AMSTERDAM (Reuters) - Top global lighting company Signify NV (LIGHT.AS) posted quarterly earnings below analysts’ estimates on Friday and trimmed full-year operating margins, citing “deteriorating market conditions”.
The Dutch company said it witnessed a worse-than-expected 25.5% fall in traditional incandescent lamp sales during the third quarter, leading to a 40% fall in adjusted operating income in that category, which has traditionally been its most profitable.
The group’s adjusted earnings before interest, taxes, and amortization (EBITA) fell to 169 million euros ($153.25 million) for the quarter ended Sept. 30, from 191 million euros a year ago, while total sales slipped to 1.54 billion euros from 1.59 billion euros last year.
Analysts polled by the company had forecast adjusted EBITA of 175 million euros and sales of 1.55 billion euros.
“While each of (our) growing profit engines improved its adjusted EBITA in the quarter, the company’s overall margin decreased by 1%, due to the performance at lamps,” the company said.
EBITA margins were 11%, at the bottom of the 11-13% range Signify had targeted for the full year, and it lowered estimates for the annual operating margins to 10.3%-10.6%.
In the third quarter, the professional lighting business was Signify’s strongest, with 3.5% sales growth and 86 million in EBITA.
The company last week agreed to buy Cooper Lighting Solutions from Eaton Corp. [EATO.UL] for $1.4 billion in cash to boost its professional lighting presence in North America.
The acquisition is the largest by Signify, formerly known as Philips Lighting, since it was spun off from Philips in 2016.
Signify is the No.2 player in North America, where it suffers from a lack of scale and competes with rivals such as Acuity Brands Inc. (AYI.N).
Overall sales in the Americas fell 10%. It was due to lower sales of lighting components to manufacturers, as well as in home lighting systems, Chief Executive Officer Eric Rondolat told reporters.
Signify shares are been up 24% this year as of Thursday’s close at 25.46 euros.
(The story corrects adjusted EBITA, paragraph 3.)
Reporting by Toby Sterling; Editing by Clarence Fernandez and Rashmi Aich