World’s largest lighting maker Signify raises 2021 forecasts

Wednesday, 5 May 2021 00:00 - - {{hitsCtrl.values.hits}}

Amsterdam, (Reuters): Signify, the world’s largest lighting maker, said it would continue to suffer supply-chain disruptions into the second quarter including fallout from the Suez Canal blockage, prolonging shortages of semiconductor and other components.

However, the company’s shares rose strongly after it reported first-quarter profits that included an upgrade to its forecasts for sales and margins over the full year, as most supply issues were expected to be resolved in the second half.

“While we see signs of an economic recovery, supply-chain performance is being challenged by component shortages, which are impacting the first half of the year,” CEO Eric Rondolat said on Friday on a call with reporters.

However, he said sales of networked lights, which require computer chips, were strong and the company expects an upswing in sales of professional lighting products in the second half.

The company raised its comparative sales growth outlook for 2021 to between 3% and 6%, from the better than 0% it had forecast in January, and said its margins would increase to around 12% from 10%.

Detailing the company’s current supply-chain problems, Rondolat said the company had faced delays in shipments due to poor weather in the United States, the blockage of the Suez Canal in late March, and the shortage of shipping containers in both the United States and China.

Signify is facing an ongoing components shortage, which includes both semiconductors and other electronics used in lights as well as of some metals and plastics.

Around 50 million euros ($ 60.5 million) worth of sales had been delayed from the first quarter into the second quarter as a result, he said.

The company’s first-quarter net profit of 60 million euros more than doubled from 27 million euros a year earlier at the start of the coronavirus pandemic.

Sales rose 3.2% to 1.60 billion euros.

Analysts for JPMorgan, which has a neutral rating on the shares, said Signify’s upgraded outlook in particular was positive.

“This indicates confidence in the ability to offset the now rising raw material headwinds and a second half recovery in Professional (Lighting)”, they wrote in a note.