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[News] Signify Reports Q3 Results, Growth in Horticulture and Connected Lighting Businesses
Recently, Signify announced its Q3 results for fiscal year 2024, showing a gradual recovery. Although sales declined year-over-year, the recovery in horticultural lighting, sustained growth in connected lighting, and growth in OEM and consumer businesses across multiple regions contributed to a sequential improvement in performance.
In Q3, Signify achieved sales of 1.537 billion EUR, a 6.8% decline year-over-year. However, compared to Q1 and Q2, sales showed an increase. The adjusted EBITA margin was 10.5%, similar to the previous year (10.7% in Q3 2023).
Signify’s net income reached 108 million EUR, up 30.3% year-over-year, with free cash flow at 119 million EUR(152 million EUR in Q3 2023).
For the first three quarters, Signify reported sales of 4.488 billion EUR, a 9.7% decline year-over-year; the adjusted EBITA margin was 8.9%; net income was 215 million EUR, an increase of 38% year-over-year; free cash flow was 249 million EUR.
In Q3, LED-based products accounted for 90% of total sales, a year-over-year increase. Additionally, the installed base of connected lighting points grew to 139 million during the reporting period.
Signify noted that its sales data showed a trend of consistent year-over-year improvement. The company effectively managed the accelerated decline of its traditional business and continued weakness in the Chinese market. Excluding these negative factors, sales declined by only 1.3% year-over-year.
To enhance its customer-centered operating structure, improve operational efficiency, and reduce structural costs, Signify has divided its business into four segments: Professional, Consumer, OEM, and Conventional.
Although sales in both Professional and Consumer segments declined year-over-year in Q3, they grew compared to Q1 and Q2. Professional sales reached 995 million EUR in Q3, down 5.6% year-over-year, while Consumer sales reached 304 million EUR, down 3.8%.
In the Professional segment, Signify saw recovery in its horticultural lighting products and continued growth in connected lighting products. Regionally, distribution channels in Europe remained weak, particularly in Eastern and Southern Europe, while Northern Europe saw growth.
Notably, horticultural lighting was one of the bright spots in lighting for 2024. According to TrendForce’s “2024 Global LED Lighting Market Analysis – 2H24,” demand for LED lighting in greenhouses focused on fruit and vegetable cultivation saw a resurgence in the first half of 2024, with investments in vertical farms—especially small and medium-sized vertical farms—boosting new demand and significantly increasing orders for LED horticultural lighting companies.
In Signify’s financial report, horticultural lighting continued its recovery in Q3. TrendForce estimates that the LED horticultural lighting market will grow to 1.317 billion USD in 2024 (+6.8% YoY) and expects another peak in replacement demand post-2025, likely driving further demand increases for horticultural lighting.
In addition to horticultural lighting, new LED applications in beauty, fisheries, livestock, and microalgae are emerging as important niche markets in the future of lighting.
In the Consumer segment, Signify reported growth in all regions except China. Excluding China, sales grew by 2.6% year-over-year.
Signify’s OEM business primarily provides contract manufacturing services for LED lighting components. Supported by stable client inventory levels and strong performance in Europe, this segment’s Q3 sales reached €126 million, a 1.6% decline year-over-year.
On the other hand, due to the ban on fluorescent lamp sales in Europe and four U.S. states, sales in the Conventional segment totaled 102 million EUR in Q3, a 29.9% decline year-over-year, and also declined sequentially compared to Q1 and Q2.
In response to the ongoing decline in its Conventional business, Signify announced it will gradually scale back this segment and continue increasing investments in connected and professional lighting products, which now account for 30% of Signify’s overall business, providing strong growth opportunities across Professional, Consumer, and OEM segments.
Looking ahead to Q4, Signify expects the adjusted EBITA margin to be at the lower end of the 10.0%-10.5% range, with free cash flow projected to account for 6%-7% of sales.
