Signify: Cost cuts, disposals and dividend reset are unlikely to resolve the need for growth; assume coverage at UW and €13 PT

研报英文原文证据摘录

Signify: Cost cuts, disposals and dividend reset are unlikely to resolve the need for growth; assume coverage at UW and €13 PT

Barclays | Signify

Investment thesis

Need a credible growth plan and proof of execution to turn positive

Lack of growth impacted by strategic choice and competitive pressures

Signify's historical performance is largely a result of lack of top-line growth due to its 'last man

standing' strategy on Conventional business and intense competitive pressures from Asia, in our

view. As shown in the chart and table below, the Conventional part of the business has trended

largely in-line with the group's expectation, and to the group's credit – it continues to make

good margins on that business (albeit restructuring costs remaining a constant feature on the

P&L). For the non-conventional part of the business, the key reason for lack of growth has likely

been the relentless pricing pressure, which has compounded at the rate of 2.5% and offset the

2.1% positive effect from volumes.

FIGURE 7. Signify - Organic sales evolution FIGURE 8. Signify - 2015-25 revenue bridge

Non-

Organic Sales Evolution €m Group Conventional Conventional

140 2015 7,465 2,850 4,615

120 Volume -1,253 -2,381 1,127

Price/Mix -1,225 119 -1,345 100

FX -837 -160 -676

80 Scope & Other 1,618 -101 1,719

60 2025 5,768 327 5,441

2015 2017 2019 2021 2023 2025 2027

Conventional Non-Conventional

Indexed to 100 in 2015

Source: Company reports Source: Company reports

Demand recovery unlikely in 2026-27

With the geopolitical disruptions since Mar-2026 likely to result in higher inflation levels and in

turn fewer interest rate cuts (and possibly even hikes), we believe that construction activity and

consumer confidence are unlikely to see a significant recovery in 2026-27. As a result, we expect