gross margin recovery.
Fourth quarter
Nominal sales decreased by 7.5% to EUR 1,022 million, including a negative currency effect of 5.1% and a positive effect of 0.4% from the consolidation of Intelligent Lighting Controls. Comparable sales decreased by 2.9%, as continued strength in professional systems and services was more than offset by softness in indoor professional and horticulture lighting. The Adjusted EBITA margin increased by 270 bps to 12.4%, mainly driven by gross margin recovery.
Digital Products
| Fourth quarter | Twelve months | ||||||
|---|---|---|---|---|---|---|---|
| 2022 | 2023 | change | in millions of EUR, unless otherwise indicated | 2022 | 2023 | change | |
| -9.4 % | Comparable sales growth | -10.5 % | |||||
| 661 | 566 | -14.3 % | Sales | 2,469 | 2,117 | -14.2 % | |
| 93 | 75 | -19.1 % | Adjusted EBITA | 297 | 205 | -30.9 % | |
| 14.1 % | 13.3 % | Adjusted EBITA margin | 12.0 % | 9.7 % | |||
| 80 | 58 | -27.8 % | EBITA | 272 | 176 | -35.4 % | |
| 78 | 56 | -28.3 % | Income from operations (EBIT) | 265 | 170 | -35.9 % |
Full year
Nominal sales decreased by 14.2% to EUR 2,117 million, including a negative currency effect of 3.8%. Comparable sales decreased by 10.5% as growth in LED lamps and luminaires was more than offset by weakness in the consumer connected and OEM businesses. The Adjusted EBITA margin decreased by 230 bps to 9.7%, mainly due to an under-absorption of fixed costs.
Fourth quarter
Nominal sales decreased by 14.3% to EUR 566 million, including a negative currency effect of 4.9%. Comparable sales declined by 9.4% due to continued weakness in consumer and OEM, while consumer connected improved sequentially. The Adjusted EBITA margin decreased by 80 bps to 13.3%, mainly as a result of under-absorption of fixed costs, partly offset by a positive sales mix effect.
| Fourth quarter | Twelve months | |||||
|---|---|---|---|---|---|---|
| 2022 | 2023 | change | in millions of EUR, unless otherwise indicated | 2022 | 2023 | change |
| -29.6 % | Comparable sales growth | -18.4 % | ||||
| 203 | 136 | -33.0 % | Sales | 793 | 627 | -20.9 % |
| 26 | 23 | -9.9 % | Adjusted EBITA | 116 | 129 | 11.2 % |
| 12.9 % | 17.3 % | Adjusted EBITA margin | 14.6 % | 20.6 % | ||
| 4 21 |
373.9 % | EBITA | 60 | 62 | 2.7 % | |
| 4 21 |
374.2 % | Income from operations (EBIT) | 60 | 62 | 2.8 % |
Conventional Products
Full year
Nominal sales decreased by 20.9% to EUR 627 million, including a negative currency effect of 2.5%. Comparable sales decreased by 18.4%. The Adjusted EBITA margin increased by 600 bps to 20.6%, driven by gross margin recovery and cost discipline.
Fourth quarter
Nominal sales decreased by 33.0% to EUR 136 million, including a negative currency effect of 3.4%. Comparable sales decreased by 29.6% as the structural decline of the business was exacerbated by the fluorescent bans in Europe, which came into effect in February and August. The Adjusted EBITA margin increased by 440 bps to 17.3%, mainly driven by gross margin recovery.
Other
Full year
'Other' represents amounts not allocated to the operating segments and includes costs related both to central R&D activities to drive innovation, and to Group enabling functions. Adjusted EBITA was EUR -86 million (2022: EUR -75 million) and EBITA was EUR -147 million (2022: EUR 138 million). In 2023, EBITA included restructuring costs of EUR 59 million, and a negative impact from incidental items and acquisition-related charges of EUR 1 million. In 2022, EBITA included a one-time gain of EUR 184 million related to the disposal of non-strategic real estate assets in Q2 22.
Fourth quarter
Adjusted EBITA was EUR -17 million (Q4 22: EUR -25 million) and EBITA was EUR -67 million (Q4 22: EUR -16 million). EBITA included a negative impact from restructuring costs and acquisition-related charges of EUR 50 million.
Sales by market
| Fourth quarter | Twelve months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2023 | change | CSG in millions of EUR, except percentages | 2022 | 2023 | change | CSG | ||
| 625 | 570 | -8.8 % | -8.2 % | Europe | 2,230 | 2,023 | -9.3 % | -8.7 % | |
| 756 | 654 | -13.4 % | -7.3 % | Americas | 2,978 | 2,633 | -11.6 % | -8.9 % | |
| 438 | 382 | -12.9 % | -4.7 % | Rest of the world | 1,709 | 1,522 | -11.0 % | -4.7 % | |
| 159 | 128 | -19.5 % | -16.3 % | Global businesses | 597 | 526 | -11.8 % | -14.4 % | |
| 1,978 | 1,734 | -12.3 % | -7.7 % | Total | 7,514 | 6,704 | -10.8 % | -8.3 % |
Americas includes Intelligent Lighting Controls since March 1, 2023. Global businesses include Fluence since May 2, 2022. Rest of the world includes Pierlite since April 29, 2022.
