Signify Nv Ord

Hello and welcome to the Signify First Quarter 2025 Results Conference call hosted by Eric Rondelat, CEO, Zeljko Kosanovic, CFO, and Telke Gerdes, Head of Investor Relations. Throughout today's call, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. You may register for questions at any time by pressing star 1 on your telephone keypad. We kindly ask you to limit the number of your questions to 1 plus one follow-up. And now I'm pleased to hand the call over to Telke Gervis. Please go ahead, ma'am.

Good morning, everyone, and welcome to Signify's earnings call for the first quarter 2025. With me today are Eric Gondola, CEO of Signify, and Zeljko Kosanovic, CFO. During this call, Eric will first take you through the first quarter highlights, after which Zeljko will present the company's financial performance. Eric will then come back to discuss the outlook for the remainder of the year. After that, we will be happy to take your questions. Our press release and presentation were published at 7 o'clock this morning. Both documents are available for download from our investor relations website. The transcript of this conference call will be made available as soon as possible. And with that, I will hand over to Eric.

Thank you, Selke. Good morning, everyone. And thank you for joining us today. Let's start with some highlights for the first quarter 2025 on slide four. Our first quarter performance landed in line with our expectations, showing sequential improvements in most of our businesses with a strong contribution of our connected offers. Indeed, we increased the installed base of connected light points from 126 million in Q124 to 153 million at the end of the last quarter. Nominal sales decreased by 1.3% to 1,448,000,000 including a positive currency effect of 1.4%. Comparable sales declined by 2.8% as growth in the consumer business across all regions was offset by weakness in professional Europe and the OEM business. Comparable sales declined by 0.9% without the negative drag of of the conventional business. Connected sales grew in the professional and consumer businesses. In China, we saw a faster than expected return to growth in both professional and consumer segments, which brings optimism for the rest of the year. The adjusted dividend margin decreased by 30 basis points to 8%, mainly due to the under-absorption of fixed costs, as well as the weakness of the high-margin professional business in europe causing an adverse segment mix effect these two effects offset the benefits from the cost reduction program net income and came at 67 million compared to 44 million euros into one last year the year-on-year improvement is mainly driven by lower restructuring costs and financial expenses finally our free cash flow generation was 40 million euros this quarter Let me now move on to our four businesses, starting with professional business on slide five. Nominal sales in Q1 were €942 million, with comparable sales showing a decline of 1.8%. During the quarter, we saw sequential improvements across most of our businesses and robust growth of agricultural lighting. In Europe, we saw continued softness particularly in the trade channel and the public segments. The adjusted EBIT MRG decreased by 30 basis points to 7.1% and showed great resilience. Indeed, the negative contribution of Europe was partially compensated by a profit expansion in all of the other businesses and the contribution from our cost reduction program. Let's now move on to the consumer business, and we move to slide six. Nominal sales in Q1 were 311 million euros and the business achieved the combined sales growth of 3.1% with a positive contribution of all the regions. During the quarter, we continue to see strong demand for our connected home offerings, in particular driven by online sales. We are also happy to report that our Chinese consumer business has returned to moderate growth. As a result, the top line growth and the cost reduction program, our adjusted EBITDA margin grew by 40 basis points to 10.8%. Continuing with the OEM business on slide seven. Nominal sales were 92 million euros with comparable sales showing a decline of 10.7%. I would like to give a little more perspective on that performance. About half of that decline is attributable to two major customers, And we believe that this effect will persist in the quarters ahead. In addition to this, we also are seeing a market environment with intensified price pressure on the gross margin, very specifically in the company business. Consequently, the adjusted EBITDA margin decreased to 4.2% due to the gross margin impact and under absorption of fixed costs. Given the start of the year, we anticipate an adjusted EBITDA margin in the mid-to-high single digit in 2025, still remaining above industry average. And finally, let's go to the conventional business on slide 8. Nominal sales in Q1 were €92 million, with comparable sales showing a decline of 23.9%, reflecting the structural decline of that business. the business retained a solid adjusted EBITDA margin of 18.4%, also driven by positive pricing. On the next slide, this is slide nine, I would like to discuss a couple of business highlights. Starting off with the latest Corporate Kings, Corporate Nights rankings. We were ranked 15th globally in the global 100 most sustainable corporations by corporate nights. But we also ranked third in our sector, which is a testament to our leadership in sustainability. Our professional business upgraded the landmark lighting of the Pasupati Bridge in Bandung in Indonesia. For this project, we partnered with Bandung and city governments to install dynamic lighting on the Pasupati Bridge. The new lighting will enhance the visual appeal of this landmark and reinforce its status as a city icon. The installation enables flexible, scene-based lighting. And through the automated control, the city will achieve 47% of energy savings. The professional business also delivered the lighting for Renault's concept store in Milan, Italy. We equipped this new concept store with customized lighting solutions using 3D printing and providing connectivity through the Interac retail management platform. The lighting design enhances the immersive customer experience and supports Renault's brand identity focused on innovation, design and sustainability while delivering 60% energy saving. Moving on to the consumer business. So we rolled out new features for the Philips Hue secure cameras. These include smoke alarm sound detection, allowing users to receive instant alerts and activate navigational lighting during emergencies. We also enhanced the compatibility with other smart home systems, such as Amazon Alexa, Google Nest Hub, and more. These updates improve a real-time safety response and enable broader integration into smart home ecosystems. Next, on slide 10, I would like to discuss our sustainability performance. The first quarter of 2025 marked the start of Signify's fifth and final year of its Brighter Lives, Better Worlds 2025 sustainability program commitments. During the first quarter, we were tracking ahead of our 2025 target to reduce emissions across the entire value chain by 40%, against the 2019 baseline. Circular revenues increased to 36%, up 1% versus the previous quarter and surpassing the 2025 target of 32%. The main contribution was from serviceable luminaires in the professional business with a strong performance from horticultural lighting. Brighter light revenues remained at 33% and beyond the 2025 target of 32%. This includes a strong contribution from both consumer and professional products with high comfort that supports health and well-being. The percentage of women in leadership positions decreased by 1% to 27%, which is not in line with our 2025 ambitions. And with this, I would like now to hand over to Zelko, who will take you through our financial performance in more detail.