Signify to pay back salaries cut early in the pandemic

Jan. 13, 2021
Expressing financial confidence, it also issues a slightly improved year-end outlook, and proposes to reinstate the suspended 2019 dividend.

Signify today announced that it will repay the salary that employees voluntarily agreed to sacrifice for three months last spring during the early days of the coronavirus pandemic.

Under what Signify called a “solidarity” scheme, in March it gave its workforce the option to reduce both their amount of work and pay by 20%. About 85% of personnel signed up to the measure, which ran from April through June.

By July, Signify credited the plan with generating most of the €43 million savings that the company reported in its second quarter.

It is now compensating participants with one-off payments equal to the amount they forfeited. Signify declined to reveal the total amount. A spokesperson told LEDs Magazine that employees will receive the funds at different times in accordance with payroll deadlines in their country.

The company is not offering the remuneration to executives, who during the three months carried on with full time work with 20% pay cuts.

“Our top level executives, so supervisory board, board of management and leadership team, which includes heads of divisions, market groups and some of our functions, are not part of this,” the spokesperson told LEDs.

Signify said the payment reflects a “robust financial performance” enabled by actions it has taken during the health crisis. Steps have included supply chain adjustments and price increases. The company has continued restructuring, and will soon pare down the size of its corporate headquarters.

Last month, Signify told analysts that for the years 2021 through 2023 it expects yearly comparable sales to grow by between 0% and 5% and free cash flow will exceed 8% of sales. It also said that its adjusted EBITA margin will be 11% to 13% by 2023.

Also last month, Signify said that full year 2021 comparable sales looked set to fall by between 13% and 13.5% and that adjusted EBITA margin for the year would be between 10.2% and 10.6%. Today it gave a slightly improved version in both categories, saying that 2020 comparable sales will fall by approximately 12.7% and that adjusted EBITA would be approximately 10.7%.

Feeling buoyed by its ability to weather the global crisis, Signify today also proposed “ an extraordinary dividend of €170M (€1.35 per share) to its shareholders,” explaining that “the amount is in line with the dividend proposal of €1.35 for 2019, which was withdrawn to ensure the company’s resilience and to strengthen its financial position during the COVID-19 crisis.” The 2019 dividend, along with a 2020 dividend proposal to be announced along with 2020 year end results on Jan. 29, are both subject to approval at the May 18 annual general meeting.

In yet another indication of its financial confidence, Signify today said it intends “to repay a minimum of €350M of debt in 2021, thereby confirming its commitment to further deleverage to a net debt/EBITDA ratio of less than 1x by the end of 2022.” The company said it “expects to report a year-end 2020 net debt/EBITDA ratio of 1.7x.”

MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).

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