Philips Lighting fourth quarter and full year results 2016

Press release                                                                                                                                                   January 23, 2017

Philips Lighting reports full year operating profit margin increase of 180 basis points to 9.1% and free cash flow of EUR 418 million

Full year 2016 highlights

• Sales of EUR 7,115 million, with comparable sales of -2.4% (2015: -3.5%)
• Continued year-on-year improvement in operational profitability

• Adjusted EBITA of EUR 645 million (2015: EUR 547 million)
• Adjusted EBITA margin improvement of 180 basis points to 9.1% (2015: 7.3%)

Net income of EUR 185 million (2015: EUR 240 million), including EUR 143 million charges not applicable in 2015 for brand license, separation costs and financial expenses

Free cash flow of EUR 418 million (2015: EUR 632 million) or 5.9% of sales
                                                                                                                                                                                            

Fourth quarter 2016 highlights

• Sales amounted to EUR 1,934 million, with comparable sales of -3.2% (Q4 2015: -2.7%)
• Total LED-based sales growth of 16%, now representing 59% of total sales
• Continued year-on-year improvement in operational profitability
  • Adjusted EBITA of EUR 188 million (Q4 2015: EUR 159 million)
  • Adjusted EBITA margin improvement of 190 basis points to 9.7% (Q4 2015: 7.8%)
• Net income of EUR 63 million, including EUR 41 million charges not applicable in 2015 for brand license, separation costs and financial expenses
• Free cash flow of EUR 272 million

Shareholder return

• Proposed cash dividend of EUR 1,10 per share, a pay-out ratio of 52%
• Additional capital up to EUR 300 million to be returned to shareholders over the period 2017-2018 by participating in share disposals by our main shareholder.

Eindhoven, the Netherlands - Philips Lighting (Euronext Amsterdam: LIGHT) today announced the company's fourth quarter and full year results 2016. "In 2016, our businesses performed in accordance with their strategic objectives, despite challenging conditions in some markets. We are pleased with the significant increase in profitability and solid free cash flow in our first year as a standalone company. These results mark a continued progression to achieve our strategic goals and medium term financial objectives," said CEO Eric Rondolat. "Our team remains focused on the opportunities ahead and is committed to meeting the needs of our customers through innovation, while executing concrete actions to continue improving our growth profile."

Key figures

Fourth quarter				Twelve months
2015	2016	Change	in € million, unless otherwise indicated	2015	2016	change
2,045	1,934	-5.4%	Sales	7,465	7,115	-4.7%
		-3.2%	Comparable sales growth			-2.4%
753	744	-1.2%	Adjusted gross margin	2,731	2,763	1.2%
159	188	18.2%	Adjusted EBITA	547	645	17.9%
105	136	29.5%	EBITA	438	479	9.4%
79	109	38.0%	Income from operations (EBIT)	331	369	11.5%
42	63	50.0%	Net income	240	185	-22.9%
			% of sales
36.8%	38.5%		Adjusted gross margin	36.6%	38.8%
7.8%	9.7%		Adjusted EBITA margin	7.3%	9.1%
478	272		Free cash flow	632	418
	0.43		Basic EPS (€)		1.26
37,399	34,256		Employees (FTE)	37,399	34,256

Outlook

In 2017, we expect further improvement in our Adjusted EBITA margin by approximately 50-100 basis points, in line with our medium term outlook to gradually improve the Adjusted EBITA margin to 11-13%. We also remain committed to delivering solid free cash flow. While we are cautious given global economic uncertainty, we remain committed to our ambition to return to positive comparable sales growth in the course of this year.

2016 dividend proposal and capital return to shareholders

We propose a dividend of EUR 1.10 per share in cash, which represents a pay-out ratio of 52% of continuing net income. The dividend payment is subject to approval by the Annual General Meeting of Shareholders (AGM) to be held on 9 May 2017. Further details will be given in the agenda for the AGM.

