Philips Lighting 1Q17 Earnings Beat Expectations Thanks to Stellar LED Sales

Philips Lighting announced the company’s 2017 first quarter results on Friday, which showed improvement in comparable sales growth, continued increase in operational profitability and free cash flow.
(Philips Lighting/ LEDinside)
 
First quarter 2017 highlights
  • Sales of EUR 1,690 million, with comparable sales of -0.8% (Q1 2016: -1.3%) 
  • Total LED-based sales growth of 19%, now representing 61% of total sales
  • Continued year-on-year improvement in operational profitability
  • - Adjusted EBITA of EUR 142 million (Q1 2016: EUR 121 million)
  • - Adjusted EBITA margin improvement of 130 basis points to 8.4% (Q1 2016: 7.1%) 
  • Net income of EUR 61 million (Q1 2016: EUR 14 million) 
  • Free cash flow of EUR 2 million (Q1 2016: EUR -78 million) 
 
 “Our comparable sales growth improved in comparison to previous quarters, driven by double-digit growth in our business groups LED and Home and a return to growth in Europe and the Rest of the World, despite ongoing challenging conditions in some markets. We continued to increase our operational profitability and free cash flow compared to the first quarter of last year, demonstrating the rigorous implementation of our strategy," said CEO Eric Rondolat. "These results reinforce our confidence that the company is well positioned to achieve its 2017 outlook and medium term goals.” 
 
In an interview with Bloomberg, Rondolat said the transition to LED is much faster than what the company originally expected. "At the end of Q1, 61% of our sales are already made by LED-based activities. There is still a lot of traction on the market and a lot of potential to innovate." He further emphasized that as the industry moves toward connected lighting, Philips Lighting is going to be the lighting company for IoT in the future. 
 
Outlook
 
Philips Lighting said it is on track to further improve its Adjusted EBITA margin by approximately 50-100 basis points in 2017, in line with its medium term outlook to gradually improve the Adjusted EBITA margin to 11-13%, and to deliver solid free cash flow. "While we remain cautious given global economic uncertainty, we are committed to our ambition to return to positive comparable sales growth in the course of this year," the Dutch lighting manufacturer said.
 
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