Signify reports full-year sales of EUR 6.2 billion, improvement in profitability by 30 bps to 10.4% and a free cash flow of EUR 529 million.
Full year 20191
- Signify’s installed base of connected light points increased from 44 million at YE 18 to 56 million at YE 19
- CSG growing profit engines -0.3%; CSG total Signify -4.6%
- LED-based comparable sales grew by 1.4%, representing 78% of sales (FY 18: 71%)
- Adj. indirect costs down EUR 125 million, or -6.6%, excl. currency effects and change in scope
- Adj. EBITA margin improved by 30 bps to 10.4%, despite a negative currency impact of 20 bps
- Adj. EBITA margin of the growing profit engines increased by 180 bps with each of the three BGs improving
- Net income increased to EUR 267 million (FY 18: EUR 261 million)
- Free cash flow amounted to EUR 529 million (FY 18: EUR 306 million) or 8.5% of sales
- Solid progress made on our sustainability goals for 2020; well on track to be carbon neutral in 2020
Fourth quarter 20191
- Sales of EUR 1.8 billion; 1.4% nominal sales growth
- CSG growing profit engines -0.7%; CSG total Signify -4.2%
- LED-based sales represent 80% of total sales
- Adj. indirect costs down EUR 25 million, or -5.4%, excl. currency effects and change in scope
- Adj. EBITA margin improved by 80 bps to 13.2%, including a positive currency impact of 30 bps
- Adj. EBITA margin of the growing profit engines increased by 180 bps
- Net income decreased to EUR 98 million ($108.39 million) compared with EUR 119 million ($131.62 million) last year
- Strong free cash flow of EUR 308 million (Q4 18: EUR 279 million)
Shareholder returns
- In 2019, EUR 164 million of capital was returned through the annual dividend payment
- Propose to pay a cash dividend of EUR 1.35 per share over 2019, an increase of 3.8% and a pay-out ratio of 47%
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s fourth quarter and full-year 2019 results. “We are pleased that we’ve improved our Adjusted EBITA margin for the sixth consecutive year, which has led to a 400 basis points increase since 2013. During the same period, our LED-based sales increased from 26% to 78%, reflecting our successful transformation from conventional lighting technologies to LED lighting products, systems and services. Our free cash flow of EUR 529 million is at the highest level since the IPO. The profit and cash contribution from the growing profit engines is now more than twice that of Lamps. This demonstrates that we have significantly strengthened the business and financial profile of the company.
We are also seeing positive traction from the acquisitions we completed in 2019 and look forward to welcoming Cooper Lighting Solutions in 2020, which will strengthen our market position in North America and our overall business mix,” said CEO Eric Rondolat. “We propose a dividend of EUR 1.35 per share which brings the total return to shareholders to more than EUR 1.2 billion since the IPO. While we continue to face challenging market conditions, we are confident that our relentless focus on our growth initiatives will further strengthen our market leadership and progressively improve our growth profile.”
Sustainability
Sustainability is central to Signify’s strategy. It is the company’s purpose to unlock the extraordinary potential of light for brighter lives and a better world. In 2019, 82.5% of the company’s revenues came from its portfolio of sustainable products, systems and services, exceeding its 2020 target of 80%. Signify sold 2.3 billion LED lamps and luminaires in 2015-2019, in line with its commitment to deliver more than 2 billion LED lamps and luminaires by the end of 2020. The company also decreased its waste to landfill by 70% and is ahead of its targets related to a safe & healthy workplace and a sustainable supply chain. The company reduced its carbon footprint by 10%, achieving carbon neutrality in 15 out of its 19 markets, demonstrating it is well on track to become carbon neutral this year. In 2019, Signify was named Industry Leader in the Dow Jones Sustainability Index for the third consecutive year and is included in CDP’s prestigious ‘A List’ for climate change since the IPO.
Outlook
For 2020, Signify aims to achieve a further improvement in the Adjusted EBITA margin and to deliver a free cash flow of at least 6% of sales. This outlook excludes the announced acquisition of Cooper Lighting Solutions. An update on the outlook will be provided after the closing of the Cooper Lighting Solutions acquisition, which is expected in Q1 2020, as previously indicated.
Capital allocation
Signify intends to maintain a robust capital structure and continues to aim towards a financing structure that is compatible with an investment grade profile. Following the announced acquisition of Cooper Lighting Solutions, the company will prioritize deleveraging with strong free cash flows expected to drive down Signify’s net leverage ratio from around 2x at closing to below 1x net debt/EBITDA within three years. The company intends to use EUR 350 million to reduce its debt in 2020.
The company plans to continue to pay a stable to increased dividend per share. While Signify will prioritize deleveraging, it will continue to invest in R&D and other organic growth opportunities. As Signify will focus on integrating Cooper Lighting Solutions, M&A will have a lower priority.
Dividend
The company proposes to pay a dividend of EUR 1.35 per share in cash related to full-year 2019, which represents an increase of 3.8% compared with last year, and a pay-out ratio of 47%. The dividend payment is subject to approval by the Annual General Meeting of Shareholders (AGM) to be held on May 19, 2020. Further details will be provided in the agenda for the AGM.
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