Q3 2023 results

October 27, 2023

Important information
Forward-looking statements
This release contains forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify, 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 inany 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, in particular the impacts of theRussia-Ukraine conflict, the conflict in the Middle East, the energy crisis in Europe, the expected recovery trajectory of China post COVID, component shortages, cost inflation, rapid technological change, competition in the generallighting market, development of lighting systems and services, successful implementation of business transformation programs, impact of acquisitions and other transactions, reputational and adverse effects on business due toactivities in Environment, Health & Safety, compliance risks, ability to attract and retain talented personnel, adverse currency effects, pension liabilities, and exposure to international tax laws.
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 ofoperations, 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 forwardlooking 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 Statements
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 businessand 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 “Chapter 18 Reconciliation of non-IFRS financial measures” in the Annual Report 2022.
Presentation
All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to totals provided. All reported data are unaudited. Unless otherwise indicated, financial information has been prepared inaccordance with the accounting policies as stated in the Annual Report 2022 and the Semi-Annual Report 2023.
Market Abuse Regulation
This presentation contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

2

Content
Business and operational performance - Eric Rondolat

Financial performance - Javier van Engelen
Outlook & closing remarks - Eric Rondolat
Q&A

3

Need to update
photoThird quarter 2023 highlights

4•

Brighter Lives, Better World 2025 sustainability program, circular revenues 2025 target alreadyreached•Continued softness in consumer connected, OEM and China putting pressure on topline•Adjusted EBITA margin expansion driven by continued gross margin recovery and cost discipline•

Solid free cash flow generation

Signify reported Q3 23 sales of EUR 1.6 billion, CSG of -7.8% and an
adj. EBITA margin of 10.7%
Sales (in EURm) & comparable sales growth (in %)
CSG

4.3%

-7.8%

-8.8%

-9.1%

-8.6%

1,912

1,649

1,978

1,678

1,644

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

Key observations for Q3 23•

121 million connected light points (Q2 23: 119 million)•LED-based sales were 85% of total sales•

Nominal sales decline of 13.8% (including FX impact of -6.2%)
to EUR 1,649m•

Comparable sales decline of 7.8%•

Adjusted EBITA margin increase of 30 bps to 10.7%

Adjusted EBITA (in EURm & as % of sales)%

510.4%

10.7%

10.2%

8.9%

8.3%

199

177

202

149

136

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

•

Gross margin improvements•

Cost discipline•

Net income of EUR 83m (Q3 22: EUR 112m)•Free Cash Flow of EUR 152m (Q3 22: EUR 135m)

Digital Solutions reported a CSG of -4.3% and an adj. EBITA margin of 11.7%
Sales (in EURm) & comparable sales growth (in %)
CSG

12.0%

-4.3%

-5.8%

-8.7%

-5.7%

1,103990

1,105951974

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

Key observations for Q3 23•

Comparable sales decline of 4.3%
•High base of comparison of 12.0% growth•

Continued strength in professional systems andservices•Softness in indoor professional and horticulture
lighting

Adjusted EBITA (in EURm & as % of sales)
•%

6

11.2%

11.7%

9.7%

8.7%

Adjusted EBITA margin increased by 50 bps to 11.7%

10.0%

•124

116

107

82

97

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

Mainly driven by gross margin expansion

Digital Solutions highlights
Introducing Interact Space
analysis

Installing new lighting in
the Meny supermarket inRønne, Denmark

Providing Algam EKO withenergy-efficient LED
lighting

Lighting up community
volleyball courts in Assam,
India• Launched Interact Space
analysis together with twonew sensors: theEnvironmental sensor andthe People sensor• It is a data-driven solutionthat gives building owners
the information they need tooptimize working conditions• Signify is the first lighting
company to offer thissolution• The new solution includes
NatureConnect, the newPhilips StoreFlow andvarious 3D-printed spots• Collaborated with KFIErhvervsdrivende Fond andthe local grocer to create a
new lighting design• It highlights the natural
colors of the products andimproves the overall
experience• Installed Philips CoreLine
Highbay and Philips CoreLine
Tempo LED lighting fixturesat the company’s facilities inMontelupone, Italy• The lighting upgrade wasdone in the company’s
warehouses and surrounding
external areas• The new installation reduces
energy consumption by~50%• Partnered with Brahmaputra
Volleyball League to install
120 Philips BVP483
floodlights in 20 community
volleyball courts• The project aims to support
the growth and adoption ofvolleyball in ruralcommunities in the state• Young players can now
practice under professional
illumination levels

7Digital Products reported a CSG of -10.3% and an adj. EBITA margin of 9.9%
Sales (in EURm) & comparable sales growth (in %)
CSG

-2.5%

-10.3%-12.9%-10.1%-12.1%Key observations for Q3 23•

Comparable sales decline of 10.3%•609

508661537505

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

Continued weakness in consumer connected, LED
Electronics and Klite

Adjusted EBITA (in EURm & as % of sales)•%

810.5%

9.9%

14.1%

8.3%

6.9%

6451

934435

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

Adjusted EBITA margin decreased by 60 bps to 9.9%•

Gross margin expansion•Under-absorption of fixed costs

Digital Products highlights
Integrating smart lighting,sensors, and cameras tohelp secure your home

