Signify N.V. (LIGHT) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Signify's 2026 Capital Markets Day. Welcome to everyone here and to everyone joining us online. Before we get started, I have a couple of housekeeping items. So then I will you through the agenda for the day. So our Press Release which contains the key elements of the Capital Markets Day was published this morning at 7:00 and the presentation is now available online for download from our Investor Relations website. A replay of the webcast will be made available as soon as possible after the event. We have an exciting agenda for you today. We will kick off with a presentation of our CEO, As Tempelman, who will walk you through the strategy and portfolio review. This will be followed by a presentation by Michael Kuhne, who will provide a deep dive on the consumer business. We will then have a break. And after the break, we will start with the professional block. As will return to present the professional business, then invite Craig Kessler, the President of Cooper Lighting to the stage to present a deep dive on his business. And then [indiscernible], the CEO of India will provide a presentation or a deep dive on our Indian market. After that, Zeljko, our CFO, will come on stage to present a how all the numbers, how it all comes together. And that will be -- that's it then for the presentations. We will then move on [indiscernible] After the Q&A, you're all invited to a launch, which will take place in our Lighting Application Center behind you. And we have two very exciting immersive sessions planned this afternoon. which you're all invited to. So there's a tour of our Lighting Application Center, where we showcase our professional products and the Philips Hue Experience Center where we showcase our Hue products. And you may see that on your badges, there are green dots on some of them. So if you have a green dot, then you're in 1 group and the other group will be -- we'll start with the other 2 first. Both groups will do both tours. Finally, after the tours, we will have a networking reception. So enjoy the day. Very excited to have a Capital Market Day and to present our strategy, and I'm very happy to now As Tempelman to the stage.

Thank you Thelke. Good morning, everyone. Thanks for joining us here in Eindhoven on this very warm day, beautiful day. For all of you online, thank you for dialing in. It has been 5.5 years since our last Capital Markets Day, and that's a long time. Maybe some would say too long. And it's great to be with you today here to engage about where Signify stands and what we are planning for the future. Now, a lot has happened in the last 5 years. Technology has evolved in many sectors and lighting industry is no exception. What we've also seen over the last 5 years, you remember, 5 years back, we were at the tail end of the pandemic of COVID, where people put a lot of investment into lighting their homes. And that was actually the last year, we saw our revenues going up. since markets have been very challenging, challenging for the lighting sector and challenging for Signify too. We faced sustained revenue decline over the recent years. and too often have we missed expectations. And for me, the case for change for Signify is crystal clear. We need to stop that decline and do better. And that's why today, we set out our new strategy to become a more focused, better performing lighting company. And I'm super excited about the plans that we have put in place. I feel fully confident we can deliver these plants with lots of self-help. Now with that opening, let me share some of the key messages I have for you this morning. We expect the market to be flattish in the next 3 years with growth in connected and intelligent lighting systems. Signify has many strengths that has brought us where we are today, and that will continue to service going forward. One of the strengths is the resilience of our gross margin. That will remain unchanged. We have a strategy with 2 legs. The first leg of the strategy is portfolio focus. After a comprehensive portfolio review, we have defined our portfolio at a more granular level around build and harvest businesses. The second leg of the strategy is a performance step up. each performance area, we have defined specific strategies with 3 playbooks to increase profitability. We have already delayered our top team, and we are fully aligned at the top, not only about the strategy we want to pursue, but also how we are going to successfully execute that strategy. We are planning to stop the decline in revenue, increase and grow profitability and deliver competitive shareholder returns. Now before I talk about our plans in a lot more detail, let me first share my view on the lighting market. And I mentioned that technology has evolved. In our definition of the lighting market, we estimate the lighting market to be around EUR 53 billion per annum. And with population growth and wealth growth per capita, we think the number of light points will continue to go up. Yet there is still a transition going on from conventional to LED lamps and from LED lamps, integrated luminaires. And with a longer product lifetime of LED we still see some erosion. So on the one hand, more light points on the other hand, longer product lifetimes and that results in a more or less flat growth for the next 3 years. And that technology, you see it here on the on the chart technology evolution started with conventional lighting, which is now still 12% of the installed base in the world, but it is only a fraction of the annual sales. You see it here, less than EUR 0.5 billion. That conventional market is declining with around 35% per annum, so its rapidly diminishing. We also see the LED lamps declining. So let me talk a little bit more about LED lamps. There is a force belief with many that the continuous decline in LED lamps will continue until we hit that horizontal access, and it will go to 0. We don't believe that will be the case. We think actually, LED lamps demand will flatten out, will plateau at around 60% of current value, 70% of current volumes. And why is that? We think there will always be a demand for nonintegrated socket-based applications, and we will see a pickup of LED for LED lamps replacement. So this is an important insight. LED lamps have been consistently declining with the decline of conventional lamps and LED lamps replacing conventional lamps, yet, we think that it will plateau out, and we will have a stable market. And that is important because it will come back into our strategic choices later on. And this is where the excitement is, connected -- intelligent connected lighting systems connected lighting systems are much behind LED when it comes or ahead, whatever -- the way you look at it, on the S curves, right, less mature and approaching inflection points. We expect volumes to continue going up. And we also expect some price erosion there. So about volume up 8%, price erosion around 4%. So on average revenue growth opportunity in the market around 4%. This is a business connected lighting where you need good hardware, good software and access to market. So it's an important part that there's -- a large degree, this is also a software and intelligent business where operating leverage is really playing a role. So as you grow the business, you grow the profitability. Now what is underpinning our view on this growth of connected, the use cases are super strong. In professional energy efficiency and operational efficiencies are key themes and they are themes to stay. And on the consumer side, we'll talk about it more later. There's an increasing demand for ambience and lighting experience in homes. The installed base of connected lighting is still very low. In the professional market, it's as low as 10% to 15% depending on your definition, so very low. And Consumer even lower, only 3% of houses actually have connected lighting installed. And if you want to succeed in this connected lighting market, you need strong brand and reputation because security of data, system longevity do matter. This is not a simple purchase. And in Europe and the U.S., we increasingly see fencing with regulation and some trade barriers as well. Now beyond lighting, with the demand of lighting to be expected to be flat, we are actively exploring opportunities to make a bigger move into new valuables beyond lighting. None of this is in the numbers yet. It's too immature to put any of that in our financial planning. But we are looking at it. And what are we looking at? We are looking at sizable large growing value pools where we have a right to play. And what does that mean and right to play is that we have a certain capability or we have a product linkage or we have a route to market that we can leverage or a customer relationship that we can utilize to get into this next door opportunities. Increasingly, data will play a key role. We already capture large amounts of data with our intelligent lighting systems, and we feed this data into adjacent systems. AI applications will unlock new use cases and make this space even more exciting. To give you an example, we have a collaboration with an HVAC manufacturer, so heating and cooling, where our lighting system capture the data, and we use that data to operate and steer the temperature settings in each room or we capture data with our outdoor street lighting that we feed into intelligent traffic systems, not only to do the dimming, but to actually also have a Smart City solutions optimize the use of energy and lighting elsewhere in the city. So we get more and more use cases in different spaces. Again, this is something that we will continue to pursue. It's not in our numbers. Our primary focus is now on becoming a more focused, better performing lighting company. But I do want to be very transparent about it that in the long term, we should not be just a lighting company. We can become much more than that and also create a lot more value with the capabilities that we have. Now a bit about Signify, and it's important to demystify a bit what our portfolio looks like. You see here the breakdown by technologies. So Conventional and LED lamps represent 16% of our systems or last year's number. That's a bit more than market. Market that's around 9%. Connected and Specialty lightings already make up 36% of our sales. Geography-wise, we currently operate with full presence, direct presence in 55 countries, and North America is our largest market. 22% of our business last year was business to consumer and 78%, the remainder was more business-to-business of nature. I want to highlight here the small blue part of the donut chart on Conventional, which is now 6% of our business. Of course, that's where the history of the company. This is what we grew big at, it's 2/3 of that is general lighting, so that's about EUR 200 million revenue or 4% of Signify and then 1/3 is Specialty linings, that is niche applications. It's important to understand that the Conventional lighting business, one is General lighting, where the conventional applications are still used to light for lighting applications and then there's the Specialty lighting for purification or other niche applications. Our mission to unlock the extraordinary potential of light for brighter and a better world remains very relevant in the future. Yet going forward, we don't -- our ambition is to lead the industry, not just by scale, but in performance, innovation and the value we deliver for shareholders. Now I've been now 9 months into this role, and I have not had a single moment where I regret my move, what a great company, what a great industry. I had the time to have the opportunity to spend a lot of time with partners, with customers and a lot of colleagues working in all parts of the business, including the frontline. And we conducted a comprehensive strategy review. And after 9 months, what is my diagnosis of Signify. Signify has lots of strength, and that also made us the company that we are today. the same strength will serve us well going forward. But that alone is not enough. We need to change and do some things differently. So let me talk to you a few areas. Despite the revenue decline, we have kept gross margin at a very resilient level, yet our performance across the portfolio is not consistent. There is an opportunity. We have technology and innovation power second to none. We have a very strong portfolio of patents. We really are very strong when it comes to R&D, yet we need to up the returns on our R&D investments, and we will. We have got great skill, real sourcing power and real flexibility when it comes to the supply chain. I'm very impressed with how we have dealt with real shocks in the supply chain due to COVID or more recently due to tariffs. Yet if I look at the value chain, Signify is still too exposed to the manufacturing of commoditized products, and I'll come back to that. To succeed in our business, you cannot do it alone. You need a very strong ecosystem of partners, and you need to be deeply connected with these ecosystems in many different markets. And we are, we have been for many, many decades. Yet, we need to invest more and we will invest more in distributor, partners, in certified system integrators and intensifies going forward. And then, part of who we are is our sustainability program, Brighter Lives, Better World. It is really differentiating us. We are really deeply motivated to be a force for good for the world well. Yet with our recent update of the program, we have fully aligned our sustainability goals with our business objectives. And that's important because I personally believe you can only make really meaningful impact if there's also an economic initiative to change. That's my diagnostic. Now one strength I mentioned, and you see it here illustrated by the chart, is this ability to keep margins at a resilient level. And you see here the green light that -- since COVID, we've seen revenue decline, but we've kept EBITDA margin at a very stable level. And what is behind that? It's our real brand strength and therefore, the pricing power that comes with it, but it's also sourcing power, our ability to keep our bill of material low. Mind you, 40% of our R&D goes into value engineering. So we often think innovation is only about the next cool stuff. Now a lot is actually going into value engineering. And all that together gave us this possibility to keep margins at a strong level. And we feel confident that we can continue doing that because they're really underpinned by these factors. Now that leads me to our go-forward strategy. In forwards, more focused, better performing Signify. More focused, better performing lighting company. First, leg of the portfolio, we have taken a comprehensive view of our portfolio. We have applied different lenses. We looked at the portfolio through geographies, segments, products, value chain, and we have really done that in a more granular level. Then we have defined the portfolio by those performance areas that we consider build, the build part of the portfolio and those that we consider for harvesting -- harvest part of the portfolio. And we have made 6 explicit portfolio choices. When it comes to the performance step up, we have 3 playbooks to increase profitability. And each performance area we apply one of these 3 playbooks and each performance area has a very distinct own strategy, also bases their own market dynamics. And there are a few common elements that we will pursue to raise the bar on operational excellence. Now I'm going to talk you through all this in the next few minutes. The granularity of the portfolio. What does it mean? And why do we do it? To give you a few examples, if you are in Consumer and you manufacture LED lamps in China, you in a very different business from selling Philips Hue