BREAKING NEWS
This content is not available in your region

Signify raises 2021 forecasts, lighting up shares despite supply woes

Access to the comments Comments
Signify Q1 sales, profit meet expectations amid component shortages
Signify Q1 sales, profit meet expectations amid component shortages   -   Copyright  (c) Copyright Thomson Reuters 2021. Click For Restrictions - https://agency.reuters.com/en/copyright.html
Text size Aa Aa

By Toby Sterling

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%.

Signify shares were up 6.9% at 47.13 euros by 0857 GMT, increasing their year-to-date gain to 36%.

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 an second half recovery in Professional (Lighting)”, they wrote in a note.

($1 = 0.8268 euros)

(Reporting by Toby Sterling; Editing by Vinay Dwivedi and Pravin Char)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.