First quarter 2018 highlights

• Sales of EUR 1,501 million, a comparable decrease of 3.5%
• Total LED-based comparable sales growth of 5.6%, representing 68% of total sales (Q1 2017: 61%)
• Adjusted EBITA of EUR 106 million (Q1 2017: EUR 127 million)
• Adjusted EBITA margin decreased 50 basis points to 7.0%; improvements in Lamps, LED and Professional offset by Home
• Cost reduction initiatives on track; adjusted indirect costs down 13%
• Net income of EUR 20 million (Q1 2017: EUR 61 million) reflecting higher restructuring costs, lower profitability and a one-off real estate gain in Q1 2017 
• Free cash flow of EUR -6 million (Q1 2017: EUR -17 million excluding real estate proceeds)

Philips Lighting announced the company’s 2018 first quarter results. “As previously indicated, the first quarter marks a soft start to the year, mainly due to a weak performance in Home, most notably in the United States. Our other three businesses further improved their operational profitability, particularly Professional which increased its adjusted EBITA margin by 310 basis points,” said Eric Rondolat, CEO of Philips Lighting. “I am pleased with the progress made on the cost side with a 13% reduction in our indirect cost base, and with our free cash flow performance after a strong fourth quarter. Our focus remains on implementing our strategy toward the shift to LED, Systems & Services.”

Outlook

The company aims to improve its Adjusted EBITA margin from 9.6% to 10.0-10.5%. It will continue to focus on its cost reduction initiatives, and expect to benefit from higher savings as of the second half of 2018. It also aims to deliver positive comparable sales growth for the full year on the basis of a strong second half. Philips Lighting expects to generate solid free cash flow in 2018, which is, however, expected to be somewhat lower than the level in 2017 due to higher restructuring payments.

Business highlights for the first quarter

1. Philips Lighting announced its intention to change its company name to Signify. The company will continue to use the Philips brand for its products under the existing licensing agreement with Royal Philips.
    
2. Philips Lighting was included in Euronext’s AEX Index on March 19, 2018. The AEX Index is a free-float adjusted market capitalization index that reflects the performance of the 25 largest shares listed on Euronext Amsterdam and is the most important indicator of the Dutch stock market.
    
3. LED: Philips Lighting introduced the Philips Trueforce LED Road and the Philips CorePro LEDtube Universal T8, supporting our continuous innovation in LED products. The Trueforce LED Road is the first of its kind to fit into the standard E27 fixture and reduces the time needed to maintain, replace and fit each street light. With the addition of the CorePro LEDtube Universal T8 for trade customers, Philips Lighting offers the broadest range of LED tubes for different applications in the industry.
    
4. Professional: Continuing it leadership in Systems and Services, the company launched Interact, its new Internet of Things platform. Interact is designed to collect, process and analyze large volumes of data from the growing number of connected light points, sensors, devices and systems. The IoT platform can create data-enabled services for customers that deliver benefits beyond illumination. Philips Lighting also introduced connected lighting systems under the Interact name. These systems can generate and upload data to the Interact IoT platform.
    
5. Professional: Exemplifying the company’s innovation leadership, Philips Lighting is the first major global lighting company to LiFi-enable luminaires from its existing office lighting portfolio. LiFi is a two-way, high-speed wireless technology similar to WiFi, but uses light waves instead of radio waves to transmit data in a highly secure way. This means LiFi can be used in places where radio frequencies may interfere with equipment, such as in hospitals.
    
6. Professional: Philips Lighting launched a new range of solar-powered products and systems, including the Philips LifeLight solar lantern, which comes with a replaceable battery that extends the product’s life far beyond its two years warranty, and the Philips SunStay, an innovative all-in-one solar street light that is compact and easy to install and maintain.
    
7. Professional: Together with American Tower Corporation, Philips Lighting announced that it will provide the City of Huntington Beach, CA with its newly developed Smart Fusion Pole. These poles provide the city infrastructure with wireless broadband connectivity in an aesthetically designed, energy-efficient street light pole.
    
8. Home: Philips Hue further strengthened its leadership position by announcing the launch of a Hue product line for outdoor in Europe and the United States this summer. The company also announced new ‘Friends of Hue’ luminaire partners in the United States and Europe, with the latter offering consumers Hue-compatible wall switches in a variety of designs, turning traditional light switches into smart controls. Finally, a fully redesigned app for Hue (app 3.0), will launch in Spring 2018.

(Source: Philips Lighting)