connected online through Amazon in the U.S. There are two different worlds. Equally, if you're in a made-to-stock business in Europe, you're in a very different world from doing a stadium specification project elsewhere in the world. So our [indiscernible] business on agriculture is a whole business on its own, in its own niche. So you really need to go one level deeper than the business unit structure to have a meaningful conversation around portfolio and performance. So we have identified about 20-plus performance areas. Each with their own market dynamics, each with their own strategy and their own P&L. We are not changing the company or reorganizing the companies just how we look at business. When I have a conversation with Michael about consumer, it's much more meaningful to talk about Hue Connect it separately from how we are doing on lamp sales or luminaire sales, yes? It just makes the conversation much clearer the performance review much sharper. Yet I don't want to build the impression that we are now a portfolio of 20 different businesses. We are far from it. The strength is in the collective portfolio. And each performance area benefits from being part of Signify. Leveraging strong company reputation and brand investments, we have shared R&D platforms, we have our patents that apply across the board. Of course, we all benefit from our scale and our sourcing power. And in the go-to-market, there's a lot of overlap. There's a lot of overlap in our route to market. And of course, we all benefit from sharing the corporate infrastructure as well. So one strength of the portfolio, while recognizing that you need to really go one level deeper when it comes to portfolio choices and performance management. Now if we then [indiscernible] and if we look back, some of these build businesses have been growing, but some has been declining as well. On average, last year, we saw about flat. So that's not where the decline [indiscernible] consider portfolio options, and I'm going to talk about that. Looking back, no surprise. These are the businesses that are exposed to continued market decline, lamps being one example. We think so that, that revenue decline will flatten out. And I talked about that on the lamps side, that is a good example. So you see the numbers here. We expect the [ minus EUR 11 million ], that was really underpinning a lot of the decline we have seen to that easing out a bit, not just because of the Q, the volume in the markets also, we expect less price pressure in some parts of these portfolios. Obviously, we will build the -- as we build the build part of the portfolio, that will become a larger part of Signify and harvesting will become smaller. So as we see that shifting by 29%, we think it will be 80-20 beyond that, right? That should continue, and we see the growth coming up. Now I mentioned we make 6 explicit portfolio choices, 3 relates to our build portfolio and the relates to our harvest portfolio. First, we are excited -- very excited about the growth strategy for Consumer. On the professional side, we will make much more targeted investment. We will be much more selective in where we want to play and where we get the highest returns. We will streamline our footprint with direct presence. I mentioned we currently have direct presence in 55 countries. We'll bring that down about 35 countries. So more focused, simplified portfolio of countries. We reduced our manufacturing exposure for the more commoditized products and components. That's the first harvest choice. We keep and extract the max value from LED lamps over the life cycle. I'll talk to that as well. And we manage -- continue to manage the decline of Conventional with all end game options open. Now let me elaborate on what these choices actually mean. On the Consumer side, Consumer we basically distinct two build businesses, two harvest businesses. The build business are Integrated Luminaires and Connected Lighting and then the harvest businesses are Lamps Manufacturing and Lamps Sales. Now on the luminaires market, so this is where you don't have a lamp, but you have a luminaire with an integrated light source. Our market share is ridiculously low. We don't really play there. And with a very targeted approach, we want to grow new revenues from this performance area. It's a multibillion market, and Michael will talk more about that later. On the Connected lighting, and you see it here on the chart, we expect to continue to see market growth a CAGR of around 4% in value terms. We have a very strong position, and we are confident that we can continue to deliver growth from this performance area. And then India, that is an opportunity on its own. We are the largest, fastest-growing, most profitable lighting company in India. And we have very exciting plans to build that business, grow that business in lighting and beyond. And that's also right on the agenda for a deep dive today, and Sumit will talk more about that later on. First choice, growing consumer. Second choice, I mentioned it's targeted investment in professionals. We don't want to put equal amount of energy into every part of the market. We are often up against competition that is very focused on one particular segment. So we will sharpen our focus on selected segments country combinations going forward. For example, in the U.S., we will focus on the Health Care segment or Data Centers. In Europe, we will focus on Outdoor Lighting, Outdoor Street Lighting. And segment focus does matter. You see it here on the chart. From our granular analysis, we see that wherever we have more than 10% share in the segment, we realized much higher profitability. So leadership in this segment does matter. Secondly, we want to -- I mentioned it, we want to invest in our distribution power and our distribution partners. We need to leverage our distribution partners more and better. And we will invest in enabling them with training and also with digital solutions. This is one of the areas where AI and digital can really help us, making it easier to do business with Signify. For those large distributors that build their own platforms, we want to build EDI and API interfaces and be part of their platforms and feed into it. For the smaller ones, we will have new tooling, AI-enabled agents as well for product recommendations and quotations and configurations. So really making the reset how we serve the channel. And we will continue to invest in Connected Lighting. I mentioned that before. I will come back to it later as well. So very targeted investment in our biggest business professional. Then this is the chart that shows the country breakdown. Basically we're going to reduce direct presence from 55 to 35 countries. Now the focus will be simplify the company, focus on those markets that have the biggest sales and the biggest upside. And you see them here listed in green. Yet on the tail end, we sell already our products in 100 other countries. We have direct presence in 55. We want to reduce that to 35. It doesn't mean our products and our brands will no longer be available in that -- in the countries that are marked right on the slides. In those markets, we will exclusively -- choose to exclusively play with channel partners, deeply engaged in those local markets. And I'm convinced actually that these partners with their proximity to their markets can actually grow the business better than we could with direct presence. So we don't call it an exit. We call it localizing the growth engine. And it's actually a build business, building by focusing on the green, but also building partner capability in the white mark countries. This will reduce complexity. We will use our invested capital that can then be deployed, of course, in the growth countries. This will be a multiyear transition. So this is not something we're going to do overnight. It's not very large reorg. It's not about all job cuts. Now we will engage country by country, find the best solution, find our way into it. By 3 years, we should be there, but it will be a journey that we take country by country, and we'll do that very carefully. Now that brings me to the harvest choices. I said we had 3 choices on the harvest portfolio. And the first is that we reduce our exposure to commoditized manufacturing. Now that is a bit of a negative. I could put it positive as well. We want to focus our manufacturing efforts on made-to-order, made to engineering. This is the specification project business, where you do a project, you have a specific solution for customers in specific markets. That's what we want to be super strong at. Projects is you know what matters most. When it comes to the more commoditized or the larger batches of productive standard products, right, so panels, lamps and so on, that's where we want to reduce our exposure. And why is that? First of all, we see huge overcapacity in the market. In particularly, you see the lighting manufacturing lines being utilized, 50%, 60% is what these companies tell me, yet they build our capacity outside of China also in response to tariffs. You see new capacity being built in Thailand, Vietnam, Indonesia and so on. So I expect that, that surplus of capacity will continue to be there for quite some years. We see some consolidation, but we expect underutilization of lines. That also means that the returns on that part of the value chain are low, way below our expectations. So it's not an attractive part of the value chain for us to play in. And we are very strong when it comes to sourcing. We got the skill, we've got the supply chain experience. I think when it comes to sourcing, we really lead the markets. So with a market that is oversupplied where we got lots of choice of strategic supplier relationships, and we have some very strong ones. Why not build that strategic supplier relationship, get less exposure ourselves. That's the strategy going forward. We focus our own efforts, all about focus on make-to-order make to engineering for a specific project for specific customers. Now so therefore, also all options are open for our OEM business units, where we, of course, manufacture components and also the commodity manufacturing, for example, of lamps in China. And then you might say, well, what does it mean, all options open? We are carefully investigating how do we make -- get the most out of these businesses? Should we keep them and just optimize them, that fits in the harvest part of the portfolio. Should we partner or seek some consolidation in markets? Or should we divest? Is there a better owner for it who is willing to give us fair value? We will explore all these options. And actually, we have started that already. Now that brings me to Conventional. I mentioned that Conventional, really two different businesses: General Lighting, declining 35% per annum and then the Specialty Conventional Lighting, which is more or less flat. As we continue, right, that General Lighting will rapidly decline 35%. So we'll be left with just a niche application, Specialty Lighting business of around EUR 75 million to EUR 85 million and then a very small General Lighting business. And we are very good at managing that decline of General Lighting. I mean the team has done a fantastic job on that. And I think we are really best positioned to make the most of that product life cycle. Yet the business that will end up with is subscale. And again, we will consider all options. Should we just keep it as a small part of the portfolio? Should we see consolidation in the industry? There are a few other players? Or should we try to divest it? We'll look at that. And then there is in the Harvest business, a business that we don't consider all options because we have firmly chosen to keep it. And that's the extracting the MAX from Lamps sales, not lamps manufacturing that goes into the top line of this slide. Now this is Lamps sales. This is where we have a very strong brand. You see everywhere in retail around the world in all those small retail shops, with all those distributors, the Philips branded lamps are everywhere. It's a good business for us. We will continue to harvest it and manage it for cash, strong brand, strong distribution reach. So those are the three harvest choices. That brings me to the second leg of the strategy, which is the performance. Now again, I mentioned we have three playbooks. And each performance area that we have defined at granular level, the same definition as we use for the portfolio split, we also use for the performance part of the strategy. There are businesses that we like in terms of profitability, and we like the growth prospect as well. Typically, the project businesses and the software businesses where as you grow in volume and scale, and you use our scale and size, profitability also growth, operating leverage, playbook one, maximize operating leverage, grow volume, grow profitability. Then there are a few performance areas that do not meet our expectations, and they need to target interventions. Those are the turnaround playbook. We got to fix those businesses, they are currently dilutive, and that needs to be turned around, playbook 2. And then three, are the businesses that are exposed to no or low growth, but where we do like the profitability. They contribute positively to the portfolio of Signify. Those are the business like LED Lamps and Conventional Lighting, right, where we need to maintain that profitability going forward. So those are the 3 playbooks. Portfolio build in harvest, playbooks, maximize operating leverage turn around or maintain profitability. Across the company, we have a few common themes fully owned by the leadership around how we want to raise the bar on operational excellence because performance is really at the heart of our strategy going forward. And these are the four performance areas. I will not talk you through all the bullets, but we will become less of a technology and product-led company, will become more of a market customer-led company. We will bring the voice of the customer in everything we do. And you need to be good at that if you want to succeed in purchase, together with a complex and rich ecosystem of partners. We will start using enabling our partners, digital and AI are going to help us on that, and we will very target it, invest in our own capabilities. and we are doing that already, whether it's around e-commerce, marketing or sales. Then supply chain. Supply chain is really critically important if you want to succeed in the specification project business as well. We need to make sure we end up with the right portfolio, and we are planning to reduce our SKUs, our stock keeping units quite significantly, 40%, 50%. We simplify our processes and we automate. We have now -- we are now starting to use AI tooling in our demand forecast and immediately, you see inventory and working capital free up. Then there's costs. We will drive a very strong cost culture at a really granular level of performance area. We have too often, rreacted on costs in a very agile and very efficient and effective manner, yet too late. And it's required a company-wide restructuring program to get our costs back to a competitive level, which we believe will be 30% of sales when you talk nonmanufacturing cost. And each time we went above that, we needed that big program to bring it down. Going forward, we want to manage cost as business as usual, each performance area not only has its own P&L, but also its own benchmark P&L and its benchmark cost base. And we want to make sure we manage it on a day-by-day basis and make sure we keep our cost at a competitive level in each single part of the business. If we do that well, we should not need any more large-scale company-wide restructuring. Also within the choices we make on portfolio will be much sharper on allocating of funds. And then on digital, I got the question