Given our capital position whilst maintaining a compatible investment-grade profile, and in line with our capital allocation policy, we will return additional capital to our shareholders. Over the period 2017-2018, we will return up to EUR 300 million, by participating in share disposals by our main shareholder.

For the full and original version of the press release click here

For the presentation click here
 
 
Conference call and audio webcast  
Eric Rondolat (CEO) and Stéphane Rougeot (CFO) will host a conference call for investors and analysts at 9:00 a.m. CET to discuss full year and fourth quarter results.

For the audio webcast click here
 

Financial Calendar 2017
21 April 2017	First quarter results 2017
9 May 2017	Annual General Meeting of Shareholders
21 July 2017	Half year results 2017
19 October 2017	Third quarter results 2017

For further information, please contact:

Philips Lighting Investor Relations
Jeroen Leenaers
Tel: [phone]
E-mail: [e-mail]

Philips Lighting Communications
Elco van Groningen
Tel: [phone]
E-mail: [e-mail]

About Philips Lighting
Philips Lighting (Euronext Amsterdam ticker: LIGHT), a global leader in lighting products, systems and services, delivers innovations that unlock business value, providing rich user experiences that help improve lives. Serving professional and consumer markets, we lead the industry in leveraging the Internet of Things to transform homes, buildings and urban spaces. With 2016 sales of EUR 7.1 billion, we have approximately 34,000 employees in over 70 countries. News from Philips Lighting is located at http://www.newsroom.lighting.philips.com

Important Information

Forward-Looking Statements and Risks & Uncertainties
This document and the related oral presentation contain, and responses to questions following the presentation may contain, forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Philips Lighting N.V. (the "Company", and together with its subsidiaries, the "Group"), including statements regarding strategy, estimates of sales growth and future operational results.

By their nature, these statements involve risks and uncertainties facing the Company and its Group Companies and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are not limited to: adverse economic and political developments, the impacts of rapid technological change, competition in the general lighting market, development of lighting systems and services, successful implementation of business transformation programs, impact of acquisitions and other transactions, impact of the Group's operation as a separate publicly listed company, pension liabilities and costs, establishment of corporate and brand identity, adverse tax consequences from the separation from Royal Philips and exposure to international tax laws. Please see "Risk Factors" in the Group's prospectus, dated 16 May 2016 (the "Prospectus") for discussion of material risks, uncertainties and other important factors which may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group. Such risks, uncertainties and other important factors should be read in conjunction with the information included in the Company's semi-annual report for the first six months ended 30 June 2016.

Additional risks currently not known to the Group or that the Group has not considered material as of the date of this document could also prove to be important and may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group or could cause the forward-looking events discussed in this document not to occur. The Group undertakes no duty to and will not necessarily update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law.

Market and Industry Information
All references to market share, market data, industry statistics and industry forecasts in this document consist of estimates compiled by industry professionals, competitors, organizations or analysts, of publicly available information or of the Group's own assessment of its sales and markets. Rankings are based on sales unless otherwise stated.

Non-IFRS Financial Measures
Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth, adjusted gross margin, EBITA, adjusted EBITA, EBITDA, adjusted EBITDA and free cash flow, and other related ratios, which are not recognized measures of financial performance or liquidity under IFRS. The non-IFRS financial measures presented are measures used by management to monitor the underlying performance of the Group's business and operations and, accordingly, they have not been audited or reviewed. Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures and ratios may not be comparable to measures used by other companies under the same or similar names. A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures is contained in this document. For further information on non-IFRS financial measures, see "Operating and Financial Review-Non-IFRS Financial Measures" in the Prospectus.

Presentation
All amounts are in millions of euros unless otherwise stated. All reported data is unaudited. Unless otherwise indicated, financial information has been prepared in accordance with the accounting policies as stated in the Combined Financial Statements for the year ended 31 December 2015 included in the Prospectus.

Market Abuse Regulation
This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

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Source: Philips Lighting via Globenewswire