Once again, Signify margins improve while sales fall

Added on 31 January 2024

Tags

Once again, Signify margins improve while sales fall

Bright spots emerge, as the horticultural slump could be over. But with geopolitics, world markets remain volatile across the company’s businesses.

Signify’s fourth quarter results echoed the third quarter as margins improved but sales and earnings declined amid difficulties in horticulture, indoor professional, consumer, OEM, and China. Some trouble spots including horticulture are now improving, but geopolitical turmoil prevents the company from forecasting overall sales, CEO Eric Rondolat said.

Nominal sales including the negative impact of currency fell 12.3% to €1.73 billion ($1.88 billion) from €1.98 billion in the same quarter a year ago, ending Dec. 31. The comparable sales decline — adjusting for currency and other factors — was 7.7%. Net income sagged 31.5% to €59 million ($64.1 million) from €86 million a year ago.

While the top and bottom line both dropped, Signify reported that gross margins improved to 40.8% from 37.1% from last year’s fourth quarter and that adjusted EBITA margins rose to 12.1% from 10.2%. It attributed the margin improvements to “effective COGS (cost of goods sold) management and positive sales mix.”

Ongoing cost cutting at Signify has included factory closures, a paring of the central organization, and a related restructuring. None of that has yet translated into actual profits, despite the margin improvements.