this morning from 1 of the media, how excited are you about the opportunity of digital and AI for Signify. I'm very excited about it. In three areas, it can make a real change. First of all, in our products, New use cases. In intelligent lighting will be unlocked with AI applications. We can talk about that more later. Then serving our channel better. I mentioned that before; and thirdly, to drive our own productivity up. demand forecasting and supply chain is a good example. For that, we are already building our data structures and intelligence foundation. And we also have full ownership, of managing the business towards a simplified and standardize landscape not just by the tech guys but by the entire leadership. Now that brings me to the team. We have already delayered the top team. So the Board of Management works directly with the key leaders. And you see here on the slide, the key P&L leaders. So we have quite a flat organization. This strategy was not pieced together by just the Board of Management. This strategy was created by the entire team. It has full ownership and not only of the strategy, but also how we are going to execute it. We already have put in place a transformation office. We have 40 to 50 really game-changing initiatives to deliver the strategy that we now have execution in place and we monitor progress. We really want to have that empowerment pushed down at those performance making sure they manage their P&L and their performance to very competitive levels. You also see that we have a vacancy in the Board of Management, and that is a vacancy of Chief Growth Officer. That's a new role that we want to create. And the Chief Growth Officer, apart from being part of the co-leading the company will also be really tasked with building the next generation of platforms. We need to become much more of a software business in combination with the hardware business as we move into the intelligence spaces to make sure we get a higher return on our R&D and make the right choices there. We invest our R&D in what we can monetize and what customers want and are willing to pay for. We'll still do some research as well, but we will focus more on what we can actually monetize. This is also of course to the who will lead the team looking at adjacent value spaces. This is really exploring, and I mentioned it earlier in the presentation, what are the next door opportunities where we can create good shareholder value. That's the team. And what is the team set out to deliver? And then I come to a few numbers. First and foremost, we want to stop the decline. This is a '29 objective, 2029 objective, and we want to return to stable, albeit low growth of the top line. This is reflective of a market, right? That has been shrinking. So we need to outperform going forward. We think it will be around 0 and we [indiscernible] to outperform. And of course, it is a function of our portfolio, which is built and harvesting. And I also want to highlight that in these numbers, we assume that all the harvesting business stay with us. So all the options are open in terms of seeking partnership, consolidation and divestments are not yet counted for in these numbers. But that's our kind of stopped the decline is our key objective. And I am confident that we can bring the company back to stable revenues. Is it ambitious enough? I don't like to present all sorts of leadership fantisism and come up with all sorts of hockey stick charts, I think we can deliver this. This is credible. Then we want to increase profitability. We are confident we can deliver around 10% adjusted EBITDA through improvement across all those businesses with our three playbooks as well as the portfolio choices we make. Sustaining gross margin and then achieving that right level of cost. And then finally, we want to deliver 7% to 8% free cash flow, 7% to 8% revenue. All this with the shareholder in mind, competitive shareholder creation is what we are fully committed to. With this strategy, we want to set up the company for future success, stabilize the revenue, improve profitability, clear portfolio choices, performance step-up, three playbooks. We'll have a balanced capital allocation. Zeljko will talk to you about it in a lot more detail. Strong balance sheet is our #1 priority. Then we are committed to pay attractive and competitive dividends and we'll be very selective on M&A, not only selective in terms of what fits strategically, but also strict criteria before we make an investment in terms of the returns we expect on such an acquisition. With that, I'm going to hand it over to our CEO of the Consumer business, Michael. Michael? [Presentation]

Good morning. Still awake? My name is Michael Kuhne, I am the CEO of Consumer Division, and I'm going to take you on a journey into the world called consumer. So being a little bit less than 2 years in a row, I also want to share my personal journey. The things I learned coming new to this industry, things I changed and the things, of course, what we're going to do. So first thing I learned coming into this industry, if you look at the Consumer business, it's not really just one business. It's actually three performance areas LED lamps, luminaires and of course, the Connected business. And all three are slightly different. They have slightly different dynamics, and they need a different strategy to get the MAX out of them. But they have one thing in common. They all three have a very sound and good foundation and a strong position in the market. And that makes that I am super excited as leading this business because I believe we have a real exciting growth opportunity here within Consumer. Now let's get into it. I already said there are three performance areas. You see them here on the slide, LED lamps, luminaire and Connected. When we start with LED Lamps, this is a big market. very profitable for us, where we have strong market share positions. And actually, the strong market share positions are growing every year. So we're increasing our market share. But we're operating here in a declining operation, right? The volumes are going down. And As already talked about it, you see in the slides. We believe that the volumes in this market will stabilize roughly 2035 at 70% of the current volumes, but it will stabilize. Going to the luminaires part. On contrary to the LED lamps, this is a [indiscernible] growing business. And it's very diversified. So it's very fragmented. There's no big player, no dominant A brand in that market. But the interesting part of this market is the size. We're talking about a EUR 15 billion plus market worldwide. And we're just relatively modest in this market yet. If I look at my current portfolio, I'm very much in the functional area, which is downlight spots, and it's just small area compared to the total opportunity we have. And I believe that with our distribution power and our brand strength, there is something to grab for us here. Connected, last but not least, we entered that market in 2012 with the Philips Hue brands. The growth here is the penetration in the households. We believe that if you do the math and read the report that this market still is in the early phases, and it could still grow on average globally, I think, 5x the current value. So that is, for me, a great opportunity where we have a strong position already. All right. But before we really go into what we're going to do, I just want to take you on a journey to zoom out a little bit because when it comes to the consumer demand model, it's slightly different than the professional one. First of all, the big difference is, of course, the one -- obvious one we're serving consumers. And consumers move houses every 8 years. That means that 12% of our potential customers are on the move and open for business and [indiscernible] there's also changing behavior of the consumers. And what we see is that they're basically moving from -- particularly after COVID from basic illumination functional light into more ambience, convenience, even connected or entertainment. And what you see more and more is that consumers are making what I always call as a marketeer, their houses, they're turning that into their homes. That means they're investing time and money and effort in getting that warm cozy atmosphere that pleasant environment where you really feel at ease because its your home, right? And you see that in the lighting part of [indiscernible] lighting, dimmers, I mean, different shades of white, warmer cozy and potentially even people jump into Connected Lighting with all these benefits, but I'll come back to that later. And the interesting part here is that's really for me a big insight is that these ambiance lights, convenience lights, creating the [indiscernible] are not necessarily fighting with the existing light sockets. These are lights, which are additional. These are lights you want, not necessarily need, right? And it's true. It's not for everybody. I'm going to be very honest. There is a group who says, functional lighting is good enough for me. But there is a large group, we call them accomplished cost of [indiscernible] who's really into this was amazing to see, and that group is growing, and that's what you see in the market. Third thing, when it comes to consumer demand model is our marketing power. And us already talked about it, the Philips brand within Consumer is just second to none. Me being a marketeer having brand awareness levels of 80-plus percent is just a dream to work on. Basically, it says that wherever you are in the world, and you mentioned the Philips brands, people will know us. And that's a big thing. And then you have, of course, our marketing activities. We constantly engage and I'll come back to that more on a daily basis, via CRM, via social media with consumers. And by doing that, we basically inspire them and give them, sold them the possibility what their home could be like. And by doing that, we create additional demand. So we have much more levers to pull when it comes to the demand model. Now to summarize, Signify is the global leader in consumer lighting worldwide. And being an integral part of Signify gives us so much benefits. To give you some examples, right? Connected capabilities, we obviously have Philips Hue. My [indiscernible] colleagues also have a Connected business. So we contribute significantly to these capabilities within Signify, but we also benefit from it. When it comes to innovation, many inside propositions from the prof part, we can take consumerize them, make it accessible in the cheaper technology and bring it to consumer. There's a great example there at the corner. It's called Philips Skylight. If you haven't seen it yet, it's basically what we took the insight and the proposition of NatureConnect for those of you who know it, especially mimics the sky and the sun in the meeting room. We consumerized it, and we just launched it this week, actually. It's there for you to see. But also when it comes to sourcing power, obviously, by combining the volumes of the prof and the Consumer business, we get better prices. And last but not least, when it comes to real distribution power, we have strong synergies there, particularly in the emerging markets, where you look at the stock and flow business of prof in emerging markets that is very much synergetic what we have in our, let's say, traditional trade retail. So strong leading market positions available in more than 150 countries. I already talked about our strong brand portfolios. Distribution power, basically, we are everywhere being at the grocery, ERT, e-commerce channels, do-it-yourself. And I think most importantly, we know what we're doing, and we have been able to turn this business after months of decline and we put a deck to growth in 2025. All right. That's what I learned, right? So coming from a different industry background, I'm coming from the consumer electronics industry, more than 20 years experience. So the 3 areas I really wanted to change quick, were capabilities, structuring people. Let me tell you a little bit what we did there. When it comes to capabilities, the first thing I really wanted to do is put the consumer in the center of everything, and I literally mean everything. That means the packaging claims, claims need to be in normal language, I can't explain to my mother what this is about. We're doing something wrong. We should not talk about so many luxes or what's -- or 27 fittings, et cetera, right? Consumer doesn't think like that. When it comes to marketing and social step-up, here, we made big changes. We hired external marketing and social media teams, really know what they're doing. To give you an example, when I came, we had one person doing social media. But we had per month, I think, 10,000 views. We don't have 10,000 views per month. We have 2 million to 3 million views per week, and that's really world-class leading. So 2 million to 3 million engagements per week with consumers, inspiring them what they can do with their homes. Big step up there. And AI, I mean, as already talked about it, we put AI in the heart of everything. I mean supply chain is already moving it. We're buying media with AI, of obviously generating visibles with it. So yes, we're really exploring a lot more and more. Coding in our connected business speeds up with AI, and we believe that can be much more. Now let's move to the structure, and that's very simple. If you look at the structure, wherever the consumer goes, we go. Very simple. So if consumer goes to Amazon, we go to Amazon. If consumer goes to TikTok, and believe me, a lot of consumers are going to TikTok this moment. We go to TikTok. If consumers go to do itself and go to do yourself, et cetera, et cetera. So it's very simple wherever they go, we go. And as a result, we also needed to change the structure because going digital, going social shopping, et cetera, needs a different scale, it's a different dedicated team. So we set up a new e-commerce organization. We did that last year, and you see immediate results, give you some numbers. Black Friday, big thing. Big thing for consumer Black Friday. Last year, the e-commerce team grew in the U.S., 36% versus last year. Europe, even better, 76% growth last year in Black Friday, immediately impacted bottom line because just doing the things right. And of course, we had a different marketing setup. I already talked about that. people. Yes, we brought in professionals when they're where we needed it to really get that impact fast, and I showed the results on it. But also internal talent, we identified quickly and put them in the right places so they could [indiscernible] and learn and be at their best. So we did quite some things there. And when it comes to my own management team, let me just say one thing. I think 60%, roughly 60% is new. But I think we're ready now for the big jump. Okay. So we talked about what I learned, we talked about what I changed. Now let's talk about what we're going to do, right? Three business performance areas. Let's start with the LED Lamps. Remember, large business, profitable strong market positions, but declining markets. So having seen these dynamics, the best strategy here is a harvest strategy, which means that we're going to defend our value share, our strong value share and maximize profit by actively managing price and cost, of course, leveraging also the strong brand and distribution power we have. When it comes to luminaires, different story, right? This market is growing, EUR 15 billion, relatively small portfolio, but we believe there's more to gain for us here with our brand. So what we're going to do is twofold. First of all, we're going to keep the functional light what we have now and grow further, the functional light, which [indiscernible] spots downlights. But on top of that, we really believe, and I really