Philips Lighting: Second Quarter Results

Press release                                                                                                                                            July 22, 2016

Philips Lighting reports continued improvement in operational profitability and cash flow in second quarter

Second quarter 2016 highlights

• Total LED-based sales growth of 25%, representing 53% of total sales
• Seventh consecutive quarter of year-on-year improvement in operational profitability
  • adjusted EBITA of €161 million (Q2 2015: €139 million)
  • adjusted EBITA margin of 9.3% (Q2 2015: 7.5%)
• Net income of €57 million, includes separation costs and brand license fee not applicable in 2015
• Free cash flow of €60 million (Q2 2015: €-82 million)

Half year 2016 highlights

• Continued improvement in operational profitability
  • adjusted EBITA of €282 million (HY 2015: €249 million)
  • adjusted EBITA margin of 8.2% (HY 2015: 7.0%)
• Net income of €71 million, includes separation costs and brand license fee not applicable in 2015

Eindhoven, the Netherlands - Philips Lighting (Euronext Amsterdam: LIGHT) today announced second quarter and half-year results 2016. "Philips Lighting delivered satisfactory performance, posting a seventh consecutive quarter of improved operational profitability and free cash flow in the second quarter. Our businesses all progressed versus last year, performing in line with their strategic objectives," said Eric Rondolat, CEO. "I am satisfied to see our strategy being successfully executed. The conventional Lamps Business' profitability remains well positioned despite the anticipated sales decline. Our total LED-based sales grew by 25% in the quarter and our systems and services businesses saw double-digit growth, driven by our continued extension of lighting into the Internet of Things. As a result, our LED-based activities now represent over half of total sales. We are pleased with these results, demonstrating the successful execution of our strategy. Our team remains focused on our journey of continuous improvement."

Key figures

Second Quarter			Â	First Half Year
2015	2016	Change	in € million, unless otherwise indicated	2015	2016	change
1,849	1,734	-6.2%	Sales	3,576	3,436	-3.9%
Â	Â	-1.5%	Comparable sales growth	Â	Â	-1.4%
685	687	0.3%	Adjusted gross margin	1,321	1,327	0.5%
139	161	16.2%	Adjusted EBITA	249	282	13.4%
128	123	-3.9%	Reported EBITA	209	223	6.7%
100	96	-4.0%	Income from operations (EBIT)	155	167	7.7%
95	57	-40.0%	Net income	125	71	-43.2%
Â	Â	Â	Â	Â	Â	Â
Â	Â	Â	% of sales	Â	Â	Â
37.0%	39.6%	Â	Adjusted gross margin	36.9%	38.6%	Â
7.5%	9.3%	Â	Adjusted EBITA margin	7.0%	8.2%	Â
Â	Â	Â	Â	Â	Â	Â
-82	60	Â	Free cash flow	74	-18	Â
Â	0.37	Â	Basic EPS (€)	Â	0.47Â	Â
39,784	35,104	Â	Employees (FTE)	39,784	35,104	Â

For the full and original version of the press release click here (http://www.lighting.philips.com/resources/quarterlyresults/2016/q2_2016/philips-lighting-second-quarter-results-2016-report.pdf)

For the presentation click here (http://www.lighting.philips.com/resources/quarterlyresults/2016/q2_2016/philips-lighting-second-quarter-results-2016-presentation.pdf)

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Conference Call and audio webcast  
Eric Rondolat, CEO, and Rene van Schooten, CFO, will host a conference call for investors and analysts at 10:00 a.m. CEST to discuss the results.

For the audio webcast click here (http://player.companywebcast.com/philipslighting/20160722_1/en/Player)

For further information, please contact:

Philips Lighting Investor Relations
Jeroen Leenaers
Tel: [phone]
E-mail: [e-mail] (mailto:[e-mail]) 

Philips Lighting Communications
Wieger Sietsma
Tel: [phone]
E-mail: [e-mail] (mailto:[e-mail]) 

About Philips Lighting
Philips Lighting (Euronext Amsterdam ticker: LIGHT), a global leader in lighting products, systems and services, delivers innovations that unlock business value, providing rich user experiences that help improve lives. Serving professional and consumer markets, we lead the industry in leveraging the Internet of Things to transform homes, buildings and urban spaces. With 2015 sales of EUR 7.5 billion, we have approximately 36,000 employees in over 70 countries. News from Philips Lighting is located at http://www.newsroom.lighting.philips.com (http://www.newsroom.lighting.philips.com) 

Important Information

Forward-Looking Statements and Risks & Uncertainties
This document and the related oral presentation contain, and responses to questions following the presentation may contain, forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Philips Lighting N.V. (the "Company", and together with its subsidiaries, the "Group"), 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 in any 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, the impacts of rapid technological change, competition in the general lighting market, development of lighting systems and services, successful implementation of business transformation programs, impact of acquisitions and other transactions, impact of the Group's operation as a separate publicly listed company, pension liabilities and costs, establishment of corporate and brand identity, adverse tax consequences from the separation from Royal Philips and exposure to international tax laws. Please see "Risk Factors" in the Group's prospectus, dated 16 May 2016 (the "Prospectus") for discussion of material risks, uncertainties and other important factors which may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group. Such risks, uncertainties and other important factors should be read in conjunction with the information included in this semi-annual report.
                                                                      
Looking ahead to the second half of 2016, the Group is primarily concerned about the challenging economic conditions, currency headwinds and political uncertainties in the global and domestic markets in which it operates.

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 of operations, 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 forward-looking 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 Measures
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 business and 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 "Operating and Financial Review-Non-IFRS Financial Measures" in the Prospectus.

Presentation
All amounts are in millions of euros unless otherwise stated. All reported data is unaudited. Unless otherwise indicated, financial information has been prepared in accordance with the accounting policies as stated in the Combined Financial Statements for the year ended 31 December 2015 included in the Prospectus.

Market Abuse Regulation
This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

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Source: Philips Lighting via Globenewswire

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