Signify CEO comments on COVID-19 and Cooper Lighting
During the recent quarterly earnings announcement, Signify CEO, Eric Rondolat, commented on his company's response to COVID-19 and to the integration of the newly acquired Cooper Lighting business.
First quarter 2020
- Signify’s installed base of connected light points increased from 56 million in Q4 19 to 60 million in Q1 20
- CSG growing profit engines -14.5%; CSG total Signify -15.3%
- Adj. indirect costs down EUR 56 million, or -11.1%, excl. currency effects and changes in scope
- Adj. EBITA margin improved by 10 bps to 7.9%, with a neutral effect from currencies
- Adj. EBITA margin of the growing profit engines increased by 100 bps to 7.7%
- Net income of EUR 27 million (Q1 19: EUR 44 million)
- Free cash flow doubled to EUR 112 million (Q1 19: EUR 55 million)
- Acquisition of Cooper Lighting completed; integration is well underway and achievement of synergies on track
COVID-19 update Q1
- Health & safety of employees was our highest priority
- Supported local partners and communities: donations of UV-C lamps and (solar) luminaires
- Our global manufacturing capacity was restored to more than 80%
- Broad range of mitigating actions to preserve profitability and free cash flow in place from start of Q1
- Liquidity remains strong, with a cash position of EUR 924 million at the end of Q1 20
COVID-19 actions
From the start of the outbreak, we have been very agile and thorough in dealing with the challenges through global and local crisis response teams. We have implemented a variety of policies including a ban on domestic and international travel, access restrictions to our sites, homeworking and very stringent hygiene and health measures across our plants, logistic hubs and R&D centers. We provided protective equipment, such as hand sanitizers, masks and temperature measurement tools.
We also implemented a broad range of mitigating actions to preserve profitability. These measures include savings in, amongst others, selling expenses, travel costs and procurement costs. In addition, we have implemented a range of measures to safeguard cash flow, including rigorous working capital management, a curtailment of uncommitted and non-essential capital expenditure, and the withdrawal of the dividend proposal.
We are accelerating and extending mitigating measures, including:
- Supervisory Board and Leadership Team took a 20% salary reduction for Q2
- A significant part of our employees voluntarily supported a 20% worktime reduction and pro-rata pay adjustment for a period of 3 months
- A 6-month delay in merit increases, where possible
- An external hiring freeze.
Successfully completed Cooper Lighting acquisition
On March 2, 2020, Signify completed the acquisition of Cooper Lighting Solutions from Eaton. Since the announcement of the transaction, Signify has worked intensively with the Cooper Lighting teams to finalize integration plans which enabled us to start the implementation from day one. As a result, key business systems have been successfully segregated from Eaton and Cooper Lighting is now operating as a business unit within Signify. The agents are committed to the go-to market approach and associated benefits of the acquisition. The integration teams are also well on track to achieve the anticipated cost savings in procurement, supply chain and sourcing optimization.
"The agents on both sides are committed to the go-to market approach and associated benefits of the acquisition.” - Eric Rondolat
Outlook:
Considering the uncertainty about the future course of the pandemic, and the length and depth of the impact on the global economy, Signify does not provide financial guidance at this point in time.
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