believe it gets me really excited because we're going to build a new portfolio, which is design-led and family-based. That sounds very complex, but it's actually very simple. Because how do consumers shop. Consumers do not walk into the shop and say, I'm on an E27, 400 looms wall lamp. Now they walk into the shop, say, that's a beautiful design, what is that? So we need to beef up our design capabilities. We want to make products beautiful, and we have one of the best design agencies in-house, making beautiful things, capture the attention of consumers. And once we've got that attention, then my family approach comes in, "Oh, you like this design. I have this not only in the wall, I have it also on the floor, table and ceiling and then you got them, because you want consistency, right. Making their houses, their homes, we're going to just help them. So that's what I mean with design-led family-based portfolio. Last not but the least, of course, the connected as talked about it growing markets. We have a very strong position here, and we just want to outgrow this market. We want to gain market share. How? Twofold, first of all, grow faster, that means getting more households into your ecosystem, so increased penetration. And once you're in those households, I want to sell more products. So we're talking about depth and width. Because in the end, and that's a big thing I think we should take out of this presentation. Philips Hue and the Connectus is about an ecosystem. We're not just selling a connected lamp. I'll come back to more and explain why. Now here you have it, our strategy going forward. As also told already, we have a strong portfolio focus. We made clear choices what we want to do, let lamps, harvest and reduce our exposure to manufacturing. Luminaires build, connect builds, right? But we need to also step up when it comes to our performance. And I'm really not happy yet when it comes to the complexity of my business. I mean I have too many SKUs. So at hidden cost, we need to get 40%, 50% out. And we already started that and making good progress. And then when it comes for lamps, we're going to defend our value share and basically use the playbook, As also talked about, in this case, to maintain profitability. And for the luminaires and connected, we have the other playbook, which is maximize operating leverage. And with this, I'm really excited to get this whole business growing. All right. That was too quick. Let me go back. For those of you who do not know the Hue business that well, we made a little clip, and then we can talk a little about Hue. Here we go. [Presentation]

Does anybody have Hue? Very good, very good. It's amazing, right? And there are, as I said, it's not for everybody, but the group really into this is really rapidly growing. And the skeptism say, "Yes, okay, what's the big deal, Michael. It's a connected build that can change color and you can turn it on and off with an app, right? But it's so much more than that. It's not just a connected color build. We're talking about indoor luminaires. We're talking about outdoor luminaire, we talk about track systems, remote controls, dimmer, security cameras, sensors, the [indiscernible] entertainment stuff, light strips, other modules, it's a whole suite of products. It's an ecosystem. But it's not the width of the portfolio, which makes it really special. It's the way all those modules work with each other and give the seamlessly personalized experience. Philips Hue basically follows you. It adapts to you, at a depth to your teams, to your preferences. And once you've set it up like you want it, you'll be so happy to do it, and you'll be so enthusiastic because, yes, you can interact with an app. But once it's done, to give you an example, 15% of our consumers, once it's set up perfectly, they don't touch that app anymore. And this is a big difference is because I talked about increased lifetime value because we're an ecosystem. Because of the seamlessness and the width of the portfolio, people start buying more products. And that's the big difference with my Chinese competitors who sell a connected proposition like a Connected Lamp, et cetera. They typically sell 1 or 2 products to a household. On average, worldwide, Philips Hue users have more than 10 appliances of Hue, and that number is increasing every year after give you a good example in the slide below this. And that's the big, we have an ecosystem. We're not just selling a connected lamp. All right. Now how are we going to further grow to this? Are going to speed up a little bit. Now we're going to, first of all, continue to deliver first-to-the-world innovations. What do I mean with here? We just lost recently MotionAware, which is super cool. It basically turns every Hue luminaire or light bulb into a motion sensor. Now you could say, okay, what does that? I'll give you an example, my kids 17, 14, I get crazy when they just leave on the lamps in the whole way or in their room. I threated with everything. It doesn't work. Now if the MotionAware, I could adjust the ecosystem in such a way that when somebody enters the hallway, light goes on, when there's nobody in hallway, light goes out. Same for their bedroom, right? It adjusts to you. You could also use it for security purposes. You can just imagine the endless possibilities it has. You can do everything what it wants because every lamp is a motion sensor. Now what we also have [indiscernible] this is a bit more difficult to explain. But once you're into the ecosystem, you have your [indiscernible] the system builds a 3D map of the room. It knows which lamp is where. And based on that, it can optimize the ambience atmosphere. Now for some of you here, I would really advise you to go through the breakout rooms at the end of the day, where you can see the demo of [indiscernible] because it's really the next level when it comes to experience. Now we talked about design and luminaires. Of course, that goes also here. We have for that design family and product led then we're going to do that also in Hue. I talked about the lifetime, we're going to increase that further by having more or beautiful products, but also have additional services, which people are willing to pay for. And we're already doing that for security, we have subscriptions, but it could also be in-app upgrades, et cetera. And last but not least, what we're going to do with Philips Hue, we're going to really create a wow entertainment experience. Now what is that? More and more consumers are consuming content, content being music, Spotify or what else or video, HBO, Netflix, et cetera. They're all into content. Light can play a real emerging role in getting that level of experience from here to there. Let me show you a movie what I mean. [Presentation]

So what it does? It sincs the light with the content being a music or video, and it gives a real cool experience, something consumers are super enthusiastic about, and that segment within the Connected business is really booming. And more and more people are getting into that. It's something you just talk about to show to your friends, right? Yes. Good. So we talked about that. Let me -- and this is my second last slide. Let me give you a real sample because what gets me really excited is I want to make sure you understand the business behind Philips Hue because it's actually very simple. The business is 3 pillars: household penetration, within the households, you have the number of devices and then you have that times the average price of the device. So what we have here, I just brought a real life example of the Netherlands. Now I have to say you, Netherlands is, of course, our home country. So we have a stronger market position here. And we're a bit further on the journey here, which is also great because it shows you, if you do everything right, the true potential of the system. Now if you look at the Netherlands, 8 million households, roughly. We have a penetration of 8%. On 8% of the households we have at Philips Hue bridge. We believe that the market in the Netherlands where globally, we believe can be 5x still what it is right now over time. penetration is a little bit higher. So we believe that it can be roughly 3x. So we believe that 8% could grow to potentially 25% over time. If you look at the household devices of you, I just put the numbers here, right? It started in '22 with 11 devices and every year, it goes up and up and up. And this is very now. And at this moment, we average, globally, we're at [ 10.5% ]. The Netherlands has 17 devices per household who has you. And then you talk about the price but you see a careful this is what we call net-net sales price. So this is prices which we sell to the retailer after rebates and discounts, this is the money we get on the back on average. So after all the negotiations. So this is the drivers. And I -- and you're a smart cookies, of course. I can see you already start calculating. So if you would increase the penetration in the Netherlands, just with 1%. We go from 8%, 9%. And you keep all that the same, 17 devices, 30 year [indiscernible] with my marketing power brand power, that would be for the Netherlands only EUR 40 million sales. And this is just the Netherlands, relatively small country, right? And there's so much more growth potential. So that gets me really excited to get there. But I have to probably get overly excited. This is hard to work there. So it's not easy to get just from 8% to 9%. But I do believe that with the transition we've made the last 2 years being in marketing, e-commerce, et cetera. We've never been in a better position ever to capture that future growth. So let me close off. We talked about my personal journey. What I learned, what we changed, we talked about what we're going to do. We have clear strategies in three business areas. We know what to do. We have proven that we can bring the business back to growth. And I hope I could convince you about the exciting growth opportunity in Consumer. Thank you all. And I believe we now have a break until 10:30, so we can all grab a coffee. Thank you so much. [Break]

Welcome back, everyone. Let's now talk about our Professional business, which is 65% of Signify as it is today and a very important core part of who we are. Now our Professional business across the world have their own characteristics and really their own regional dynamics. But what goes for all regions is that you really need to distinguish the stock and flow business, which is the more trade commoditized part of the business versus projects, which are much more customer-led, made-to-order specification business often involving Connected Lighting propositions. Signify has a very strong position in both of these segments, and that was a position that was built over many decades. Now across all the regions, there are a few common elements in our Professional strategy going forward. First of all, we are going to focus and have a much more disciplined focus on the segments where we have leading positions. So don't play everywhere play where we can truly win and differentiate and choose your segments on a country level and a regional level carefully. Secondly, we are going to fully leverage our partners and reinvest in our distribution. It's not just distributors, wholesalers, that's also agents in the U.S. that specifiers, that's architects and so on. And then what is also true for all parts of the Prof business across the world, we will continue to invest in our leading position in Connected Lighting. That is our largest growth opportunity. Those are the three key messages, stock and flow is different from projects. We have strength in both segments. And going forward, we want to focus where we have leading positions. We want to win with partners, and we want to invest in Connected Lighting. The Prof strategy on the page. Now to, again, create a bit more clarity around our portfolio mix. You see it here, about 70% of last year's sales was actually around projects versus 30% in the trade-oriented stock and flow. And when it comes to geography split, North America is about half the Prof business. Europe represents 30% and rest of world, the remainder. And I talked about the importance of this rich and somehow complex ecosystem that is really important in the Project business, but also in stock and flow. We have multiple routes to market with many actors involved. And there's complex decision-making. And demand creation through specification is really key. It's a real key to success. You've got to be specified on a project. Equally important is the mind share of installers. You want to make sure you have good mind share and preference, choice of preference with installers. And we know how this ecosystem works. We have been doing this for many, many years. We have got the deep reach in the markets, we've got a relationship. We are deeply involved. And going forward, like I said, we want to leverage our partners even more and make them successful. If our partners win with their sell-out and they are successful in the market, we will benefit from that as well. So first key message. The ecosystem our deep connectivity in that ecosystem is a real differentiator. And it's actually very hard for newcomers to play into this space -- in this Project space. And this is what I call our pride slide. There, we do amazing projects around so many segments in so many countries. And you see some of them here on the slide. We have been selected as the preferred supplier on flood lights by FIFA. And of course, that gives us a real strong position to be the recommended provider for the football industry. Now you see also here on the hotel side, the famous hotel, the iconic Marina Basins in Singapore; where we have deployed our Interact platform together with our Dynalite platform. It an huge hotel facilities and entertainment facilities, more than 100,000 light points, HVAC systems and Drapery are up 2,500 rooms. So we go much further than just lighting. We actually controll drapery and HVAC systems in those hotel rooms. And then hospitals. I mentioned that health is a key -- health care is a key sector also for us in the U.S. and Cooper Lighting has worked here with the Massachusetts General Hospital to create a safe place that support high-risk patients recovery and their well-being. So I could talk about this slide for a long time, I won't. But what all these projects have in common is that they make use of our leading Connected Lighting platforms. And our position today is strong in this business, and it's a key area for growth going forward. Like I mentioned earlier this morning, the installed base in Professional when it comes to Connected and Intelligent Lighting Systems is still low. It's 10% to 15%. There's way to go, way to go. We have a leading position. It's already 40% of our Prof sales, is actually connected. This is last year's number. And over -- on previous years, last few years, we have seen double-digit growth in Connected Lighting. We have a very strong patent portfolio, not just on hardware, but also software. Increasingly, you see that our patent portfolio is shifting to much more software. And above all, we are trusted for our quality, for reliability, for the data security that we provide, but also for the longevity of the relationships that we build. So going forward, connected lighting will continue to be important. We keep growing it across many applications. Operating leverage is really keen as we grow the business. We also improve its profitability. We invest in new use cases, leveraging AI functionality, and we will also address this ease of installation. And that's important because, particularly in Europe, as you see in the other markets as well, the capacity of technicians is a real crunch point. So there is just not enough technician capacity available. So therefore, time