Signify N.V.

Signify reported second-quarter sales of 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, driven mainly by lower Consumer gross margin, weaker volume leverage, higher input costs, and a 50 basis point FX hit. 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, down 120 basis points. By segment, Professional comparable sales declined 2.5% with a 7% adjusted EBITA margin, Consumer comparable sales declined 0.2% with a 3% margin, OEM sales declined 12% with a 4.6% margin, and Conventional sales declined 9% with an 18.1% margin. Management confirmed full-year guidance of adjusted EBITA margin of 7.5% to 8.5% and free cash flow generation of 6.5% to 7.5% of sales.

CEO A.C. Tempelman said the quarter reflected a mixed market, but he believes Signify has started executing the strategy laid out at Capital Markets Day. He highlighted strong professional project growth in the U.S. and rest of the world, resilient consumer sell-out, continued growth in India and luminaires, and a strong recovery in Conventional profitability. His tone was constructive, emphasizing that turnaround playbooks are already in full execution, pricing is improving, and the company is confident in stronger second-half profitability.

CFO Zeljko Kosanovic focused on the quarter’s financial pressures and the mechanisms expected to offset them. He cited EUR 1.332 billion in sales, EUR 81 million in adjusted EBITA, a 6.1% margin, and EUR 35 million in free cash flow, while noting that working capital improved by EUR 107 million to 6.3% of sales. He said the indirect cost resizing program remains on track, the EUR 180 million gross savings plan is more heavily weighted to the second half, and full capture of the run-rate benefit is expected by exit 2026 into 2027. He also pointed to price/mix traction, gross margin resilience efforts, and continued cost discipline as the basis for maintaining guidance.

Analysts pressed on why retailers were still destocking connected products despite strong sell-out, and management said inventory convergence was slower than expected but is now happening, with stock levels around 8 to 10 weeks depending on the retailer. Questions also focused on the EUR 180 million cost savings program, the second-half EBIT bridge, and whether guidance should have been reset; management said the savings are on track, with most benefits coming in the second half, and pointed to stronger second-half sales, gross margin resilience, and more cost-program contribution. Other questions covered pricing, Consumer margin recovery, FX, transportation costs, and OEM volatility; management said price increases are gaining traction, Consumer should normalize in the second half, non-hedged FX is being treated like another cost input, and OEM’s weaker Q2 was not necessarily a trend.