Full year
In 2023, most markets were impacted by softness in the consumer segment, the OEM business and indoor professional lighting. Outdoor professional lighting showed resilience. In Europe, comparable sales declined by 8.7%, as most markets declined. In the Americas, comparable sales declined by 8.9%, mainly due to the United States, partly offset by strong growth in Latin America. In the Rest of the World, comparable sales declined by 4.7%, due to weakness across most markets. Global businesses' comparable sales declined by 14.4%, mainly due to Klite and Fluence.
Fourth quarter
In Europe, comparable sales declined by 8.2%, due to softness in most markets. In the Americas, comparable sales declined by 7.3%, as solid growth in Latin America and Canada was not able to offset weakness in the United States. In the Rest of the World, comparable sales declined by 4.7%, due to persistent weakness in most markets. Global businesses' comparable sales declined by 16.3%, mainly due to Fluence.
Working capital
| in millions of EUR, unless otherwise indicated | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 |
|---|---|---|---|
| Inventories | 1,361 | 1,247 | 1,050 |
| Trade and other receivables | 1,102 | 1,093 | 1,012 |
| Trade and other payables | -1,859 | -1,672 | -1,539 |
| Other working capital items | -41 | -35 | -62 |
| Working capital | 564 | 632 | 461 |
| As % of LTM* sales | 7.5 % | 9.1 % | 6.9 % |
* LTM: last twelve months
6,614 6,336 6,275
Fourth quarter
Compared to September 2023, working capital decreased by EUR 171 million to EUR 461 million, mainly driven by a further reduction of inventories, lower receivables and other working capital items, partly offset by lower payables. As a percentage of last twelve-month sales, working capital decreased by 220 bps to 6.9%.
Compared to December 2022, working capital decreased by EUR 103 million, mainly due to lower inventories, lower receivables and other working capital items, partly offset by lower payables. As a percentage of last twelve-month sales, working capital decreased by 60 bps. Including last twelve-month sales pro forma for Fluence and Pierlite, working capital decreased by 50 bps.
| Fourth quarter | Twelve months | |||
|---|---|---|---|---|
| 2022 | 2023 | in millions of EUR | 2022 | 2023 |
| 137 | 89 | Income from operations (EBIT) | 718 | 369 |
| 86 | 69 | Depreciation and amortization | 318 | 274 |
| 41 | 107 | Additions to (releases of) provisions | 120 | 266 |
| -56 | -46 | Utilizations of provisions | -199 | -192 |
| 247 | 121 | Changes in working capital | -248 | 87 |
| -5 | -1 | Net interest and financing costs received (paid) | -39 | -41 |
| -36 | -23 | Income taxes paid | -99 | -81 |
| -36 | -28 | Net capex | 69 | -110 |
| -14 | 8 | Other | -197 | 15 |
| 364 | 295 | Free cash flow | 445 | 586 |
Cash flow analysis
The gain related to the disposal of non-strategic real estate assets, included in EBIT, is eliminated in Other. Total cash proceeds from the disposal of these assets are included in Net capex.
Full year
Free cash flow increased to EUR 586 million, mainly driven by lower inventories, which benefited from shorter lead times, and lower receivables. Last year's free cash flow benefited from cash proceeds from the disposal of non-strategic real estate assets. Free cash flow included a restructuring payout of EUR 69 million (2022: EUR 54 million).
| Twelve months | |||
|---|---|---|---|
| In millions of EUR | 2022 | 2023 | |
| Digital Solutions | 321 | 458 | |
| Digital Products | 170 | 291 | |
| Conventional Products | 56 | 99 | |
| Other* | -101 | -263 | |
| Signify free cash flow | 445 | 586 |
* Non-allocated free cash flow items (e.g. tax, interest and central functions).
In 2023, Digital Solutions and Digital Products continued to generate the majority of Signify's free cash flow, contributing 88% of Signify's free cash flow excluding 'Other' (2022: 90%). In 2022, 'Other' free cash flow included the Q2 22 proceeds from the disposal of non-strategic real estate assets.
Fourth quarter
Free cash flow decreased to EUR 295 million, mainly due to a lower inflow from working capital, as Q4 last year benefited from a stronger reduction of inventories. Free cash flow included a restructuring payout of EUR 16 million (Q4 22: 11 million).
