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Introduction & Market Context
Signify NV ( AMS (VIE:AMS2):LIGHT) released its Q2 2025 results on July 25, 2025, revealing a mixed performance across its business segments. The global lighting leader reported a 0.8% comparable sales growth (CSG) excluding its conventional business, while overall sales declined by 4.4% to €1,418 million compared to €1,483 million in the same period last year. The company’s stock closed at €23.00 on July 24, near its 52-week high of €24.62, suggesting investor confidence despite the challenging environment.
The results come amid ongoing industry-wide challenges including supply chain pressures and currency fluctuations, with Signify noting a negative currency impact of 3.0% on sales, primarily related to the USD. Despite these headwinds, the company maintained a relatively stable adjusted EBITA margin of 7.8%, just 10 basis points below Q2 2024.
Quarterly Performance Highlights
Signify’s Q2 2025 performance showed a decline in key financial metrics compared to the same period last year. Net income fell to €57 million from €63 million in Q2 2024, while free cash flow decreased to €36 million from €51 million, representing 2.6% of sales compared to 3.4% in the previous year.
As shown in the following comprehensive overview of quarterly results, the company experienced a sequential improvement from Q1 2025 but remained below the previous year’s performance:
A notable bright spot was the continued expansion of Signify’s connected lighting ecosystem, with connected light points increasing to 156 million. This represents a steady growth from the 153 million reported in Q1 2025, underscoring the company’s strategic focus on smart lighting solutions.
Segment Performance Analysis
The Consumer Business emerged as the standout performer, delivering its third consecutive quarter of comparable sales growth at 2.6%, while improving its adjusted EBITA margin by 30 basis points to 7.4%. This segment benefited from strong connected home performance and maintained momentum across most markets.
The Professional Business returned to growth with a modest 0.2% CSG, though its adjusted EBITA margin decreased by 70 basis points to 7.4%. The segment saw solid performance in North America and strong growth in connected lighting across all regions, partially offset by a negative currency effect of 3.1%.
In contrast, the OEM Business faced significant challenges with a comparable sales decline of 11.6% and continued price pressure for non-connected components. The segment’s adjusted EBITA margin decreased to 8.5%, reflecting these ongoing challenges.
The following chart illustrates the factors affecting Signify’s adjusted EBITA margin, which decreased slightly from 7.9% to 7.8% year-over-year:
The Conventional Business continued its structural decline with a 26.8% drop in comparable sales. However, the segment maintained strong profitability with an adjusted EBITA margin of 18.6%, demonstrating effective management of this legacy business.
Financial Position and Cash Flow
Signify made notable progress in improving its working capital, reducing it to 7.5% from 7.9%. This improvement was driven by inventory reduction, decreased receivables, and increased payables, as illustrated in the following breakdown:
Free cash flow generation remained positive at €36 million but declined from €51 million in Q2 2024. The decrease was primarily due to lower income from operations, changes in working capital, and higher net capital expenditures.
Currency movements had a significant impact on Signify’s financial results, with a negative 3.0% effect on sales, though the impact on adjusted EBITA margin was neutral. The company’s currency exposure remains diversified, with 41% related to USD, 23% to EUR, 8% to CNY, and 28% to other currencies.
Outlook and Strategic Initiatives
Despite current challenges, Signify maintained an optimistic outlook for the full year 2025, projecting low single-digit comparable sales growth (excluding the Conventional business) and an adjusted EBITA margin between 9.6% and 9.9%. The company also expects free cash flow to represent between 7.0% and 8.0% of sales.
As shown in the following outlook summary, Signify plans to continue its share repurchase program of up to €150 million in 2025, signaling confidence in its financial position and future prospects:
The company continues to make progress on its sustainability initiatives under the "Brighter Lives, Better World 2025" program. Signify reported being ahead of track on climate action targets and on target for circular economy and brighter lives goals, though it remains behind on its women in leadership positions target.
The following chart illustrates Signify’s progress toward its sustainability goals:
Signify highlighted several business achievements during the quarter, including helping Gothenburg become safer and more sustainable with 27,000 connected light points, illuminating Tan Son Nhat Airport in Ho Chi Minh City with smart lighting, and expanding the Philips Hue ecosystem with the new Hue Play wall washer.
While facing headwinds in certain segments, Signify’s continued innovation in connected lighting and its strong performance in the Consumer segment provide a foundation for potential growth as it navigates the evolving lighting market landscape. Investors will be watching closely to see if the company can deliver on its optimistic outlook for the remainder of 2025.
Full presentation:
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