Signify recently announced its Q4 and full-year results for fiscal year 2024. While sales continued to decline, the rate of decline slowed, due to accelerated declines in traditional businesses, weakness in the European professional lighting business and the Chinese business, and signs of a rebound in the agricultural lighting business in 2024.
In addition, it is worth noting that Signify saw net profit growth in both the fourth quarter and the full year due to a year-on-year decrease in restructuring costs and financial expenses.
In detail, in 2024, Signify achieved total sales of €6.143 billion (approximately RMB 46.22 billion), with nominal sales decreasing by 8.4% and comparable sales decreasing by 6.6%.
Adjusted EBITDA was €606 million, a 9.6% decrease year-over-year. The adjusted EBITDA margin was 9.9%, a slight decrease year-over-year; full-year net income was €334 million, a 55.3% increase year-over-year; free cash flow was €438 million, representing 7.1% of sales. In 2024, Signify's LED product sales accounted for 93% of total sales (2023: 85%).
Despite the continued decline in its traditional lighting business, Signify has driven growth in other business segments through cost strategies. By continuing to implement these cost strategies, Signify saved €131 million throughout the year and successfully reduced its debt by €440 million.
In the fourth quarter of fiscal year 2024, Signify achieved total sales of €1.655 billion (approximately €11.9 billion in net profit for the fourth quarter, representing a 101.3% increase year-over-year). Free cash flow was €188 million, a decrease compared to the same period in 2023.
It is reported that despite the challenges still faced in the Chinese market and the European professional lighting business, Signify's business gradually improved in the fourth quarter, especially in the consumer lighting business, while the smart connected and specialty lighting businesses also continued to grow.
In response to the sluggish global LED lighting market demand and to continue implementing cost reduction and efficiency improvement strategies, Signify officially implemented a new organizational structure in 2024, dividing its business into four independently operating vertical departments: Professional, Consumer, OEM, and Conventional.
In 2024, facing sluggish global lighting market demand, Signify's sales declined across all business units, although some businesses saw an increase in EBITDA margin after adjustments.
Professional business: Full-year sales were €3.933 billion, with nominal sales down 7.6% and comparable sales down 5.8%, mainly due to declining demand in the European indoor professional lighting market and weakness in the Chinese construction industry; adjusted EBITDA margin fell to 9.3%.
Consumer business: Full-year sales were €1.297 billion, with nominal sales down 3.4% and comparable sales down 1.2%; adjusted EBITDA margin improved to 11.1%.
OEM business: Full-year sales were €437 million, with nominal sales down 4.5% and comparable sales down 2.0%; adjusted EBITDA margin improved to 11.1%.
Conventional business: Full-year sales were €437 million, with nominal sales down 30.2% and comparable sales down 29.2%; adjusted EBITDA margin fell to 17.9%. The decline in performance was mainly due to the continued impact of the European fluorescent lighting ban, which exacerbated the structural decline in the business.
For 2025, Signify expects continued strong sales performance throughout the year (excluding traditional business). Signify also anticipates stable adjusted EBITDA margins in 2025, with combined revenue from professional, consumer, and OEM businesses offsetting any weakness in traditional business. Signify aims to achieve 7-8% free cash flow from sales by 2025. (Text: Irving)