Developing branded 3Dprinted pendant lamps
with Werder Bremen

Launching Ultra Efficient Aclass Philips LED SON-Tlamps

Introducing new WiZ
products• Introduced new Philips Hue
Secure cameras, sensors,
and app features to help
secure your home
• Monitor your home in realtime and receive instantmotion notifications• Use the Security Center in
the Philips Hue app totrigger and sound alarms,
and arm or disarm thesystem• Signify and Werder Bremen
created branded 3D-printedpendant lamps, available inthe club’s fan shop
• The lampshade and green
band with Werder branding
are largely made fromrecycled materials• In 3D printing, customers
can take part in the design
process and design a lamp
according to their wishes• The Ultra Efficient A-class
Philips LED SON-T lamps are
the first A-class HID lamps inEurope• These lamps allow for aneasy replacement ofConventional HID lamps withLEDs• Energy savings of up to 55%• Launched a new Color
Filament range and the new
Neon flex strip• The new Color Filament
range has a vintagetransparent glass stylepaired with curved filament
design• The new Neon flex strip canbe formed into any shape
you like9

Conventional Products reported a CSG of -21.0% and an adj. EBITA margin of
21.2%
Sales (in EURm) & comparable sales growth (in %)
CSG

-9.5%

-21.0%-11.4%-8.5%-15.0%Key observations for Q3 23•

Comparable sales decline of 21.0%
•195

145

203

186

160

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

Volume decline in line with expectation

Adjusted EBITA (in EURm & as % of sales)•%

1014.2%

21.2%

12.9%

22.5%

20.5%

2831264233

Q3 22

Q3 23

Q4 22

Q1 23

Q2 23

Adjusted EBITA margin increased by 700 bps to 21.2%•

Gross margin recovery•

Cost discipline

Brighter Lives, Better World 2025 – Q3 2023 results

Brighter Lives

Better World

Doubling our positive impact on the environment and society

Q3 2023
Result2025
TargetClimate action

Carbon reduction over value chain
against Paris Agreement

0On track

324 MT

Circular economy

Circular revenues

16%

32%

32%

Food availability
Safety & security
Health & well-being

Brighter lives revenues

16%

31%

32%

Great place to work

Women in leadership positions

17%

29%

34%

A list for climate andsupply chain leader
112019Baseline

DJSI World Index

EcoVadis Platinum
Medal and top 1%

On track
Off track

Content
Business and operational performance - Eric Rondolat

Financial performance - Javier van Engelen
Outlook & closing remarks - Eric Rondolat
Q&A

12

Need to update
photoAdjusted EBITA margin increased to 10.7%, driven by COGS improvements
and positive mix, partly offset by under-absorption of fixed costs
As % of sales+30 bps

10.4%

10.7%
-0.2%

+230 bps

0.0%

0.1%Currency

Other

1.8%

-1.9%

0.1%
0.4%

Q3 22

13

VolumeMixPrice

COGS

Indirect Costs

Q3 23

Working capital decreased to 9.1%, mainly driven by lower inventories andreceivables, partly offset by lower payables
In EURm / as % of sales-160 bps

10.7%1

9.1%

820
632
51-449382-172

Q3 22

14Inventories

Trade & other receivables

1Includes sales of Fluence and Pierlite on a 12-month pro-forma basis.

Trade & other payables

Other workingcapital items

Q3 23

ContentBusiness and operational performance - Eric Rondolat

Financial performance - Javier van Engelen
Outlook & closing remarks - Eric Rondolat
Q&A

15

Need to update
photoOutlook%

16•

Signify confirms its guidance for the full year 2023 and expects•Adjusted EBITA margin of 9.5-10.5%•Free cash flow generation at the higher end of the 6-8% range

Q&A
Need to update
photoCurrency movements had a negative impact on sales and neutral impact on
the Adjusted EBITA margin
Q3 23 Sales FX Footprint (% of total)

18

Key observations•Overall currency impact of -6.2% on sales, mainly from
USD depreciation•

Neutral currency impact on the Adjusted EBITA margin

Net income decreased to EUR 83m, mainly due to lower income fromoperations
Key observations

From Adjusted EBITA to net income (in EURm)
Adjusted EBITA

Q3 22
199

Q3 23
177

- Restructuring-6-27- Acquisition-related charges-10-3104

EBITA

193

151

Amortization

-32

-19

EBIT

161

131

Net financial income / expenses-17-22

Income tax expense

-32

-26

00112

83

1 - Other incidental items

Results from investments in associates
Net income

191Non-recurring by nature and relate to:• Impairment and other non-cash charges related tooperations in Russia and Ukraine• Separation• Transformation• Results on real estate transactions• Legal cases• Incidental warranty costs• Environmental provision for inactive sites• The discounting effect of long-term provisions

Free cash flow increased to EUR 152m, as a lower income from operations
was compensated by a cash inflow from working capitalKey observations

Free cash flow (in EURm)
Q3 22161

Q3 23131

Depreciation and amortization

7866

Additions to (releases of) provisions

2546Utilizations of provisions-56-53

Change in working capital
Net interest and financing costs
received (paid)
Income taxes paid

-928-2-5-17-21Net capex-32-31

Other

-13-9

Free cash flow

135152

As % of sales

7.1%

9.2%

Income from operations

20••

Free cash flow of EUR 152m•

Cash inflow from working capital•Lower income from operations

Restructuring payout of EUR 21m (Q3 22: EUR 14m)