January 12, 2023   

Signify Closed 2022 with Lower than Expected Sales

2023 01 signify lower sales restate expectations eric rondolat.jpg

In October, CEO warned its Q4 revenue would be down, but previous guidance missed

 

Signify is expected to share its official financial results on January 27, but today the Netherlands-based company is getting ahead of some not-so-good news about the recent fourth quarter that closed on December 31, 2022. The world’s largest lighting maker published a preview of some preliminary and unaudited 2022 financial figures.

Signify explained that it expects a comparable sales decline of 8.8% for the fourth quarter, resulting in a comparable sales growth of 1.2% for the full year 2022, compared to the previous guidance of +2-3% for the year.

The company cited the following reasons for softer-than-expected quarter:

  • Stronger than anticipated deterioration of its business in China due to ongoing COVID-related disruptions

  • A much lower growth in the OEM channel

  • Weaker indoor professional business than expected.

 

Signify derives 69% of revenues from Europe (31%) and the Americas (38%). The remaining 31% comes from what it calls Rest of World and Global Businesses.

During Signify’s third quarter earnings call on October 28, 2022, CEO Eric Rondolat provided some early indications that Q4 was going to be a challenging quarter. Rondolat cited three factors that would cause the quarter’s sales to be negative when compared to the last quarter of 2021.

  1. Signify was comparing Q4 2022 to a very strong Q4 in 2021, that saw higher-than-usual backlog shipments due to component challenges that were resolved in that quarter.

  2. “We had a very strong horticultural business in Q4 last year, and our horticulture business is temporarily affected by the price of energy”, said Rondolat.

  3. “In Q4 last year, we had a very strong quarter on the consumer side, which we believe we're not going to get this quarter given the softness that we have experienced already at the end of Q2 and in Q3”, said Rondolat.

 

Profits are also expected to come in lower than expected. Signify expects an Adjusted EBITA margin of approximately 10% for both the fourth quarter and the full year 2022. This compares with the previous full-year guidance of the lower end of the 11.0-11.4% range.

Expected free cash flow seems to be in line, or a smidge better, than previous statements, 5.9% of sales, compared to the previous guidance of the lower end of the 5-7% range.

Midafternoon trading (Central European Time) on the Amsterdam Stock Exchange shows that Signify N.V. (LIGHT.AS) stock is down less than 1% at €32.94.

Signify will publish its fourth quarter and full-year 2022 results on January 27, 2023. The company’s 2022 Annual Report is expected on February 28.

 

 

 




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