Signify (LIGHT) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales were EUR 1.48–1.5 billion, down 9.8% nominally and 8.4% on a comparable basis, mainly due to declines in Professional and Conventional lighting, especially in Europe and China.

• Net income rose to EUR 63 million from EUR 45 million in Q2 2023, mainly due to lower adjustment items and higher financial income.

• Free cash flow was EUR 51 million, down from EUR 88 million, impacted by higher restructuring payouts and working capital outflows.

• Installed base of connected light points reached 136 million, with LED-based sales rising to 86% of total sales from 84% a year ago.

• Released a Climate Transition Plan with SBTi-validated net-zero targets for 2040.

Financial highlights

• Adjusted EBITA margin was 7.9% (Q2 2023: 8.3%), with gross margin improving by 140 bps to 40.3% but offset by under-absorption of fixed costs.

• Comparable sales declined 8.4% year-over-year; nominal sales decline of 9.8% including -1.4% FX impact.

• Working capital as % of sales improved to 7.9% from 8.9% year-over-year, with inventories and receivables down.

• Free cash flow as % of sales fell to 3.4% from 5.3% year-over-year.

• Net debt increased to EUR 1,165 million after debt repayment and dividend payment; net debt/EBITDA at 1.8x.

Outlook and guidance

• Guidance maintained: Adjusted EBITA margin expected at the lower end of 10.0–10.5% range and free cash flow at 6–7% of sales for FY 2024.

• Cautious outlook for Professional Europe and China, but positive trends expected in Americas, OEM, and Consumer segments.

• Sequential improvement in organic growth expected in H2, with margin recovery back-end loaded, especially in Q4 due to cost savings and restructuring benefits.