Signify reported the financial results of the second quarter of 2019 and announced that it has agreed to buy a 51% share of Klite Lighting, a China-based LED luminaires manufacturer.

Signify registered sales of EUR 1.477 billion (US$ 1.65 billion) with an on-year decrease of 6.1%. LED-based sales increased by 0.2%, accounting for 77% of total revenue. The adjusted gross margin declined by 20 bps to 37.7% due to lower sales volumes and price erosion, largely offset by ongoing procurement savings. Adjusted EBITA amounted to EUR 133 million (US$ 148.22 million) compared with EUR 130 million in the same period last year. The Adjusted EBITA margin improved by 60 bps to 9.0%, despite a sales decline, and includes a currency impact of +20 bps. Net income increased from EUR 29 million (US$ 32.32 million) last year to EUR 50 million in 2Q19 (US$ 55.7 million) due to better operational profitability and lower restructuring costs.

Signify CEO Eric Rondolat commented, “We are satisfied with the ongoing improvement in the operational profitability and cash generation of our businesses in the second quarter. Sales declined mainly due to economic headwinds in Europe and non-recurring country-specific developments in growth markets. While market conditions remain challenging, the solid momentum in our growth platforms, our relentless focus on operational efficiencies and our strong free cash flow profile position us well for the future.”

The Dutch company also revealed its invest plan of acquiring 51% stake in Chinese LED lighting company Klite Lighting with the aim to further strengthen its strategic position in LED market with the investment. According to Signify, the transaction will bring additional scale and innovation power to Klite Lighting, allowing it to generate further cost efficiencies and enhance its product development, including connected lighting offerings.

Klite Lighting has been one of Signify’s main suppliers of high-quality and very cost-efficient LED lamps and luminaires for many years. The transaction, which is subject to customary closing conditions, is expected to close in the second half of 2019, after which Klite Lighting will continue to operate as a standalone entity.