Net debt and total equity
| in millions of EUR | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 |
|---|---|---|---|
| Short-term debt | 83 | 759 | 1,038 |
| Long-term debt | 1,950 | 1,270 | 1,192 |
| Gross debt | 2,033 | 2,029 | 2,230 |
| Cash and cash equivalents | 677 | 689 | 1,158 |
| Net debt | 1,356 | 1,340 | 1,071 |
| Total equity | 3,065 | 3,084 | 2,947 |
Fourth quarter
Compared with the end of September 2023, the cash position increased by EUR 469 million to EUR 1,158 million, mainly driven by free cash flow generation and financial proceeds from debt issuance. In Q4, Signify issued longterm debt to refinance part of the debt that will mature in 2024. As a result, gross debt increased by EUR 201 million to EUR 2,230 million. As a result of the higher cash position, net debt reduced to EUR 1,071 million. Total equity decreased to EUR 2,947 million (Q3 23: EUR 3,084 million), primarily due to currency translation results.
Compared with the end of December 2022, the cash position increased by EUR 481 million, while gross debt increased by EUR 197 million. As a result, net debt decreased by EUR 285 million. At the end of December 2023, the net debt/EBITDA ratio was 1.7x (Q4 22: 1.3x).
Other information
Appendix A – Selection of financial statements Appendix B – Reconciliation of non-IFRS financial measures Appendix C – Financial Glossary
Conference call and audio webcast
Eric Rondolat (CEO) and Javier van Engelen (CFO) will host a conference call for analysts and institutional investors at 9:00 a.m. CET to discuss the fourth quarter and full-year 2023 results. A live audio webcast of the conference call will be available via the Investor Relations website.
Financial calendar
| Annual Report 2023 |
|---|
| First quarter results 2024 |
| Annual General Meeting |
| Ex-dividend date |
| Dividend record date |
| Dividend payment date |
| Second quarter and half-year results 2024 |
| Third quarter results 2024 |
For further information, please contact:
Signify Investor Relations Thelke Gerdes Tel: +31 6 1801 7131 E-mail: [email protected]
Signify Corporate Communications
Tom Lodge Tel: +31 6 5252 5416 E-mail: [email protected]
About Signify
Signify (Euronext: LIGHT) is the world leader in lighting for professionals, consumers and the Internet of Things. Our Philips products, Interact systems and data-enabled services, deliver business value and transform life in homes, buildings and public spaces. In 2023, we had sales of EUR 6.7 billion, approximately 32,000 employees and a presence in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We have been in the Dow Jones Sustainability World Index since our IPO for seven consecutive years and have achieved the EcoVadis Platinum rating for four consecutive years, placing Signify in the top one percent of companies assessed. News from Signify can be found in the Newsroom, on X, LinkedIn and Instagram. Information for investors is located on the Investor Relations page.
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 projections of Signify N.V. (the "Company", and together with its subsidiaries, the "Group"), including statements regarding strategy, estimates of sales growth and future operational results.
By their nature, these statements involve risks and uncertainties facing the Company and its Group companies, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are not limited to: adverse economic and political developments, in particular the impacts of the Russia-Ukraine conflict, the conflict in the Middle East, the energy crisis in Europe, the expected recovery trajectory of China post COVID, component shortages, cost inflation, rapid technological change, competition in the general lighting market, development of lighting systems and services, successful implementation of business transformation programs, impact of acquisitions and other transactions, reputational and adverse effects on business due to activities in Environment, Health & Safety, compliance risks, ability to attract and retain talented personnel, adverse currency effects, pension liabilities, and exposure to international tax laws.
Additional risks currently not known to the Group or that the Group has not considered material as of the date of this document could also prove to be important and may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group or could cause the forward-looking events discussed in this document not to occur. The Group undertakes no duty to and will not necessarily update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law.
Market and Industry Information
All references to market share, market data, industry statistics and industry forecasts in this document consist of estimates compiled by industry professionals, competitors, organizations or analysts, of publicly available information or of the Group's own assessment of its sales and markets. Rankings are based on sales unless otherwise stated.
Non-IFRS Financial Measures
Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth, adjusted gross margin, EBITA, adjusted EBITA, free cash flow, and other related ratios, which are not recognized measures of financial performance or liquidity under IFRS. The non-IFRS financial measures presented are measures used by management to monitor the underlying performance of the Group's business and operations and, accordingly, they have not been audited nor reviewed. Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures and ratios may not be comparable to measures used by other companies under the same or similar names. A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures is contained in this document. For further information on non-IFRS financial measures, see "Chapter 18 Reconciliation of non-IFRS measures" in the Annual Report 2022.
Presentation
All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to totals provided. All reported data are unaudited. Unless otherwise indicated, financial information has been prepared in accordance with the accounting policies as stated in the Annual Report 2022 and the Semi-Annual Report 2023.
