Lights maker Signify cuts annual outlook on lower consumer demand, China woes

(Reuters) -Signify, the world’s biggest maker of lights, cut its full-year profit margin and sales guidance on Friday, hit by lower consumer demand and a slowdown in China amid uncertain growth outlook.

“We have shifted gears to adapt the company to a structurally weaker external environment in the coming quarters, when current headwinds and volatility are likely to persist,” Chief Executive Officer Eric Rondolat said in a statement, adding that Signify would focus on controlling costs and cash flow. The Dutch group said it now expects adjusted earnings before interest, taxes and amortisation (EBITA) margins and free cash flow to be at the lower end of its guidance.

Comparable sales growth will be between 2% and 3% for 2022, down from previous guidance of 3-6%, it added.

Its range for adjusted EBITA margin is between 11.0% and 11.4%, with free cash flow equal to 5% to 7% of sales.

Signify, the former lighting arm of Philips, sells mostly LED lights and lighting systems to both consumers and businesses.

In the third quarter, the professional segment offset weaker demand from consumers, the group said, with total sales rising to 1.91 billion euros ($1.90 billion), up 4.3% in comparable sales.

In July, Signify had lowered its margin and free cash flow outlook, saying it expected its profit margins to decline as supply chain disruption and currency effects weighed on its earnings.

($1 = 1.0026 euros)

(Reporting by Valentine Baldassari; editing by Josephine Mason and Rashmi Aich)