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Lighting maker Signify cuts 2022 outlook again on China, business lighting

by Staff GBAF Publications Ltd
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(Reuters) -Signify NV, the world’s biggest maker of lights, on Thursday again cut its full-year 2022 profit margin and sales guidance, citing a steeper than expected slowdown in China and lower demand for professional indoor lighting.

Signify’s shares fell 3.9% in early Amsterdam trading to 31.84 euros.

The Dutch group, which had already cut forecasts in July and October, now expects an adjusted margin on earnings before interest, taxes and amortisation (EBITA) of approximately 10%.

That compares with the previous full-year guidance of the lower end of the 11.0% to 11.4% range. It will publish fourth-quarter and full 2022 results on Jan. 27.

“Signify experienced a stronger than anticipated deterioration of its business in China due to ongoing COVID-related disruptions, a much lower growth in … (component sales) and a weaker indoor professional business than expected,” the company said in a statement.

Comparable sales growth is now seen at 1.2% for 2022, compared with a previous guidance of a 2-3% increase, with an 8% decline in the fourth quarter.

ING analyst Marc Hesselink said in a note the company’s shares have already been weak, down 27% from a year ago, as it is considered cyclical.

However in October the company had said it was seeing strong demand for its energy-saving lights, especially in Europe.

“We expected that the focus on energy efficiencies would have offset some of the cyclical weakness but that was clearly not the case,” Hesselink said.

Signify said it expected free cash flow of 445 million euros ($479 million) for the full year, which Hesselink said was better than feared.

Signify was created by the spin-off of Philips’ lighting business in 2016.

(Reporting by Benoit Van Overstraeten; Editing by Sudip Kar-Gupta, Jane Merriman and Tomasz Janowski)