of technicians are scarce. And if we make the commissioning of these systems easier and the installation of the hardware easier, that is a real competitive advantage. Now a bit around -- quick around the three different regions. In Europe, we have a very long history, of course, from the Philips days. We have a very strong brand. We've been here for decades. We have the #1 position. We are very strong in outdoor. We've got three manufacturing sites in Poland, in Hungary and in Spain. And Europe is a more fragmented market with quite a few different supplier. We also see a growing importance of e-commerce, and that is particularly also in the environment of distributors. You see distributors do not just sell over the counter, but they also start to put more on their website. So this is an opportunity to enable them and help them doing that in a successful manner. Going forward, we will have that segment prioritization in Europe, very strong focus on the outdoor side, and we will make better use and invest in our partners, our specifiers. We want to grow the number of relationships we have with specifiers. We will focus our innovation on Connected Lighting, no surprise and the specification Projects business. And when it comes to performance for the European business, all three playbooks do apply. Outdoor, strong position. We want to scale that business, keep growing it, keep leveraging our strong starting position and really have operating leverage to grow profitability. The stock and flow, that's where it's more competitive, more commoditization. There, we need to maintain profitability. It's part of the business that serves us well, but there's also where you really need to have a very strong marketing mix, and that's what we are pursuing. And then, of course, on the indoor side, although we are probably outperforming when it comes to revenue, the profitability of our indoor business needs improvement, and that is really a turnaround playbook, and we have actions lined up to deliver on that. That's Europe. Then the rest of the world. Now the rest of the world is a big place because we define the world is North America, Europe and rest of world. And by definition, therefore, it is a very fragmented landscape with many countries. What is consistent, though, is that in many of those markets, we are facing local competition. We are the only true global player and that gives us a real advantage. We have a high portfolio of very high-growth countries, delivering profitable, accretive growth. The largest markets are Middle East, Turkey, Africa, China, India, Southeast Asia, and we also have a strong position in the Pacific. Made-to-order manufacturing, we do in 10 locations. We have manufacturing sites. You see it here on the slide. Our major plans are in China, Egypt, Saudi, Brazil and also in Indonesia. It is also more fragmented space and very much a partner-led business. 75% of our sales through these emerging markets go through distributor channels. Now going forward, We, again, like Europe, actually, we prioritize and focus on the specification business. What you see is once we get specified on the Project, we are in a very strong position. We win one out of two. So getting specified on a project is really important. Hence, our investment that we make also in specification. We focus on segments where we are strong for the rest of the world that is quite broad with road and street lighting, sport lighting, facade lighting, bridges, landmark is very important to us as well as hospitality, I just shared the example of Marina Basins in Singapore. And then I talked about localizing the growth engine, focusing our footprint, of course, that also is relevant for the Rest of World region, where we will fully leverage partners in a number of markets to -- in terms of our go-to-market strategy. That brings me to the North America, where we have two businesses. We have a Genlyte Solutions, and we have Cooper Lighting Solutions. Now together, the two businesses have about 20% market share. Cooper, very strong #2 and then Genlyte #4 position in markets. They have separate front ends, meaning they've got 2 phases to the market. right? We got two product offerings, two agent networks, both business have their own agent networks. And they compete in a way on stock, on connected lighting, indoor and outdoor. Yet together, the complementary of these agent networks because the agents are either working primarily related to Cooper or Genlyte, there's no overlap there. Collective, it gives us really good coverage and customer relevance. So it works well for us. And what we basically want to do is keep those two front ends going while we leverage the full scope Signify and on the back end, shared functions, procurement and so on. So that is really the strategy going forward. Now Greg will talk a lot more about Cooper. Let me say a few things about Genlyte light. Genlyte was acquired by Philips in 2008. And it was very strong on Project Specification business. This was in the days where Conventional was still very big. And as the technology transformation happens from Conventional to LEd Lighting, we saw that Genlyte has been broadened out, right? They got involved in stock and flow. They grew their indoor business. They got a bit diffused on the outdoor as well. So what we now want to do is we want to bring Genlyte back to its core strength. Specification, big focus on outdoor, where we have a really competitive product portfolio and a very strong brand portfolio as well. Simplify the business, focus it again. Not only outdoor, we will still also focus on indoor projects because you've got to stay relevant for your agents as well. So that's really the strategy going forward, focused enlight and that is also with the turnaround playbook. We want to make sure that we bring the profitability up while we continue to serve the markets well. Now the Cooper Lighting Solutions is a real assets, very successful acquisition of Signify, done back in 2020. We see it as an important part of Signify as it is today, but also a key platform growth going forward. And therefore, I'm very happy to welcome Kraig Kasler, the CEO of Cooper, to talk to you a lot more about what Cooper is and what we set out to do, Kraig. [Presentation]

So welcome, and thank you again for being here today in person and online. As mentioned, I'm Kraig Kasler. I have the privilege of leading our North American business called Cooper Lighting Solutions. I've been with the business for 18 years, and of course, part of Signify since 2020, the acquisition for the last 6 years. And today, we occupy the #2 market share position in the U.S. And since joining the company here, we've extended and increased market share over the last 6 years. And we have a solid plan in place to go ahead and continue doing that over the next several years. And that includes gaining share on our #1 competitor and then further distancing ourselves from the significantly smaller players that are behind us in the marketplace. And so I'll walk you through how we're going to go ahead and do that. So first, let me start with the market. The North American market is large. It's the most concentrated in the world and very profitable. And so as I mentioned, we hold a very strong #2 position, and our plan is to amplify this #2 position out there in the marketplace by adding to a very broad and rich and deep product offering and leveraging that through our very, very strong agent network that allows us to reach the most customers out there in the North American market. And we have a clear winning strategy. We're going to grow our Connected Lighting business have been and we'll continue to grow it as well as our Specification Lighting portfolio, and I'll walk you through how we're going to leverage some of the investments Signify's making in digital and artificial intelligence to help us on the front in the back end of our business. So let's start with the market. As I mentioned, a large market, $10.5 billion. It has contracted since COVID, the market is still down since -- before COVID. But the good news as we look forward, we see the market growing in the low single digits space. And so that gives us even more opportunity here to amplify our growth and outperform the market. As we mentioned, it is consolidated. You can see here the top 4 players in the market represent more than 60% of the market. There's a high degree of specification in this market, quality matters, particularly on the project side of the business and individual codes and regulations in North America will favor large luminaire manufacturers, and I'll walk you through why that is coming up in a little bit here. And we have a very unique market with our lighting agents that are out there serves a very fragmented customer base. You see the customers listed here on the page. But I thought maybe I'd pause here for a second and just talk a little bit about agents that may not be as familiar with them or manufacturers reps. At their core, they're really an extension of our sales team, right? They don't take title to the product. You saw As's chart on how decisions get made here. We don't ship them product and they reship it to customers. Instead, they're out doing presales service support, post-sales service support and of course, selling on our behalf. And as we ship products, they get commissions. They are very, very highly motivated as 100% commissioned agents. This is the only way they make money is if they sell to be partnered with the very best manufacturers in the marketplace, because that gives them the best chance in that local marketplace to win projects. But in any given project, there's not enough even from the largest lighting companies like Cooper not enough product breadth to serve every single product need that would happen on a given project. And so agents also represent many other manufacturers, but Cooper Lighting is by far the largest share of wallet for them, representing 50% to 60% of the total sales of that agent. The last thing, I guess, I would mention about agents that's important, is they've been a very effective barrier to importers. On the stock and flow side of the business, that's a bit harder because those folks can get directly to some contractors and distributors and sell product. Project side, that's very, very difficult to do. And so if you don't have relationships with strong agents that know the local decision makers in the market, it's very, very hard to go ahead and compete there. And so that's another piece of value on why we like our agents so much. So now let me introduce Cooper Lighting. It's a very, very strong platform for us for a profitable growth. We are fully invested here, have an end-to-end position in the marketplace. We have 6 plants, 3 in the U.S., 3 in Mexico that primarily serve the Project part of our business. And of course, we, as mentioned, leverage the Signify scale procurement, innovation, digital and some of the back-office functions that we talked about. But our leading agent network, 125 agents strong, each with their own teams being successful in the local market. We have 10 different channels to market, and these relationships are deeply important to us and our agents, many of them spanning on average over 20 years and many of them much longer than that. So as you can see in the middle, a little bit of a cut of our business, different views as a percent of sales. U.S. is the predominant part of our sales, of course. Project is larger than stock. Indoor is larger than outdoor. However, outdoor, we also have the #2 market share position there, and most importantly, connected, which is a growing part of our business, now up to roughly 1/3 of our total sales. And as you can see on the right side of the chart here, we have a strong trajectory in the business. This has been a successful acquisition since being acquired in 2020 despite the economic environment, which was -- threw COVID at us and then a lot of supply chain and global transportation disruptions, a couple of global conflicts around the way. And then just for fun in the U.S., we threw in tariffs and inflation to deal with as well. But despite all that, we outgrew the market, and we increased our profitability. So I think it shows our resilience. And along the way, we made a couple of small but very strategic acquisitions, one in Specification Lighting and one in Connected Lighting to further enhance our offering and help us continue to be positioned well as we go forward. So as mentioned, two parts of the strategy here, right? One on portfolio, one on performance. And what you're going to hear today, and I'll walk you through in the next 15 minutes or so, one slide on each of these 5 bubbles at the bottom. We have a 5-pronged strategy to winning in North America and really continue to extend our winning performance here. On the top and the bottom of the page, customer experience and operational excellence. We're going to leverage some of the investments Signify is making here to improve, and we'll, of course, customize that for North America, but that will improve the performance for all of our customers and all of our shareholders. But we're going to take a deeper dive here on the stock and flow part of our business, where, again, the Signify scale, particularly in procurement, helps us. But we're really going to go deeper on the project side of our business in Specification Lighting and Connected Lighting because in any given project, one or the other or both combined are really the key to the project coming to Cooper Lighting as opposed to one of our competitors. And so the other point that I would make in this because we talked about agents in the front of this, this is also how agents are organized and go to market. Generally, we have a stock and flow team focused on contractors and distributors. The Specification Lighting team that are calling on the lighting designers and architects. And then the Connected Lighting team that's focused on engineers and contractors in terms of deploying the Connected Lighting solutions. And so that's why we draw this distinction on the project side of the business. So as we get into each one of these 5, it's always a good idea to start with the customer, right? And so this is our customer experience and really how customers deal with end agents, by the way, deal with Cooper Lighting every single day along the buying journey. So you see the 5 steps across the top. Prior to becoming part of Signify, the front end of our business was old and out-of-date. It was a set of systems that we had built in the 1990s. We were not easy to do business with. People loved our products, loved our people, loved our agents but we were difficult to do business with. And so as one of the first investments we made since we came to Signify last 4 years, we spent time reengineering and rebuilding tools in each one of these. So, if you can imagine yourself, let's say, in a hospital and in the discovery phase, really learning about the project. We now have a tool called Light Architect. You can download a Google Maps view of the hospital, you can imagine the parking lot, you drag in the Cooper Lighting parking lot fixture. This tool will lay out the parking lot, how many poles, how many light fixes, what luminaire levels, what mounting heights. And then you can sort of zoom in and see the total lighting design of that is also see the product in application to make sure from an aesthetic standpoint, what you're hoping to achieve. Then if you came inside you could download the building layouts of this and lay out all your indoor fixtures and leading controls to manage the indoor Connected Lighting system. Once you have that done, you'd pass it off to another tool that would allow you to configure the product. So you get specific model numbers so that we know exactly