Signify Q2 2025 slides: Connected lighting grows amid overall sales decline

Introduction & Market Context

Signify NV (AMS:LIGHT), the global leader in lighting solutions, presented its Q2 2025 results on July 25, 2025, revealing a mixed performance amid challenging market conditions. The company’s stock price decreased by 1.03% following the earnings release, reflecting investor concerns about European market weakness and a cautious outlook for China.

Despite an overall comparable sales decline of 1.4%, Signify demonstrated resilience in its strategic growth areas, particularly connected lighting, which continues to gain market share. The company’s focus on digital transformation and sustainability remains central to its long-term strategy.

Quarterly Performance Highlights

Signify reported nominal sales of €1,418 million for Q2 2025, representing a 4.4% decline compared to the same period last year. However, when excluding the rapidly declining Conventional business, the company achieved a modest comparable sales growth of 0.8%.

The adjusted EBITA margin decreased slightly by 10 basis points to 7.8%, while net income fell to €57 million from €63 million in Q2 2024. Free cash flow decreased to €36 million from €51 million in the prior year, primarily due to higher cash outflow from working capital.

As shown in the following chart of quarterly performance:

A key achievement highlighted in the presentation was the continued expansion of Signify’s connected lighting ecosystem, with the installed base of connected light points increasing to 156 million. This aligns with the company’s strategic focus on digital solutions and IoT-enabled lighting systems.

Segment Analysis

Signify’s performance varied significantly across its four business segments, reflecting different market dynamics and strategic positioning.

The Professional segment, Signify’s largest business unit, achieved modest comparable sales growth of 0.2% with an adjusted EBITA margin of 7.4%. The presentation highlighted solid performance in North America and strong growth in connected lighting across all regions, partially offset by a negative currency effect of 3.1%.

The Consumer segment delivered the strongest performance with 2.6% comparable sales growth, marking its third consecutive quarter of growth. The adjusted EBITA margin improved by 30 basis points to 7.4%, driven primarily by volume growth and continued momentum in connected home products.

In contrast, the OEM business continued to face significant challenges, with comparable sales declining by 11.6%. The presentation cited intense price pressure for non-connected components and the impact of two major customers as key factors. Despite these challenges, the segment maintained an adjusted EBITA margin of 8.5%, as negative pricing effects were largely offset by bill-of-material savings and a positive sales mix.

The Conventional business, which includes traditional lighting technologies, continued its expected decline with comparable sales falling by 26.8%. However, this segment maintained strong profitability with an adjusted EBITA margin of 18.6%, highlighting Signify’s effective management of this sunset business.

Financial Analysis

The slight decrease in adjusted EBITA margin from 7.9% in Q2 2024 to 7.8% in Q2 2025 was the result of several offsetting factors. Negative impacts from volume (-0.3%), price/mix (-1.8%), and currency (-0.1%) were largely counterbalanced by improvements in cost of goods sold (1.4%) and indirect costs (0.5%).

The following bridge chart illustrates these factors:

Signify made significant progress in working capital management, reducing working capital to 7.5% of sales from 7.9% in Q2 2024. This improvement was driven by lower inventories (-€77 million) and reduced trade receivables (-€67 million), partially offset by lower trade payables (€108 million).

The company’s free cash flow decreased to €36 million in Q2 2025 from €51 million in the same period last year, primarily due to higher cash outflow from working capital.

Currency movements had a negative impact of -3.0% on sales, mainly related to the USD, but a neutral impact on the adjusted EBITA margin. The sales currency footprint remains heavily weighted toward the USD (41%) and EUR (23%).

Sustainability Achievements

Signify continues to make significant progress on its sustainability goals under the "Brighter Lives, Better World 2025" program. The company ranked 6th overall and 1st in the Netherlands in Corporate Knights’ Europe’s 50 Most Sustainable Corporations ranking.

The presentation highlighted that Signify is ahead of track on climate action, has achieved 37% circular revenues (against a 32% target for 2025), and has reached 33% of revenues from brighter lives initiatives (exceeding the 32% target). Women in leadership positions have increased to 27%, though still below the 34% target for 2025.

The company also showcased several sustainability projects, including lighting solutions for Gothenburg and Ho Chi Minh City, as well as the expansion of the Philips Hue ecosystem with the Hue Play wall washer.

Outlook & Forward-Looking Statements

Looking ahead to the remainder of 2025, Signify maintains its outlook for low single-digit growth excluding the Conventional business. The company expects an adjusted EBITA margin between 9.6% and 9.9%, and free cash flow of 7.0-8.0% of sales.

The company also confirmed its share repurchase program of up to €150 million in 2025, signaling confidence in its cash generation capabilities despite near-term challenges.

According to CFO and Interim CEO Željko Kosanović, "Connected and specialty lighting now represent over a third of our total sales," highlighting the company’s successful transition toward higher-growth, higher-margin business segments. This strategic shift is expected to drive long-term value creation despite ongoing challenges in traditional lighting markets.

While Signify faces headwinds from weak European market conditions and a cautious outlook for China, its focus on connected lighting, sustainability, and operational efficiency positions the company to navigate the current market environment while building foundations for future growth.

Full presentation:

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