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Investing.com -- Signify shares tumbled over 5% Friday after the world’s biggest lighting manufacturer reported a sharper-than-expected fall in third-quarter sales and cut its full-year guidance as weakness in the U.S. commercial and public lighting markets deepened.
The Dutch company said sales fell 8.4% year-on-year to 1.4 billion euros ($1.6 billion), missing consensus estimates of 1.46 billion euros.
Revenue in the core professional segment dropped 7% to 928 million euros, with a larger-than-expected pullback in U.S. demand for lighting in commercial, industrial, and public spaces.
Original equipment manufacturer (OEM) sales plunged 26% to 93 million euros due to reduced orders from two large customers, while sales of conventional lights fell 25% to 76 million euros.
The consumer division, which includes Philips Hue and WiZ, recorded a modest 1% decline to 301 million euros.
UBS analysts led by Sven Weier said that “results are again rather disappointing on the lack of any positive sales momentum in the key value driver business.”
As a result, Signify lowered its full-year outlook across key metrics. The company now expects comparable sales growth (CSG) to fall between 2.5% and 3%, compared with prior expectations for low single-digit growth. The consensus estimate sits at -1.5%, according to UBS.
Excluding its conventional lighting business, Signify projects a 1.0–1.5% decline in sales, versus earlier guidance for low single-digit growth and a consensus of 0.2%. Adjusted EBITA margin is now expected between 9.1% and 9.6%, down from the previous 9.6–9.9% range and broadly in line with the 9.5% consensus cited by UBS.
Free cash flow as a percentage of sales is forecast at 7%, at the low end of its earlier 7–8% range and in line with expectations.
"Based on our math the mid-point of the sales guidance implies Q4 sales down 5% (all in) and the adj. EBITA guidance implies a Q4 25 EBITA margin of 11.7% vs 12.4% in Q4 24," UBS analysts wrote.
They now expect investors to look for more detail on what the company means by its planned portfolio review, adding that a stronger focus on professional lighting “would be positive.”