what we need to build for the customer. Then you need to price and sort of quote the customer, so a configure price quote set of tools. And now it's come time to order, and we built a whole customer portal that allows a customer then, of course, to go in place the order online in conjunction with our agents and then track, whether it's coming from our distribution or our manufacturing plants all the way to the customer site. And then lastly, support the customer using AI tools that we built on the back end from a post-sale service and support side. But that's really just the beginning of the story. So this big leap forward we've made since part of joining Signify. The good news now is we can also add an Agentic AI layer to this to make each one of these steps more efficient along the way, but more importantly, in an automated fashion, sort of move customers across this journey in an automated way to deliver faster and better service at a lower cost. So next, the stock and flow part of the business, as mentioned, by far the most competitive segment that we're in. We have leading brands here, thousands of SKUs, 9 distribution centers. This is really playbook 3, as talked about. It isn't the fastest-growing part of our business, but it is a very profitable part of our business. And we've done this successfully for decades, the stock and flow part of our business, including through COVID. And we've dealt with importers all along the way pre LED and post LED. But what we're doing here differently going forward instead of thinking of Cooper Lighting is one broad P&L or business. We're breaking part the stock and flow and project part of the business. So we can make conscious choices of how to serve our customers and then also how to manage our P&L for shareholders, right? So if you think of the P&L, the top part of the P&L here, super important to be making the right price, volume and margin trade-offs to sort of maximize our position in the marketplace and our profitability. And on the bottom part of the P&L, having a very lean SG&A model to serve what is a very transactional segment. And what matters to customers here, speed, service and cost. And if you think of ease of doing business in this segment, orders in the segments are thousands of dollars or tens of thousands of dollars, sometimes hundreds of thousands of dollars. So it's many transactions that add up to a big dollar number. And so if you are not easy to do business with sort of a frictionless model here, people will go and choose others. Next on Commercial excellence. Well, why is this important? We spend an inordinate amount of time in this segment. There are labor shortages from a contractor standpoint all over the U.S. and to have our products be the absolute quickest to install is a huge part of the value we deliver into this marketplace, making sure from a sales and agent standpoint, they understand our products and can articulate that to distributors and contractors is super important. And then lastly, needless to say, a relentless focus on cost. Bill of material here is super important. All the tariffs and moving things all over the world to make sure we're in the best cost manufacturing place that we can be at all times, super important. This is where Signify scale helps us immensely here with access to these various contract manufacturers around the world and make sure we're getting the best value there. And then also, as I mentioned, making sure we have a very lean SG&A. So now let's leave the stock and flow world. We'll go into the project world. And this story here is really about rebuilding our portfolio. So let me take you back in time sort of pre-LED, I think 2008, 2010, we have thousands of different product families, hundreds of thousands of different SKUs we ship every year. And what you need to figure out, right, is which stuff you're going to convert to LED first, second, third, fourth, so forth. And so obviously, a big driver of that is where is the best customer and value proposition. But closely behind this, of course, you're going to try to change the highest volume, lowest mix stuff first LED. Well, that is not the specification lighting space. It's actually the exact opposite. This is a lower volume, higher mix part of the portfolio. And so smaller niche competitors maybe a $10 million, $20 million, $30 million company more focused on converting that, the larger players in the lighting industry took a step backwards during the LED transition. The good news here is now this -- with some of the investments, sort of winding down on the front end that we've been making in Connected Lighting, we're going to be attacking this space and rebuilding our leadership portfolio here, both organically and targeted from an inorganic standpoint, from an M&A. And this is clearly playbook #1. This is about driving operating leverage in a margin-accretive segment that's highly differentiated. And as we do this, we're going to focus, as As mentioned, on the highest growth segments in the marketplace, right, both from a product development standpoint and a commercialization standpoint. Things like health care, education, data centers, just to name a few. And a good example of this is this company. You see here that we acquired in the middle, about 7 months ago, Nemalux, a very small, harsh and hazardous business primarily operating in Canada, serving markets like oil and gas and mining and wastewater treatment and complex manufacturing environments. These are places where spark from a lighting fixture causes big unsafe events in the marketplace. And so customers very much value safety, brand and reputation, right? So this is very, very important. And what we brought to this acquisition was access to the small companies access to North America, particularly the U.S. and Mexico here because they have great products, they have great know-how. They just didn't have a way to commercialize this. And by the way, we didn't have access to this portfolio. So 7 months in, super excited about the early results and where this is taking us. Now from a Connected, and I would argue this is the most exciting part of the story. First of all, it's the fastest-growing part of the lighting market. Second, we're outgrowing that. And third, we're very well positioned to really add some sales and marketing gas on top of a winning portfolio. So really the opposite story of what we just heard on specification, where we want to rebuild the portfolio. because we have great sales and marketing. This is the exact opposite of that story. And what I'd want to impress on everybody here today is sort of on the left-hand side of this chart, this is a hard journey. This is a 10- to 15-year journey to build this Connected Lighting system designed for North America and North American codes. And if you think about the range of applications that you have to build for here, it's very significant. Everything, let's say, from a small doctor's office up to a very complicated hospital or maybe a hospital complex that spans many states throughout the U.S. both wired applications, wireless applications, many different customer requirements and different customer segments. This is hard. It takes a lot of money. It takes a lot of time. And quite frankly, there's only a few in the industry that have the ability to sustain the level of investment it takes to build these systems and commercialize them. The great news for Cooper Lighting is this work is largely done. Of course, the journey never ends, but the big build is behind us. We now have a leadership Connected Lighting system here. And I mentioned I'd come back to this individual codes standards in the U.S. They basically require individual level luminaire control. And so why is that important? Why does that favor large manufacturers. The answer to that is really twofold. First of all, the most efficient way to deploy in a sensor network in a building is to integrate them into fixtures. And so if you have a broader lighting fixture portfolio, you have more ways to deploy the sensor network. The second part of the story is the most cost-effective way to deploy the sensor technology is to do this in a luminaire in a factory. Those that just are sending control devices to a job and luminaire devices in a job and relying on the labor-constrained contractor to put these pieces together, wire them, make them operational and connect them to a software system is absolutely the wrong way to deploy the technology. And so we're well positioned here. The solution stack is built, the codes and standards are helping us. The market is growing, what do we need to do? This again here is playbook #1 about driving operating leverage. What we need to do is pour some sales and marketing on this story. This is around upscaling our agents to make sure they understand the value proposition and how to deploy this in the marketplace, attacking again going where the growth is in terms of the market segments where we can win and increasing our sales and marketing spend. So we become the basis of specification in the marketplace where historically sometimes we have been chasing our competitors. And so we have sort of crossed that bridge. And I talked about this being the most exciting part of the story and why is that? Well, as you think about how projects develop most often, the lighting control system is specified before a project than the lighting is. And so if you have a winning lighting control system and Connected Lighting system, and you are the basis of specification. You're not only going to win the Connected Lighting, but all the other lighting that comes with it. And so it sort of has a multiplying effect of being great here also makes you great on the Specification Lighting side. In the last of the 5 things that I was going to talk about, but certainly not the least is operational excellence. We've done a lot here, but there's a lot more that we can do yet going forward. So pre-LED, we had 14 factories in Cooper Lighting coming into the company. We had 7. Today, we have 6 despite all the supply chain chaos that's happened there. And when we came into the company, if you overlaid Cooper Lighting's distribution Center network with what Signify had in North America, they were virtually identical. Same number of DCs in most cases, the same cities that we were in and so we've rationalized that down from 15 to 9. And you can see about 2/3 of the sales here that we have today come from our manufacturing sites that are working, as as mentioned, primarily on our Projects business, why we're leveraging our global purchasing power to be successful on the stuck and flow side. So again here, I'd say our strategy is clear. There's more we can do. We have more North America infrastructure opportunities, both on the plant and DC side, driving fixed and variable cost productivity, a very, very important continuous improvement every day on that. And, of course, then to reduce inventory and lead times. And this is really the oxygen of our business. And that's why it's so important to have an end-to-end business structure so that we can really drive this every day. This fuels all the other investments we want to make in the product and the commercial side of the business to fund the investments that we want to make there. And then on the supply chain side, we talked about leveraging the AI investments that the company is making here. This is both how we digitally connect to our customers to have a better view of the demand coming in. And on the backside, passing that exact same forecasting information to our suppliers and being able to track those materials into our factory as well as digitizing and automating some of the process as it sits between the front and back end of that supply chain. So we think there's a lot of gas left in the tank here in terms of what we can do from an operational excellence standpoint. So as I close here today, I hope you can see we have a very clear strategy in execute and road map to amplify our #2 position. I've been in this business for 18 years in this industry for longer than that. I believe with every fiber of my being. This is the right strategy for us and for the company here. And I'm quite confident that we're going to create operating leverage, driving sort of an accretive Specification Lighting portfolio out into the marketplace, a growing and accretive Connected Lighting business while enabling many of the processes that we've talked about here today with the digital investments and the AI investments we have to drive success both for our customers as well as our shareholders. And so with that, I'm going to go ahead and pass it over to Sumit, who's got an equally exciting story to tell you about India. So thank you for your time. [Presentation]

Good morning. My name is Sumit Joshi. I've been working with this company for the last 14 years. And it's a great privilege to lead India market for the last 8 years. I said I've been with this company, 15 years back is when I joined in 2011 when I joined in marketing team in India. At that point in time, we launched the first LED bulb in India. The price of that bulb was EUR 25, 15 years down the line, the price of that bulb, it's EUR 0.5 a it's EUR 0.50. In that EUR 0.50, we make money, we have selling expenses cost. In this 15 years, inflation has gone up, the price has come down dramatically. EUR 0.50 can only go down so much from here on. I firmly believe that we are now in the stage where I think the second stage for the lighting industry is going to start. I firmly believe that. The company which I joined in 2011 versus what it is today is completely different. It's very different. There was no connected, now it's much connected. Brands, which we are #2, #3 are not there. Conventional, it's gone. But one thing has not changed in this 15 years. And my friends, that thing is we are still the second biggest light source for the world. Who's the first one? The Sun, that thing has not changed. Now what that tells us is that we have what it takes to go through this transformation. And today, I'm going to use this opportunity to give you a flavor of India, not in the weather you have seen in the last 2, 3 days, the temperature of India, but really bring to you what India can play a role, a significant role in Signify's next journey. So quickly, I'm going to start and at the onset, I just want to simply take away for you, and that takeaway is India is already a very high-performing business for Signify. We spoke about build and harvest. Clearly, India is a part of build. And when I say India being part of build, both our Consumer business as well as Professional business is part of build. It makes us more money. We are growing. We are better than the competition there. And the playbook, which we are going to apply, of course, for India is to leverage this growth. More we grow, it is very, very accretive to Signify. So the calling card, the marching order for India very clearly is how fast and how much can we grow. And today, I'm quickly going to take you through why do we believe that the market is there, which is structural growth and how do we participate in that. I'll share some bit on our position in Indian market. How Signify position. We are, of course, the lighting leader, best in terms of the industry of financials and all of that, but I will share that much more in detail. And I'll share with you what is going to be our simple 5-point strategy to take it to the next level. So let's begin. Let's look at the market. It's a compelling growth market. On the left-hand side, you see that as far as the economic -- macroeconomic backdrop is concerned, it's the highest growing market. But what is interesting to note is that if the world is going to grow, a large portion of that growth is contributed by India, 17%. What it also means is that for us as a