Oct 27 (Reuters) – Shares of Dutch LED lighting systems and electrical components maker Signify rose 10% on Friday as cost cuts pushed quarterly profit above forecasts but sales remained weak .
“Demand is pretty slow in all geographies,” Chief Executive Officer Eric Rondolat said on a call with analysts. According to Rondolat, the company’s priorities now are to improve gross margin, pay dividends to shareholders and reduce debt in a context of market volatility and high interest rates.
The group recorded an 11.3% fall in adjusted earnings before interest, tax, depreciation and amortization (EBITA) to €177 million, comfortably beating the company’s consensus estimate of €157 million.
Signify has been cutting costs, including through layoffs, in response to a slow market recovery in China and falling sales volumes.
It said its workforce fell to 32,214 employees at the end of the quarter, from 34,273 the year before.
JPMorgan analysts said in a note that cost reductions were starting to materialize and pointed to year-over-year margin expansion “after eight quarters of declines.”
Gross margin as a percentage of sales reached 39.7% in the third quarter, up from 37.3% a year earlier, Signify said.
Rondolat, however, warned that macroeconomic pressures would continue to weigh on the group’s sales in the coming quarters.
Nominal sales in the third quarter fell 13.8% to 1.65 billion euros, said Signify, which reported a negative currency effect of 6.2%.
The group confirmed its outlook for the current year on Friday. (Report by Olivier Sorgho; French version by Mariana Abreu, edited by Jean-Stéphane Brosse)
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