Market Abuse Regulation
This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
Appendix A – Financial statement information
A. Condensed consolidated statement of income
In millions of EUR unless otherwise stated
| Fourth quarter | January to December | |||
|---|---|---|---|---|
| 2022 | 2023 | 2022 | 2023 | |
| Sales | 1,978 | 1,734 | 7,514 | 6,704 |
| Cost of sales | (1,271) | (1,048) | (4,781) | (4,146) |
| Gross margin | 707 | 686 | 2,732 | 2,558 |
| Selling, general and administrative expenses | (501) | (503) | (1,927) | (1,882) |
| Research and development expenses | (76) | (93) | (295) | (308) |
| Impairment of goodwill | – | – | – | – |
| Other business income | 12 | 3 | 227 | 24 |
| Other business expenses | (5) | (4) | (19) | (23) |
| Income from operations | 137 | 89 | 718 | 369 |
| Financial income | 6 | 14 | 47 | 32 |
| Financial expenses | (34) | (32) | (88) | (134) |
| Results relating to investments in associates | – | – | – | – |
| Income before taxes | 108 | 71 | 678 | 268 |
| Income tax expense | (22) | (12) | (145) | (53) |
| Net income | 86 | 59 | 532 | 215 |
| Attribution of net income for the period: | ||||
| Net income (loss) attributable to shareholders of Signify N.V. | 84 | 56 | 523 | 203 |
| Net income (loss) attributable to non-controlling interests | 2 | 3 | 9 | 12 |
| Earnings per ordinary share attributable to shareholders | ||||
| Weighted average number of ordinary shares outstanding | ||||
| used for calculation (in thousands): | ||||
| Basic | 125,233 | 126,313 | 125,004 | 125,951 |
| Diluted | 127,221 | 127,262 | 127,597 | 127,338 |
| Net income attributable to shareholders per ordinary share | ||||
| in EUR: | ||||
| Basic | 0.67 | 0.44 | 4.18 | 1.61 |
| Diluted | 0.66 | 0.44 | 4.10 | 1.59 |
B. Condensed consolidated statement of comprehensive income
In millions of EUR
| Fourth quarter | January to December | |||
|---|---|---|---|---|
| 2022 | 2023 | 2022 | 2023 | |
| Net income (loss) | 86 | 59 | 532 | 215 |
| Pensions and other post-employment plans: | ||||
| Remeasurements | 21 | (13) | 15 | (14) |
| Income tax effect on remeasurements | (5) | 2 | (5) | 2 |
| Total of items that will not be reclassified to profit or loss | 16 | (11) | 11 | (12) |
| Currency translation differences: | ||||
| Net current period change, before tax | (381) | (181) | 159 | (143) |
| Income tax effect | – | – | – | – |
| Net investment hedge | ||||
| Net current period change, before tax | – | 2 | (10) | (3) |
| Income tax effect | – | 1 | – | 1 |
| Cash flow hedges: | ||||
| Net current period change, before tax | 42 | 4 | (24) | 25 |
| Income tax effect | (10) | (1) | 6 | (6) |
| Total of items that are or may be reclassified to profit or loss | (349) | (176) | 132 | (126) |
| Other comprehensive income (loss) | (333) | (187) | 143 | (138) |
| Total comprehensive income (loss) | (247) | (128) | 675 | 77 |
| Total comprehensive income (loss) attributable to: | ||||
| Shareholders of Signify N.V. | (238) | (125) | 663 | 71 |
| Non-controlling interests | (10) | (2) | 12 | 6 |
C. Condensed consolidated statement of financial position
In millions of EUR
| 2022 | 2023 | |
|---|---|---|
| Non-current assets | ||
| Property, plant and equipment | 699 | 633 |
| Goodwill | 2,861 | 2,755 |
| Intangible assets, other than goodwill | 700 | 641 |
| Investments in associates | 12 | 12 |
| Financial assets | 165 | 91 |
| Deferred tax assets | 418 | 402 |
| Other assets | 40 | 32 |
| Total non-current assets | 4,895 | 4,566 |
| Current assets | ||
| Inventories | 1,361 | 1,050 |
| Financial assets | – | 2 |
| Other assets | 161 | 147 |
| Derivative financial assets | 34 | 14 |
| Income tax receivable | 56 | 54 |
| Trade and other receivables | 1,102 | 1,012 |
| Cash and cash equivalents | 677 | 1,158 |
| Assets classified as held for sale | 1 | – |
| Total current assets | 3,391 | 3,438 |
| Total assets | 8,286 | 8,004 |
| Equity | ||
| Shareholders' equity | 2,920 | 2,817 |
| Non-controlling interests | 145 | 129 |
| Total equity | 3,065 | 2,947 |
| Non-current liabilities | ||
| Debt | 1,950 | 1,192 |
