Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Signify NV (PHPPY, Financial) reported a sequential improvement in most of its businesses, with a strong contribution from connected offers, increasing the install base of connected light points from EUR126 million in Q1 '24 to EUR153 million.
- The company saw a faster-than-expected return to growth in both professional and consumer segments in China, bringing optimism for the rest of the year.
- Net income improved to EUR67 million compared to EUR44 million in Q1 last year, driven by lower restructuring costs and financial expenses.
- The Consumer business achieved sales growth of 3.1% with a positive contribution from all regions, and the adjusted EBITA margin improved by 40 basis points to 10.8%.
- Signify NV (PHPPY) was ranked 15th globally in the Corporate Knights rankings for the global 100 most sustainable corporations, highlighting its leadership in sustainability.
Negative Points
- Nominal sales decreased by 1.3% to EUR1,448 million, with comparable sales declining by 2.8% due to weakness in the professional Europe and OEM business.
- The adjusted EBITA margin decreased by 30 basis points to 8%, mainly due to adverse absorption of fixed costs and weakness in the high-margin professional business in Europe.
- The OEM business saw a significant decline in comparable sales by 10.7%, attributed to two major customers, with expectations that this effect will persist.
- The Conventional business experienced a decline in comparable sales by 23.9%, reflecting the structural decline of that business.
- The percentage of women in leadership positions decreased by 1% to 27%, which is not in line with the company's 2025 ambitions.
Q & A Highlights
Q: Can you provide more details on how you plan to shift sourcing from China in the second half of the year?
A: Eric Rondolat, CEO: We have a plan to mitigate and flexibilize our supply chain to the maximum. We are working with suppliers and our manufacturing plants to move production from China to other countries, mainly in Asia. This includes both finished products and components, ensuring we meet the local content requirements for country of origin.
Q: Is there an opportunity to gain market share in the US due to competitors' reliance on China?
A: Eric Rondolat, CEO: Yes, we believe our footprint is advantageous compared to competitors who are more dependent on China. With most of our imports coming from Mexico and Canada under the USMCA agreement, we are less affected by tariffs, allowing us to potentially gain market share.
Q: What are your observations on demand and pricing since tariffs were implemented?
A: Eric Rondolat, CEO: We've seen relative stability in pricing across most businesses, with some price increases in the US already accepted by the market. We are monitoring the situation to remain competitive and ensure demand is not adversely affected.
Q: How do you view the professional demand in Europe, and what are your expectations for recovery?
A: Eric Rondolat, CEO: We remain cautious about Europe despite lower rates. The economy in key countries like Germany, the UK, and France is still impacted. We expect the business to stabilize but do not foresee a rebound in Europe in 2025.
Q: Can you elaborate on the price development and cost savings in relation to gross margin trends?
A: Zeljko Kosanovic, CFO: We see stabilization in pricing and improvement in volumes. We have a strong line of sight on bill of material savings, which, along with procurement efforts, should contribute positively to gross margin stabilization moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
