Quarterly sales declined again at Signify as they have been since the end of 2022, but net income rose for the first time in 18 months as the company reported a mixed bag of results, including a surprise slump in the European Professional group but a strong U.S. Professional showing.
For the quarter ending March 31, sales fell 12.5% to €1.47 billion ($1.57 billion) from €1.68 billion in the first quarter of 2023, marking a 10.1% drop on a comparable basis, which this quarter mostly reflects currency differences.
With cost-cutting measures taking hold and the company paying less for materials, net income jumped 56.3% to €44 million, from €28 million in the same period last year. The company also cut its work force by about 9% since last year’s first quarter, to 31,339 from 34,408.
“In the first quarter, we saw improving dynamics in our U.S. Professional, OEM, and Consumer businesses, while the market in China remained soft and the European Professional business was substantially below our expectation,” CEO Eric Rondolat said.
While “dynamics” might have improved in all those sectors, sales did not.
Overall Professional sales fell nominally by 9.8% and comparably by 6.3% to €943 million ($1 billion) from €1.05 billion a year ago.
Consumer sales fell 8.8% nominally and 15% on a comparable basis to €299 million ($320.1 million) from €328 million. The company’s signature Philips Hue line of smart lighting had experienced hard times following a bonanza during the stay-at-home COVID era. The company has been hoping to energize Hue sales. Rondolat today said that “we have reached the bottom and are in position to grow again,” although he did not elaborate on any new measures. Some analysts believe that price cuts will be necessary.
OEM fell 10.4% nominally and 16.7% on a comparable basis to €103 million ($110.3 million) from €114 million.
Neither dynamics nor sales improved in the Conventional business, as bans on fluorescent lighting took their toll compared to a year ago, when customers stocked up before the policies hit. Conventional sales tumbled by 35.7% to €119 million ($127.4 million) from €186 million; the decline on a comparable basis was much less, at 8.5%.
“As the year progresses, we anticipate a sequential comparable sales growth improvement, driven by momentum in the Americas and our OEM and Consumer businesses,” Rondolat said. “The continued effort to manage the gross margin, combined with the implementation of our cost reduction program, will deliver a positive effect on our operating margin in the quarters ahead, in line with our guidance for the full year.”
LEDs Magazine will report in greater detail on today’s earnings report, including on Rondolat’s optimism for renewed growth in the horticulture sector.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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