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.

Following recent downward revisions in annual financial targets by semiconductor lithography equipment manufacturers ASML and Canon, Nikon has also announced a cut to its forecast.

According to a press release from Nikon, the company expects its 2024 performance to fall short of initial plans due to delays in the recovery of market conditions within its Precision Equipment Business and Components Business, resulting in lower-than-expected demand and postponed sales of certain products.

Nikon has also revised its consolidated financial forecast for the year ending March 31, 2025, citing a delayed recovery in semiconductor-related markets as the reason for adjusting its sales plans in the lithography system sector. However, sales in the Imaging Products Business are anticipated to align with projections.

Notably, IC Smart reported that ASML revealed its Q3 financial results on October 15, reporting sales and gross margins in line with expectations. However, new orders plummeted by 53% quarter-over-quarter, falling short of half the market’s expectations. ASML has also lowered its 2025 sales target from a previously estimated range of €30 to €40 billion down to €30 to €35 billion, attributing the slowdown to a lagging recovery in most markets, with certain fabs delaying their demand for lithography systems, particularly EUV systems, despite strong demand in the AI sector.

The same IC Smart report noted that on October 24, Canon announced record high revenues for Q3 2024 (July to September) but also lowered its full-year performance expectations. Revenue was revised down from an initial estimate of ¥4.6 trillion to ¥4.54 trillion, while operating profit was adjusted from ¥465 billion to ¥455.5 billion. The net income target was cut from ¥335 billion to ¥325 billion, with Canon attributing this to an increase in the yen’s exchange rate. Additionally, the company has reduced its sales target for semiconductor lithography machines from 244 units to 239 units for the current fiscal year.

(Photo credit: ASML)

Following the Federal Reserve’s two-rate cut and release of its latest Summary of Economic Projections (SEP) on September 18, the U.S. 10-year Treasury yield has surged by 60 basis points over the past two months, from around 3.7% to approximately 4.3%. Why have Treasury yields risen so sharply? We attribute this trend to several key factors:

Market Overestimation of Rate Cuts
Earlier, the market was more optimistic about rate cuts, generally expecting that a potential recession in the U.S. would prompt the Fed to lower rates by over 11 cuts in this cycle. As a result, the 10-year Treasury yield declined to around 3.65% between July and September. However, the SEP released on September 18 indicated that rate cuts may only total approximately 10 basis points in this cycle, with the Fed expressing confidence in managing inflation and stabilizing the labor market. This shift led the market to recalibrate expectations, pushing the 10-year Treasury yield up by 20 basis points to around 3.85%—a key initial factor behind the rise in yields.

(Source:  Fed)

Stronger-than-Expected Economic Data
At the Fed’s meetings in July and September, the emphasis shifted from inflation to the labor market, with the market trading Treasuries based on the notion that “a deteriorating labor market could trigger a recession in the U.S.”

However, unexpectedly, the employment data released on October 4 significantly exceeded market expectations. Non-farm payrolls for September saw a substantial increase, and the unemployment rate declined once again. Although October’s non-farm payroll data showed a sharp drop, this was primarily due to temporary impacts from hurricanes and strikes. The ADP data indicates that the job market remains robust, which has led the market to raise its interest rate expectations again. As of November 1, the U.S. 10-year Treasury yield has risen to approximately 4.38%.

(Source:  CME, FedWatch, TrendForce)

Additionally, recent data on retail sales and GDP have highlighted robust consumer spending, with consumer confidence also climbing steadily. These indicators underscore the resilience of the U.S. economy, contributing to the recent rise in Treasury yields.

Potential Debt Expansion in Coming Years
While the U.S. Treasury on October 30 announced no changes to its long-term bond issuance size and the Treasury Secretary signaled that issuance would remain steady for upcoming quarters, potential increases in U.S. debt may be inevitable. The lack of a strong focus on deficit reduction among presidential candidates in the ongoing election cycle suggests debt growth may persist, which is another significant factor driving up recent Treasury yields.
Overall, if economic data continue to show strength, the Fed’s ability to cut rates may remain constrained. Meanwhile, though the Treasury plans to maintain issuance levels in the short term, the absence of a deficit reduction focus among candidates signals ongoing risks of fiscal expansion. These factors are likely to exert further upward pressure on U.S. Treasury yields.