| Post-employment benefits | 327 | 322 |
| Provisions | 283 | 263 |
| Deferred tax liabilities | 25 | 20 |
| Income tax payable | 111 | 79 |
| Other liabilities | 160 | 154 |
| Total non-current liabilities | 2,855 | 2,030 |
| Current liabilities | ||
| Debt, including bank overdrafts | 83 | 1,038 |
| Derivative financial liabilities | 42 | 17 |
| Income tax payable | 21 | 20 |
| Trade and other payables | 1,859 | 1,539 |
| Provisions | 168 | 206 |
| Other liabilities | 194 | 206 |
| Liabilities from assets classified as held for sale | – | – |
| Total current liabilities | 2,367 | 3,027 |
| Total liabilities and total equity | 8,286 | 8,004 |
D. Condensed consolidated statement of cash flows
In millions of EUR
| January to | |||||
|---|---|---|---|---|---|
| Fourth quarter | December | ||||
| 2022 | 2023 | 2022 | 2023 | ||
| Cash flows from operating activities | |||||
| Net income (loss) | 86 | 59 | 532 | 215 | |
| Adjustments to reconcile net income (loss) to net cash provided by | |||||
| operating activities: | 175 | 209 | 451 | 705 | |
| • Depreciation, amortization and impairment of non-financial | |||||
| assets | 86 | 69 | 318 | 274 | |
| • Impairment (reversal) of goodwill, other non-current financial | |||||
| assets and investments in associates | – | – | – | – | |
| • Result on sale of assets | (2) | (1) | (182) | 6 | |
| • Net interest expense on debt, borrowings and other liabilities | 12 | 10 | 41 | 43 | |
| • Income tax expense | 22 | 12 | 145 | 53 | |
| • Additions to (releases of) provisions | 43 | 101 | 110 | 243 | |
| • Additions to (releases of) post-employment benefits | (2) | 6 | 10 | 23 | |
| • Other items | 15 | 14 | 9 | 64 | |
| Changes in working capital: | 247 | 121 | (248) | 87 | |
| • Changes in trade and other receivables | 101 | 52 | 130 | 50 | |
| • Changes in inventories | 224 | 157 | 126 | 267 | |
| • Changes in trade and other payables | (90) | (110) | (555) | (272) | |
| • Changes in other current assets and liabilities | 11 | 22 | 52 | 42 | |
| Changes in other non-current assets and liabilities | (11) | 3 | (24) | 3 | |
| Utilizations of provisions | (41) | (38) | (157) | (153) | |
| Utilizations of post-employment benefits | (15) | (8) | (41) | (38) | |
| Net interest and financing costs received (paid) | (5) | (1) | (39) | (41) | |
| Income taxes paid | (36) | (23) | (99) | (81) | |
| Net cash provided by (used for) operating activities | 400 | 323 | 376 | 696 | |
| Cash flows from investing activities | |||||
| Net capital expenditures: | (36) | (28) | 69 | (110) | |
| • Additions of intangible assets | (21) | (19) | (62) | (67) | |
| • Capital expenditures on property, plant and equipment | (19) | (11) | (70) | (51) | |
| • Proceeds from disposal of property, plant and equipment | 4 | 2 | 201 | 8 | |
| Net proceeds from (cash used for) derivatives and other financial | |||||
| assets | (7) | (2) | (29) | 7 | |
| Purchases of businesses, net of cash acquired | – | 3 | (297) | (13) | |
| Proceeds from sale of businesses, net of cash disposed of | – | – | – | – | |
| Net cash provided by (used for) investing activities | (43) | (26) | (256) | (115) | |
| Cash flows from financing activities | |||||
| Dividend paid | – | (12) | (188) | (210) | |
| Proceeds from issuance of debt | 1 | 222 | 217 | 233 | |
| Repayment of debt | (104) | (18) | (276) | (83) | |
| Purchase of treasury shares | – | – | (48) | (7) | |
| Net cash provided by (used for) financing activities | (103) | 192 | (295) | (67) | |
| Net cash flows | 254 | 488 | (175) | 514 | |
| Effect of changes in exchange rates on cash and cash equivalents | |||||
| and bank overdrafts | (46) | (18) | 3 | (31) | |
| Cash and cash equivalents and bank overdrafts at the beginning of | |||||
| the period 1 | 467 | 688 | 847 | 676 | |
| Cash and cash equivalents and bank overdrafts at the end of the | |||||
| period 2 | 676 | 1,158 | 676 | 1,158 |
1 For Q4 2023 and Q4 2022, included bank overdrafts of EUR 1 million and EUR 2 million, respectively. For January to December of 2023 and 2022, included bank overdrafts of EUR 1 million and EUR 4 million, respectively.
