Signify N.V.

Total sales were EUR 1.332 billion, with comparable sales down 3.6% year over year. Adjusted EBITA was EUR 81 million and adjusted EBITA margin was 6.1%, down 170 basis points, mainly due to lower gross margin in Consumer, higher input costs, and lower fixed-cost absorption. Free cash flow was EUR 35 million versus EUR 36 million last year, and working capital improved by EUR 107 million to 6.3% of sales. By segment, Professional sales declined 2.5% and margin was 7%; Consumer sales were down 0.2% and margin was 3%; OEM sales fell 12% and margin was 4.6%; Conventional sales declined 9% and margin improved to 18.1%. Management reaffirmed full-year guidance for adjusted EBITA margin of 7.5% to 8.5% and free cash flow generation of 6.5% to 7.5% of sales.

CEO As Tempelman described the quarter as mixed, but said Signify has already started executing the strategy laid out at Capital Markets Day. He highlighted strength in U.S. and rest-of-world Professional projects, continued growth in India and luminaires, and positive traction from pricing plus cost actions. He sounded constructive on the second half, saying the turnaround playbooks are fully in execution and that employee response to the new strategy has been very positive.

CFO Zeljko Kosanovic emphasized that lower margins were mainly driven by Consumer, where higher input costs outpaced price realization and weaker volumes reduced fixed-cost absorption. He cited Q2 adjusted EBITA of EUR 81 million, margin of 6.1%, and free cash flow of EUR 35 million, while noting working capital improved by EUR 107 million and 120 basis points to 6.3% of sales. He said the EUR 180 million gross savings program is on track and that most savings will be captured in the second half, with full run-rate benefit expected entering 2027; he also said guidance does not include any additional IEEPA impact in the second half.

Analysts focused on retailer destocking in Connected Consumer, the pace and phasing of the EUR 180 million cost savings, confidence in second-half EBIT delivery, Consumer margin recovery, FX impacts, shipping costs, and dividend disclosure. Management said Connected inventories are now around 8 to 10 weeks depending on the retailer and are near normalized levels, and that guidance does not include any further IEEPA benefit or impact. They said cost savings are on track with a heavier second-half contribution, and that second-half improvement should come from higher top line seasonality, gross margin resilience, and more cost savings, while Consumer should normalize as Connected recovers and price actions catch up.