Philips Lighting recently released its financial results for the fourth quarter and full year of 2017. In Q4 2017, the company recorded sales of €1.892 billion (approximately RMB 14.85 billion), representing a 3% year-on-year increase. However, net income for the quarter fell to €38 million (about RMB 298 million) from €63 million in the same period of 2016.
The company saw growth in key markets such as Europe, the U.S., and China, while the Middle East and Turkey, particularly Saudi Arabia, remained challenging. On the product front, Philips Lighting reported strong performance across several segments. Lamps sales reached €442 million, LED sales amounted to €440 million, special products business generated €786 million, and household products brought in €232 million during the quarter.
Looking at the full-year performance, total sales for 2017 reached €6.965 billion (around RMB 54.67 billion), reflecting a 0.5% increase compared to 2016. Net income for the year was €281 million, up from €185 million in 2016.
In terms of financial highlights, adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose to €207 million in Q4 2017, up from €188 million in the same period the previous year. The EBITDA margin improved by 120 basis points to 10.9%, compared to 9.7% in Q4 2016. Free cash flow also increased to €434 million from €272 million in 2016.
For the full year, overall LED sales grew by 19% and accounted for 65% of total sales, compared to 55% in 2016. Adjusted EBITDA for 2017 stood at €699 million, an increase from €645 million in 2016. The EBITDA margin improved by 90 basis points to 10%, and free cash flow totaled €403 million, slightly lower than €418 million in 2016.
Looking ahead, Philips Lighting expects its adjusted EBITDA margin to grow between 10% and 10.5% in 2018, aligning with its medium-term goals. The company is focused on cost reduction and anticipates higher savings and profits in the second half of the year. With a strong start to Q1, it aims for positive year-on-year sales growth throughout 2018. While restructuring costs may lead to slightly lower free cash flow compared to 2017, the company remains committed to maintaining solid cash flows.
In addition to its financial updates, Philips Lighting has been recognized by the non-profit organization CDP (formerly Carbon Disclosure Project) as a "Supplier Participation Leadership" member for 2018. This recognition highlights the company’s efforts to reduce carbon emissions and promote sustainability across its supply chain. Philips Lighting was rated “Climate Change Level A†by CDP, acknowledging its leadership in environmental impact reduction.
Anna Spinellii, Vice President of Global Purchasing at Philips Lighting, stated, “We are proud to join the Global Suppliers Leadership Council. Reducing carbon emissions in the supply chain is a key part of our Shining Life, A Better World sustainability initiative. This recognition reflects our ongoing commitment to environmental responsibility.â€
Dexter Galvin, Global Corporate and Supply Chain Director at CDP, added, “Philips Lighting’s efforts in sustainable supply chain management serve as a model for the industry. Their initiatives demonstrate the importance of addressing climate change and align with global commitments like the Paris Agreement.â€
In 2017, 29 companies were selected for the Supplier Participation Leadership Committee, and this number doubled to 58 in 2018. Out of over 3,300 applicants, only 2% were chosen, underscoring the significance of sustainable practices in supply chain management. Only 23% of participating companies actively engage suppliers on environmental issues, emphasizing the need for greater integration of sustainability into business operations.
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