2 Included bank overdrafts of EUR 0 million and EUR 1 million as at December 31, 2023 and 2022, respectively.
Appendix B - Reconciliation of non-IFRS financial measures
Sales growth composition per business in %
| Fourth quarter | ||||
|---|---|---|---|---|
| Comparable growth |
Currency effects |
Consolidation and other changes |
Nominal growth |
|
| 2023 vs 2022 | ||||
| Digital Solutions | (2.9) | (5.1) | 0.4 | (7.5) |
| Digital Products | (9.4) | (4.9) | – | (14.3) |
| Conventional Products | (29.6) | (3.4) | – | (33.0) |
| Signify | (7.7) | (4.9) | 0.2 | (12.3) |
| January to December | ||||
|---|---|---|---|---|
| Comparable growth |
Currency effects |
Consolidation and other changes |
Nominal growth |
|
| 2023 vs 2022 | ||||
| Digital Solutions | (5.4) | (3.1) | 1.5 | (6.9) |
| Digital Products | (10.5) | (3.8) | – | (14.2) |
| Conventional Products | (18.4) | (2.5) | – | (20.9) |
| Signify | (8.3) | (3.3) | 0.8 | (10.8) |
Sales growth composition per market in %
| Fourth quarter | ||||
|---|---|---|---|---|
| Comparable growth |
Currency effects |
Consolidation and other changes |
Nominal growth |
|
| 2023 vs 2022 | ||||
| Europe | (8.2) | (0.6) | – | (8.8) |
| Americas | (7.3) | (6.7) | 0.6 | (13.4) |
| Rest of the world | (4.7) | (8.1) | – | (12.9) |
| Global businesses | (16.3) | (3.2) | – | (19.5) |
| Signify | (7.7) | (4.9) | 0.2 | (12.3) |
| January to December | ||||
|---|---|---|---|---|
| Comparable growth |
Currency effects |
Consolidation and other changes |
Nominal growth |
|
| 2023 vs 2022 | ||||
| Europe | (8.7) | (0.6) | – | (9.3) |
| Americas | (8.9) | (3.2) | 0.5 | (11.6) |
| Rest of the world | (4.7) | (7.6) | 1.3 | (11.0) |
| Global businesses | (14.4) | (1.5) | 4.1 | (11.8) |
| Signify | (8.3) | (3.3) | 0.8 | (10.8) |
| Adjusted EBITA to Income from operations (or EBIT) in millions of EUR | |||||
|---|---|---|---|---|---|
| -- | -- | -- | -- | ----------------------------------------------------------------------- | -- |