company, if we have to grow, the percentage contribution from India in terms of growth also be -- also has to be of a certain level. And this growth is coming both from consumption. Consumers are spending a lot more money. They are upgrading, but there is also a big amount of capital expenditure, which is happening all across in India. In the middle, you see that LED market per se is very mature. It's already 100% penetrated, almost Conventional is gone because government played a big role in terms of the transformation from Conventional to LED. So what is going to drive the market in coming time? It's not going to be from Conventional to LED. I think that is dusted. It's going to be from new points. And I can tell you the speed at which the new points in lighting are coming up is huge. There are more homes. India used to be a country which there used to be a lot of joint families. Now there are many more nuclear families. Now what does that mean? That means that there are more homes which are coming up. There are more rooms, there are more industries, there are more airports, there are more railway stations, there are more everything, hotels and restaurants. Now all of that is basically about new points. But if one has to win in the new point, the ecosystem one needs to play is very different than a replacement cycle, where the distribution was good enough, brand was good enough. But if you need to influence or make our customers B2B or B2C buy when they're constructing, we need to have a fantastic ecosystem to play with. It involves internal designers, architects, contractors. So it's a complex ecosystem and that makes it difficult for any player to just come and go and win. We have been there in India for the last 90 years, and we have that ecosystem like nobody else has. What is also interesting for you to see is that if you look at the market, the market is 55% Consumer and 45% Prof. This is a bit different than what we saw globally, because there is so much also happening in Consumer side. It's 55%, 45%. So in a way, equally divided. What that also brings is the synergy which we have in Consumer and Prof part of our business. Now this synergy is in products, the synergies in go-to-market. If a consumer is using Philips at the home and he is going to be a procurement person, there needs to be a familiarity with the brand to buy it for the offices. I think it's so critical that these synergies play in our favor. And the last slide is about the market where you see lighting is just 5% of what we call as an addressable market for adjacencies. We have what it takes. We have the brand, we have the team, we have the technical know-how. We have the distribution for us to have a natural way into adjacencies, which are not only lighting. And that portion is very, very big. And I'm going to share with you some of the things which we have done around that. So the market in summary, is compelling. It is not going to be a market for 1 year, 2 year, it's the market which is going to be there for next few generations. But if one has to win in this market, this market is very unique in terms of the characteristics. It is not a concentrated market. Kraig shared in lighting in U.S. He said it's a concentrated market. It's more big few distributors here. It's a very, very distributed market. And brand plays a big growth. So the first thing is brand. 50% of the market today is controlled by 5 brands. While there are 500 brands in that market. What that means is that even when there are so many brands, the quality, the reliability, innovation, brand familiarity matters. So brand matters, and it's a big differentiator. Even the new brands which are trying to come in, they have to spend money on building the brand. If you don't have a brand, the chances of your success in Indian market is very, very less. Distribution, more than 300,000 mom-and-pop stores. 40% of that is in rural India. While e-commerce is growing, of course, it's growing modern retail is growing, but it is still less than 10% of the market. Now that means that the relationships, reach, which one needs to have, the access, the supply chain to reach to these places is extremely critical, and that's a big moat, which one has. Also when it comes to Professional business, Professional business is not only about big projects. These are the small projects. These are the projects which are maybe EUR 2,000 projects, EUR 5,000 projects, they come from various parts of the country. And that, again, is a large base. And if one needs to win there, you need to reach, you need to have access, you need to have relationships to win in that place. India definitely rewards local depth. You cannot sell in India, whatever is just by importing from China, for example. If you need to have speed, if you need to have cost, if you need to have innovation and the application, which is very, very India specific, you need to be in India. Also compliance is becoming much higher, right? So therefore, local for local design capabilities, local for local manufacturing is absolutely important. Last few years, we have also seen that India has really started growing in terms of exporting out, right? So now Apple exports, most of their mobiles out of India. Samsung, a lot of mobile own manufacturers are putting money because there is arbitrage as far as the labor is concerned, and therefore, that is also boosting the export. So local for local, very, very critical. And what I said, infrastructure is the tailwind. There are -- what you see there is a bridge which was led by us. It's a bridge in Bombay, in Mumbai, it's a bridge on which now municipality uses that bridge to start advertising. Now they are making money by advertising on the bridge, which is lit by our intelligent bridge lighting. But this is just the one bridge, India is a continent. So there are going to be many, many more bridges which are going to come in. There are many more tunnels, which are going to come in. So the infrastructure tailwind India has is very, very significant. So I share with you market is compelling, but if one needs to win in this market, only the companies who have the brand who have the distribution who have the relationships have a chance to win in this market. Now let's look at, therefore, if this is the market, how are we placed in this market. Now let's make no mistake about it. India -- Signify is the #1 lighting company in India, much higher than the second brand, which is there. It is also the most profitable lighting company in India. It is also growing faster than the industry in India. So we really are in a good space and good place as far as India business is concerned. And there are a few elements why we are able to do this consistently. The first element is brand. Philips in India is considered to be an Indian brand. I mean it's been there for so many years, and it is also a premium brand. So people are ready to pay 10%, 15% premium for buying Philips brand. But the market is laddered. It's not one brand which can go and tackle all the segments. So a few years back, we launched a brand called Ecolink. Now this EcoLink brand is again a brand which is in lighting, but it's also now getting into adjacencies. It's becoming a more of electrical brand, electrical goods brand, but it is able to straddle across the price points, right? So Philips at the top and EcoLink at the bottom. But both these brands are strong. Philips, amazing brand preference. It's something which we have, which definitely just gives us the premium which we want. The talent is high quality talent in India we have. We are the employer of choice in India. If we have to have those relationships, technical know-how, if you look at any other lighting company you would have people who have had some experience in Signify. It is the place and not only for lighting, but also overall to have the talent. We also have a significant amount of our global functions operating out of India. Now it makes -- it helps because India per se, it's a big market as well as there are a lot of global technical [indiscernible] our finance service center, all of that gets operated, but we get best of the best people there. Distribution power, I discussed, of course, we have more than 100,000 reach directly and indirectly even more. What we did in the last few years is also create a channel, which is called as Philips Smart Light Ups. What does it do? If the market is moving to new points, the way consumers or small businesses make decisions is different. They want to go and feel the product. They want to go and see what all is available. they're not going to be buying just one product. They are going to buy a suite of products. Smart products need to get explained. And therefore, we started something which is our franchisee operation, which is called Philips Smart light hubs. We already have around 350 of them, and we'll push them up to even maybe 500 next couple of years. Now this is very, very differentiated. Nobody else has it. It's a clear moat for us to premiumize. And the reason why we are one of the most profitable companies in lighting in India is because our mix of products is much better because we are able to premiumize the offering whenever whoever is coming to that smart light hub. We are also #1 in e-commerce. While it is less than 10%, but we have a position of leadership in e-commerce, in general trade and our own distribution, which is smart light hubs. So a fantastic distribution power, which is extremely difficult for anybody else to just get overnight. As I told you that local innovation matters in India. -- whether it is hardware, whether it is software, all of that is to be made for India. And I think we have a fantastic team and innovations, which are only applicable in some parts of India. India is about wall lights. We created a lot of these innovations, which will sell based on the consumer insights, which we have from India. So very, very strong base of innovation. We are also the highest Connected Lighting base, whether it's Professional or Consumer. While in Consumer, is just 3% of our business, it's growing rapidly, 30% plus growth but I think there is a path to that, which is going to be even higher, and nobody else is as big in Connected versus us. Manufacturing scale, I think it's a very, very important moat we have. This is not our own manufacturing. We wanted whatever As was saying that we want to have a manufacturing footprint where you're not the owners of it, but you play a big role of it. Already in India, we have a JV with the biggest EMS player in India by name Dixon. It's electronic [indiscernible]. It's a 50%, 50% JV. Already, we are the biggest lighting manufacturer for India. What that means is that, big brands, small brands are buying lighting products from this JV called [indiscernible]. Now that makes us also very, very good when it comes to the cost base, which we have from our manufacturing. All of this actually helps us to outperform the market and not once we have been outperforming the market for many, many years when it comes to financial metric. We are the best when it comes to the profitability, when it comes to market share, and we are much, much above the Signify average. So as I said, our playbook is leverage and grow. More India grows, I think is going to be significant benefit for Signify globally. So if this is the position, I think there are just 5 things which we are going to be looking at, and we are focused in choosing these 5. On the performance side and on the portfolio side. On the portfolio side, we entered in a category called fans 2 years back. It's a big market in India. And with the temperatures which are happening now in Europe, I don't know whether it will become a market in Europe as well. But it is as big a market as lighting. It goes through the same ecosystem of the retailers, which we have. It requires a technical know-how. We entered that market because that market was also shifting when it came to technology. There is an introduction of what is called as BLDC motor based fan, which is basically brushless direct current motor-based fans. It's like what happened with LED to lighting. Now that gave us a wedge to enter into the market where there was a technical change which was happening. And we had what it took for us to get there. 18 months back, we launched these fans under the brand Ecolink. And in 18 months, we -- I think we will be able to close already in top 5 of that BLDC segment. Of course, not a fan, BLDC is a part of the bigger fan segment. but it has given us millions of euros in revenue. We will scale this up. Not only are we going to scale the fans business, but we will also we will enter into adjacent categories, which require brand, which requires access and which also requires the technical know-how. That's what we will do. And that is one big play as far as portfolio is concerned. How do we leverage the go-to-market synergies and brand synergies. There are inorganic options available or we are exploring. India is not a story of 1 year, 2 year, if we need to, and we are in a great position. I think we are in a position which a lot of people will be jealous of, to be very honest. We need to use that and look at some of the opportunities which might have, which are inorganic in nature. Of course, all those will be looked at from a financial sense what makes sense. -- but that is 1 more serious attempt, which we are going to be doing in terms of really scaling up India to the next level. On performance, I think our performance is good, but we are not happy. We are saying, how can we accelerate it further? An acceleration in performance for us is premiumization. So as I said, branded retail premiumize it. How do we take smart lighting to the next level. There is no -- I mean we are the biggest, but how do we scale that up even further? As far as professional is concerned, there is a focused approach, which we have. We are verticalized our go-to-market. So we have vertical segments through which we go to market. And there are segments which we have identified where we will focus, whether it's global capability centers, 2,000-plus GCCs are coming in India, whether it is education, health care, these are the big segments where there is a lot of capital expenditure, which is happening. Semiconductor is another place where there are a lot of industries that are going to be set up the, of course, infrastructure. So these are selected focus segments on which we'll go. But we will only succeed if we continue to be cost -- best in cost. And when I say best in cost, both in terms of our Select, which is an MC, but also in terms of our COGS, which is our BOM. So with not whole of the portfolio is Litinm right now progressively -- we will look at taking more and more of that into our JV, which will also help us to ensure that we remain cost competitiveness. I think I'm pretty convinced about being cost competitive on lighting for sure. but I think we are also bringing all that knowledge and say, how can we also be cost competitive from the beginning when we are getting into adjacencies as well. So this is it. Just to get you back to the 3 points, which I wanted to establish. It is a strong market with macro growth, based on a lot of new light point creations, premiumization is happening, we are extremely well positioned here. Our position is distinct. So we need to just put the fuel and take it to the next level. And we have a very clear strategy on how are we going to do it. I personally believe that not only are we are -- we continue to be the second biggest light source, but I think India is going to play a significant role in Signify's future journey. And that future journey will have a lot of numbers. So with this, I will also have Zeljko to come on to stage for him to share what does it translate to? Over to you, Zeljko. Thank you.

