By Leo Marchandon
(Reuters) – Signify, the world’s biggest maker of lights, on Friday reported third-quarter core profit slightly below market expectations, hit with continued weakness in the Chinese market and its professional business in Europe.
The Dutch group has been impacted by the gloomy economic situation in Europe and greater price competition and sluggish economy in China. It has also flagged potential tariff risks from the trade spat among the United States, the European Union and China.
Its adjusted earnings before interest, tax and amortisation (EBITA) fell 8.7% from a year earlier to 161 million euros ($174 million), missing analysts’ average forecast of 163 million in a company-provided consensus.
Quarterly sales declined 5.2% on a comparable basis to 1.54 billion euros, in line with market expectations.
Signify said its consumer business reported a 1.8% drop in comparable sales, dragged by China. Excluding China, the division delivered comparable sales growth of 2.6%, with growth across its regions.
“Despite the shrinking contribution of the Conventional business to EBITA, we have maintained a resilient bottom-line as our cost reduction program delivers the expected benefits,” CEO Eric Rondolat said in the earnings statement.
Signify, which in January said it would lay off 1,000 employees in 2024 to cut costs, had a workforce of 30,159 at the end of the quarter, down from 31,920 at the end of last year.
It reiterated its full-year outlook, including an adjusted EBITA margin at the low end of its 10% to 10.5% range.
Its adjusted EBITA margin was 10.5% in the third quarter, up from the 7.9% in the previous quarter but slightly below analysts’ consensus of 10.6%.
“Given that the major cost savings should be back-end loaded we expect bigger margin improvements only in Q4,” UBS analyst Sven Weier said.
($1 = 0.9242 euros)
(Reporting by Leo Marchandon in Gdansk; editing by Milla Nissi)