| Signify | Digital Solutions |
Digital Products |
Conventional Products |
Other | |
|---|---|---|---|---|---|
| Fourth quarter 2023 | |||||
| Adjusted EBITA | 209 | 127 | 75 | 23 | (17) |
| Restructuring | (83) | (16) | (14) | (2) | (51) |
| Acquisition-related charges | (5) | (5) | – | – | 1 |
| Incidental items | (13) | (8) | (4) | (1) | – |
| EBITA | 108 | 97 | 58 | 21 | (67) |
| Amortization 1 | (20) | (18) | (2) | – | – |
| Income from operations (or EBIT) | 89 | 79 | 56 | 21 | (67) |
| Fourth quarter 2022 | |||||
| Adjusted EBITA | 202 | 107 | 93 | 26 | (25) |
| Restructuring | (47) | (10) | (10) | (25) | (2) |
| Acquisition-related charges | (4) | (4) | – | – | – |
| Incidental items | 15 | 5 | (3) | 4 | 10 |
| EBITA | 166 | 98 | 80 | 4 | (16) |
| Amortization 1 | (29) | (28) | (2) | – | – |
| Income from operations (or EBIT) | 137 | 70 | 78 | 4 | (16) |
1 Amortization and impairments of acquisition related intangible assets and goodwill.
| Digital | Digital | Conventional | |||
|---|---|---|---|---|---|
| Signify | Solutions | Products | Products | Other | |
| January to December 2023 | |||||
| Adjusted EBITA | 670 | 422 | 205 | 129 | (86) |
| Restructuring | (167) | (32) | (25) | (51) | (59) |
| Acquisition-related charges | (14) | (15) | – | – | 1 |
| Incidental items | (40) | (17) | (4) | (16) | (2) |
| EBITA | 449 | 358 | 176 | 62 | (147) |
| Amortization 1 | (80) | (74) | (6) | – | (1) |
| Income from operations (or EBIT) | 369 | 285 | 170 | 62 | (147) |
| January to December 2022 | |||||
| Adjusted EBITA | 762 | 424 | 297 | 116 | (75) |
| Restructuring | (64) | (15) | (11) | (34) | (4) |
| Acquisition-related charges | (27) | (27) | – | – | – |
| Incidental items | 173 | (8) | (14) | (22) | 217 |
| EBITA | 844 | 374 | 272 | 60 | 138 |
| Amortization 1 | (126) | (118) | (7) | – | (1) |
| Income from operations (or EBIT) | 718 | 256 | 265 | 60 | 137 |
1 Amortization and impairments of acquisition related intangible assets and goodwill.
| Acquisition | ||||||
|---|---|---|---|---|---|---|
| Restruc | related | Incidental | ||||
| Reported | turing 2 | charges | items 1 | Adjusted | ||
| Fourth quarter 2023 | ||||||
| Sales | 1,734 | – | – | – | 1,734 | |
| Cost of sales | (1,048) | 9 | 1 | 12 | (1,026) | |
| Gross margin | 686 | 9 | 1 | 12 | 707 | |
| Selling, general and administrative expenses | (503) | 57 | 3 | (1) | (445) | |
| Research and development expenses | (93) | 18 | – | – | (75) | |
| Indirect costs | (596) | 74 | 3 | (1) | (520) | |
| Impairment of goodwill | – | – | – | – | – | |
| Other business income | 3 | – | – | – | 3 | |
| Other business expenses | (4) | – | 1 | 2 | (2) | |
| Income from operations | 89 | 83 | 5 | 13 | 189 | |
| Amortization | (20) | – | – | – | (20) | |
| Income from operations excluding | ||||||
| amortization (EBITA) | 108 | 83 | 5 | 13 | 209 | |
| Fourth quarter 2022 | ||||||
| Sales | 1,978 | – | – | – | 1,978 | |
| Cost of sales | (1,271) | 29 | (2) | – | (1,244) | |
| Gross margin | 707 | 29 | (2) | – | 734 | |
| Selling, general and administrative expenses | (501) | 17 | 4 | (5) | (485) | |
| Research and development expenses | (76) | 1 | – | – | (75) | |
| Indirect costs | (577) | 18 | 4 | (5) | (560) | |
| Impairment of goodwill | – | – | – | – | – | |
| Other business income | 12 | – | (10) | 2 | ||
| Other business expenses | (5) | – | 2 | – | (3) | |
| Income from operations | 137 | 47 | 4 | (15) | 172 | |
| Amortization | (29) | – | – | – | (29) | |
| Income from operations excluding | ||||||
| amortization (EBITA) 1 |
166 | 47 | 4 | (15) | 202 |
Fourth quarter 2023 Income from operations to Adjusted EBITA in millions of EUR
Incidental items are non-recurring items by nature and are related to impairment and other non-cash charges/gains related to operations in Russia and Ukraine, a one day FX loss from the devaluation of the Argentine peso by the Argentinian government, separation costs, transformation costs, real estate gains/loss, legal cases, incidental warranty costs, environmental provisions for inactive sites and the discounting effect of long-term provisions.
2 Restructuring costs were EUR 83 million for Q4 2023. These consisted of EUR 77 million of employee termination benefits and EUR 6 million of other costs related to restructuring programs.
Restructuring costs were EUR 47 million for Q4 2022. These mainly consisted of EUR 20 million of employee termination benefits, EUR 10 million of impairment of property, plant and equipment, and EUR 14 million of inventory write-downs related to restructuring programs.
| Acquisition | ||||||
|---|---|---|---|---|---|---|
| Restruc | related | Incidental | ||||
| Reported | turing 2 | charges | items 1 | Adjusted | ||
| January to December 2023 | ||||||
| Sales | 6,704 | – | – | – | 6,704 | |
| Cost of sales | (4,146) | 62 | 3 | 36 | (4,044) | |
| Gross margin | 2,558 | 62 | 3 | 36 | 2,660 | |
| Selling, general and administrative expenses | (1,882) | 81 | 11 | (1) | (1,791) | |
| Research and development expenses | (308) | 24 | – | – | (284) | |
| Indirect costs | (2,191) | 105 | 11 | (1) | (2,075) | |
| Impairment of goodwill | – | – | – | – | – | |
| Other business income | 24 | – | (2) | (11) | 10 | |
| Other business expenses | (23) | – | 2 | 16 | (5) | |
| Income from operations | 369 | 167 | 14 | 40 | 590 | |
| Amortization | (80) | – | – | – | (80) | |
| Income from operations excluding | ||||||
| amortization (EBITA) | 449 | 167 | 14 | 40 | 670 | |
| January to December 2022 | ||||||
| Sales | 7,514 | – | – | – | 7,514 | |
| Cost of sales | (4,781) | 43 | 6 | 25 | (4,708) | |
| Gross margin | 2,732 | 43 | 6 | 25 | 2,806 | |
| Selling, general and administrative expenses | (1,927) | 21 | 18 | 11 | (1,877) | |
| Research and development expenses | (295) | – | – | – | (294) | |
| Indirect costs | (2,222) | 21 | 19 | 11 | (2,171) | |
| Impairment of goodwill | – | – | – | – | – | |
| Other business income | 227 | – | (1) | (218) | 8 | |
| Other business expenses | (19) | – | 3 | 10 | (6) | |
| Income from operations | 718 | 64 | 27 | (173) | 636 | |
| Amortization | (126) | – | – | – | (126) | |
| Income from operations excluding | ||||||
| amortization (EBITA) | 844 | 64 | 27 | (173) | 762 |
January to December 2023 Income from operations to Adjusted EBITA in millions of EUR
Incidental items are non-recurring items by nature and are related to impairment and other non-cash charges/gains related to operations in Russia and Ukraine, a one day FX loss from the devaluation of the Argentine peso by the Argentinian government, separation costs, transformation costs, real estate gains/loss, legal cases, incidental warranty costs, environmental provisions for inactive sites and the discounting effect of long-term provisions.