Read more at Datatrack

According to a report from Wccftech, citing information from Semafor, the US Commerce Department is reportedly exploring ways to assist Intel, which may include a potential merger deal.

The report from Wccftech highlighted that Intel is the only US-based company with “mature” processes and facilities, making it a crucial component of the U.S. aim to achieve self-sufficiency in semiconductor production.

Previous rumors indicated that Intel might be acquired by companies such as ARM or Qualcomm. Regarding this potential acquisition, Qualcomm’s CEO Cristiano Amon stated that the company is exploring its options, with a decision anticipated after the US elections, according to the report from Wccftech.

The report highlighted that U.S. policymakers are also considering a merger deal, viewing it as acceptable for Intel to merge with native companies such as AMD or Marvell.

However, the report also noted that as the U.S. places significant importance on the foundry division, the potential sale of the chip business is still considered a viable option, which could involve companies such as Qualcomm, ARM, or even AMD.

Notably, Intel is expected to receive USD 8.5 billion in grants and USD 11 billion in low-interest loans from the U.S. government under the CHIPS Act. However, the funding has been delayed, as the report mentioned.

According to the report from Semafor, Intel’s outlook for the fourth quarter is better than expected, and on its earnings call last week, CEO Pat Gelsinger stated that the company is on schedule to start producing its most advanced chips, referred to as 18A, next year.

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• [News] Intel Impresses the Market with Upbeat Q4 Guidance; 18A to Begin High-Volume Production in 2H25

(Photo credit: Intel)

Last week, U.S. equity markets experienced a pullback, primarily driven by declines in the tech sector, leading the S&P 500 to drop 1.37%. In the bond market, decreasing election uncertainty and a resilient labor market caused yields on 2-year and 10-year Treasuries to rise to 4.212% and 4.386%, respectively, slightly widening the yield spread to 16 basis points. Meanwhile, the dollar index remained steady around 104.

Key Economic Data Review for Last Week:

U.S. Q3 GDP: U.S. Q3 GDP grew at an annualized rate of 2.8% (previous: 3.0%). Consumption rose by 3.7% (previous: 2.8%), contributing 2.46 percentage points, while imports grew by 11.2% (previous: 7.6%), with a negative contribution widening, reflecting strong consumer demand. Residential investment and inventory changes acted as primary drags, but as rate expectations ease and election uncertainty dissipates, the housing market and corporate investment are expected to strengthen.

Read more at Datatrack

Bank of Japan Rate Decision: The Bank of Japan held rates steady at 0.25%, in line with market expectations. BOJ Governor Kazuo Ueda indicated that if economic performance aligns with projections, further rate hikes could be implemented. He also stated that with a more stable market environment, the BOJ no longer needs extra time to observe market dynamics.

Read more at Datatrack

U.S. October Employment Data: Due to the impacts of hurricanes and the Boeing strike, October nonfarm payrolls increased by only 12,000 (previous: 223,000), while the unemployment rate held at 4.1%. However, ADP data shows private-sector employment rose by 233,000 (previous: 159,000), suggesting a robust labor market when unaffected by temporary factors.

 
Read more at Datatrack

Key Economic Data Review for This Week:

China NPC Standing Committee (11/4 – 11/8): Markets will closely watch for additional fiscal stimulus measures and debt issuance aimed at boosting domestic demand. According to Reuters, the upcoming policies could total approximately 10 trillion yuan ($1.4 trillion).

U.S. Presidential Election (11/5): Odds from RealClear Politics and various betting platforms indicate Trump as the likely winner of this election. Polls, however, show both candidates in close contention, with results from key states expected between 11/6 and 11/8.

U.S. Monetary Policy Decision (11/7): Recent U.S. economic data has been strong, with core PCE growth in Q3 easing to 2.2% (previous: 2.8%). Despite a lower-than-expected nonfarm payroll increase of 12,000 in October (due to hurricanes and strikes), the unemployment rate remains at 4.1%. With the labor market still stable, markets anticipate the Fed will cut rates by 25 basis points at this meeting, with another 25-basis-point cut expected in December.

Read more at Datatrack

• Exclusive: China considers over $1.4 trillion in extra debt over next few years