AMSTERDAM (Reuters) - Dutch lighting maker Signify (LIGHT.AS) will double its share buyback programme this year to 300 million euros (£266.45 million), the former Philips Lighting announced on Friday, sending its shares higher despite a fall in sales and a cut in its outlook.
Comparable second-quarter sales fell 3.4 percent to 1.54 billion euros ($1.79 billion), extending a weak start to the year.
Chief Executive Eric Rondolat said sales were expected to recover in the second half but not enough for the company to deliver on its promise of year-on-year sales growth.
The world’s largest lighting maker said it would repurchase shares worth 229 million euros in the second half of the year, doubling the amount earlier promised for 2018 from its original size of 150 million euros.
The company, spun off from Philips in 2016, bought back 71 million euros of shares in the first half.
The lowered outlook for 2018 did not come as a surprise, ING analysts said in a note, while the slight underperformance of the second-quarter results was “nothing major” in their view.
The increased share buyback served as “an extra”, they said, helping lift shares 8.4 percent to 24.46 euros at 0845 GMT, their highest level since June 18.
Despite the rally, Signify shares are still down 20 percent since the start of the year, after disappointing first-quarter results led to a sharp drop in the share price in April.
Signify said its results were hurt by a worldwide shortage of important electronic components, as suppliers are failing to meet earlier commitments for shipments.
“This is a temporary problem, but it can last a while,” Rondolat told reporters. “We are managing the supply situation week by week, which has never happened to us before. Our visibility on what can be delivered has lowered dramatically.”
Rondolat also said the performance of Signify’s Home division remained weak as resellers in the United States were still selling down excess stock build-up before the holiday season.
The Home division focuses on newer technologies in lighting such as its Hue line of networked LED lights that can be adjusted by mobile phone.
Sales of LED lamps were flat year-on-year while those of traditional light bulbs declined by 16 percent.
Adjusted earnings before interest, taxes, and amortisation (EBITA) dropped 18 percent to 130 million euros. Sales and core profits were slightly below the average expectations in a Reuters analysts poll.
Reporting by Bart Meijer; Editing by Subhranshu Sahu and Adrian Croft