2 Restructuring costs were EUR 167 million for the year ended December 31, 2023. These consisted of EUR 150 million of employee termination benefits and EUR 18 million of other costs related to restructuring programs.
Restructuring costs were EUR 64 million for the year ended December 31, 2022. These mainly consisted of EUR 27 million of employee termination benefits, EUR 12 million of impairment of property, plant and equipment, and EUR 16 million of inventory write-downs related to restructuring programs.
Amounts may not add up due to rounding.
1
Appendix C – Financial glossary
Acquisition-related charges
Costs that are directly triggered by the acquisition of a company, such as transaction costs, purchase accounting related costs and integration-related expenses.
Adjusted EBITA
EBITA excluding restructuring costs, acquisitionrelated charges, and other incidental charges.
Adjusted EBITA margin
Adjusted EBITA divided by sales to third parties (excluding intersegment). 'Operational profitability' also refers to this metric.
Adjusted gross margin
Gross margin, excluding restructuring costs, acquisition-related charges, and other incidental items attributable to cost of sales.
Adjusted indirect costs
Indirect costs, excluding restructuring costs, acquisition-related charges, and other incidental items attributable to indirect costs.
Adjusted R&D expenses
Research and development expenses, excluding restructuring costs, acquisition-related charges, and other incidental items attributable to research and development expenses.
Adjusted SG&A expenses
Selling, general and administrative expenses, excluding restructuring costs, acquisition-related charges, and other incidental items attributable to selling, general and administrative expenses.
Brighter lives revenues
Percentage of total revenues coming from all products, systems and services contributing to Food availability, Safety & security, or Health & well-being.
Changes in scope
Consolidation effects related to acquisitions.
Circular revenues
Percentage of total revenues coming from products, systems and services designed for a circular economy, categorized as serviceable luminaires (incl. 3D-printing), circular components, intelligent systems, or circular services.
Comparable sales growth (CSG)
The period-on-period growth in sales excluding the effects of currency movements and changes in consolidation and other changes.
EBIT
Income from operations.
EBITA
Income from operations excluding amortization and impairment of acquisition-related intangible assets and goodwill.
EBITDA
Income from operations excluding depreciation, amortization, and impairment of non-financial assets.
Effects of changes in consolidation and other changes
In the event a business is acquired (or divested), the impact of the consolidation (or deconsolidation) on the Group's figures is included (or excluded) in the calculation of the comparable sales growth figures. Other changes include regulatory changes and changes originating from new accounting standards.
Effects of currency movements
Calculated by translating the foreign currency financials of the previous period and the current period into euros at the same average exchange rates.
Employees
Employees of Signify at the end of the period, expressed on a full-time equivalent (FTE) basis.
Free cash flow
Net cash provided by operating activities minus net capital expenditures. Free cash flow includes interest paid and income taxes paid.
Gross margin
Sales minus cost of sales.
Incidental charges
Any item with an income statement impact (loss or gain) that is deemed to be both significant and not part of normal business activity. Other incidental items may extend over several quarters within the same financial year.
Indirect costs
The sum of selling, general and administrative expenses and R&D expenses.
Net capital expenditures
Additions of intangible assets, capital expenditures on property, plant and equipment and proceeds from disposal of property, plant and equipment.
Net debt
Short-term debt, long-term debt minus cash and cash equivalents.
Net leverage ratio
The ratio of consolidated reported net debt to consolidated reported EBITDA for the purpose of calculating the financial covenant.
R&D expenses
Research and development expenses.
Restructuring costs
The estimated costs of initiated reorganizations which have been approved by the company, and generally involve the realignment of certain parts of the organization. Restructuring costs include costs for employee termination benefits for affected employees and other costs directly attributable to the restructuring, such as impairment of assets and inventories.
SG&A expenses
Selling, general and administrative expenses.
Working capital
The sum of inventories, trade and other receivables, other current assets, derivative financial assets minus the sum of trade and other payables, derivative financial liabilities and other current liabilities (excluding dividend-related payables).