All right. Well, thank you so much, Sumit, for sharing such really generally exciting opportunity and speaking very, very well and very concretely to the potential of profitable growth that we can unlock in our build portfolio. So that's a very good example of that. So it's been quite dense. For all of you, I'm sure, in the last 2 hours or so, you've heard many perspectives on our markets, our position and most importantly, on our plan forward, coming from us, from Michael, from Kraig and just now from Sumit. So what I will do now is to bring it all together, to wrap it all together into what does that mean for the value creation roadmap of Signify in the next years. So I've been with Signify for 9 years. of which 2 years in my current role as a CFO. So this time has given me a clear eye view on where we stand. But it has also given me a lot of opportunities to engage with many of you present in the room and also connected online. And those conversations have been extremely valuable, very, very insightful to also help us sharpen and make sure that our thinking, our choices and our decisions are holistic, grounded, but also meaningful to what matters to you. So As has mentioned, I think the last few months have been very energizing, very intense. So we've really been able to build together with the leadership team. So this is very important. I really want to emphasize that. We are strongly aligned across the leadership team in shaping the path to success for the company forward and very aligned on, first, identifying the opportunities, clarifying the choices, but also very aligned in making the changes we need to make to be a better performing company. So I will now -- let me start first. And that grounded clarity, I want to say, is very important. It's foundational for me on what we're going to share it's really grounded. The clarity on the way forward is at the core of what I'm going to share in the next 30 minutes or so. So starting with the overall picture, a few key messages, and I will develop further each of them. So first, looking back, the past 4 years have been very challenging, significant pressure on our top line with -- driven by market conditions, but also structural changes in the industry have put our business to the test. Now how did we pass the test or reacted? So I think first, we demonstrated real agility in gross margin, protection and in cash generation. And there, I'm really generally proud of what our teams have achieved knowing firsthand what it took to be able to drive that agility and resilience. On indirect costs, we did take a lot of meaningful measures. However, we do recognize that those measures, dollar actions were more reacting to the events and not as proactive as it should have been. And I think this is an important -- very important learning that we are feeding forward in our plan to enhance our performance. Now looking forward, we have a clear, grounded road map to achieve our 2029 objectives. And this is built both on the strength that we recognize. But As has said, bidding on the strength is not sufficient. and it's also addressing directly the areas that we need to improve. So 3 priorities, 3 axis in this road map. First, stabilizing the top line. And this is really the combination recognizing the different dynamics across our portfolio, the contribution of the build portfolio and managing in a value-preserving way the harvest portfolio. Second, improving profitability structurally. Here, very importantly, we drive a step change in implementing specific playbook. So you heard a lot about the playbook, and I will come back to that again because it's very central. And it's really all about disciplined execution and the differentiation of the how we drive disciplined execution across the different performance area. Third, unlocking a structurally stronger cash generation profile. So in this roadmap, there are 2 foundational commitments that remain extremely important and will be maintained. First, robust balance sheet; second, a balanced capital allocation. So these are very important foundations that are sustained. So I'll try to put more numbers and a bit more insight into this resilient story I was just outlining. So here, you have the visualization of our revenue and operating margin and the different building bricks. So of course, as you can see, and if we start from the peak of 2022, where our revenue was EUR 7.5 billion, it's 23% decline of our nominal revenue, of which 1/3 is foreign exchange translation and 2/3 is intrinsic decline of our revenue. So what is important here is how we have preserved profitability in this context. And let's look at the different building breaks. First on gross margin. So it's helped and it actually improved. When you look at the cost of goods sold and the cost of goods sold are 2/3 of the total cost of the company, they've actually been adapted faster than the revenue decline. At the same time, our indirect cost or nonmanufacturing costs have been decreased net by 12%. So we've taken a lot of measures and a lot of -- and we've also taken advantage of our new operating model that was implemented in 2024. But here, it's fair to recognize that we did a lot of downsizing. So we did downsize a lot. However, we have not fully rightsized, and I will come back to that, which is an important element on the path forward. So overall, if we look back in the context of a sharp decline of our sharp compression on our top line, the profitability resilience model has worked reasonably well. However, that additional pressure, especially in our indirect costs, that move, as you can see on the chart from below 28% in '22 to close to 32%. So that additional pressure is the main driver for the pressure that we face on our operating margin, especially in '25 and also in 2026. Now looking at cash. Cash has been consistently strong. So the cash generation remains strong through the cycle. And this is very important because it allowed first financial stability, which was extremely important in that kind of environment, but also it gave us still the strategic flexibility that we could apply despite of those significantly deteriorated market environment. So in a nutshell, when tested, the Signify financial engine has helped margin protected, cost actively managed, cash strong. And this is a very important foundation that we will be building on. Now you've seen this slide earlier, and this is -- this slide is really summarizing the heart of our 2029 ambition. And I would like to give more clarity on what it is built on. So it is anchored on the strategic framework that I shared earlier. Portfolio focus and performance step-up with strong discipline and execution behind both. And this is what is behind our objectives -- our financial objective. Now looking at the numbers, comparable sales growth, 0% to 1%, adjusted EBITDA margin around 10%, free cash flow, 7% to 8%. These are not aspirational ambitions, these are very, very grounded objectives that are built on a very clearly articulated roadmap and trajectory that we have built at a very, very granular level, and I will come back to that. So let me give a little bit more texture on the bottom part of this page, which is more about the levels. On the top line, this is -- first, that's the combination, and this is really the effect of the portfolio focus you heard about. So with the growth of our build portfolio and the -- how we manage the evolution in our harvest portfolio with, all in all, leads to a stronger growth profile. That will get stronger, of course, leading to the 0 to 1 and, of course, structurally stronger beyond. So that's the first time. The price pressure easing dynamically and sequentially as we go, is also an important element that will also give support to the improvement of our top line and our ability to get to stability and back to growth. On profitability, again, a very important lever is the execution of those 3 distinct performance playbook that we've talked about, applied across the different performance areas. Across the board, growth margin discipline being actively sustained. So this is an important element. And driving competitive costs throughout the portfolio at a much more granular level, and I will come back to that element as well. On free cash flow, simply put, there are 2 main levers. -- which are really at the core of unlocking the stronger cash generation, of course, profitability expansion, so getting our structural profit up and the optimized inventory, which is the most significant driver in our overall working capital efficiency improvement. So now I will go in each of the different parameters, starting first with the top line. So you heard before the different dynamics between build and harvest portfolio. So here, -- so we, of course, looked very, very thoroughly at each and every performance area, each and every portfolio on the dynamics of both volume and price. So as you can see, it's a very -- it's a mixed bag. So it's a very contrasted dynamic. So let me maybe go through each of the 4 businesses. So if you look at Professional, you heard, I think, a very, very clear and concrete example earlier from what Kraig presented for the Cooper Light business. In the connected -- in the project and especially in the connected projects, we do see and we drive positive dynamic both in volume and price. And they are very clear levers behind that. In the stock and flow, it's a bit different because here, we are in a much more competitive, much more fragmented space in our professional business. And there, we do see stabilization in volume and still continued price erosion, albeit at a more moderate pace than what we have experienced in the last few years. In consumer, Connected and luminaires, you heard it from Michael are it's both volume and price going into a positive direction. At the same time, in lamps, of course, the volumes will follow the technology replacement cycle, while we will be able to continue to exercise strong price power on the back of a very strong brand. In OEM, here, we do expect continued challenging market conditions with stabilization, right? And especially when you look at the price pressure, which is expected to ease compared to what we have experienced. Conventional, very predictable in the volumes following the dynamic of the market. And we are able as the market leader in that segment to continue to exercise price power as we have been doing over the past few years. So in a nutshell, contrasted dynamics across the different parts and the different portfolio. But altogether, there is really a clear and visible and tangible path that gives us confidence on our ability and the road map that goes with that to stabilize the top line of the company and to bring it back to positive territory. Now I will go back to -- so now it's about the profitability, and I will zoom in on the key levers. So again, you've seen that. I really want to come back to that because it is absolutely central to how we are structurally in a consistent and disciplined fashion, bringing our profitability up and improving and looking at a different portfolio. So -- we do not run -- I think clearly, we do not run 1 uniform profitability improvement program across the company. It's really about -- and we have taken a lot of effort to really design and craft those 3 playbooks and what they really mean in the detail to make sure that they are implemented in a way that is specifically adapted to the performance areas the reality of the space we are operating, but also to the reality of our current profitability today. So playbook 1 is the operating leverage one. You've heard many examples today of where this applies. The playbook 2 is really very simply put where you need to bring back the profitability to the entitlement where it belongs, whether it is in build portfolio or harvest portfolio, -- so it is more about the execution part. And the playbook 3, which is very important because this is how you manage effectively and maximize the value in those portfolios that have low or no growth, but where the profitability today is accretive and strongly contributing to the overall profitability of the company. So what ties all those 3 playbooks together is 1 single performance management system that we are driving and supporting and also powered by this transformation office that we are putting in place. But the most important is the granular P&L accountability and ownership that is driven through the organization. And here, it's very important because this is where we are leveraging the most, our operating model, right? We have a new operating model that has been in place for 2 years now. That's absolutely where we can really extract more value out of that operating model in stepping up and enhancing structural your performance. So this differentiated approach in the profitability management is what makes me really confident in our ability to achieve this 10% objective by 2029 because we have the clarity, and we know exactly what lever applies where. So here, what this slide does is to bring together the different angles to our profitability improvement path. So our adjusted EBITDA in 2025 was 8.9%. Our outlook for' '26 in the range of 7.5% to 8.5%. And we have initiated a reset. So we are in a transition year. And now we are from here a very clear trajectory and the roadmap to restore and gradually improve our profitability towards the 10% objective by 2029. So what you see on the left-hand side, the left chart is a kind of a simplified overview of the contribution of the build portfolio and the harvest portfolio to that profitability improvement. So the build portfolio represents roughly 2/3 of the improvement. So this is roughly 2/3 and 1/3 still contributed by the harvest portfolio. Now on the right-hand side, what you see is more the contribution of impact of the 3 playbooks. So here, the first one, which is the operating leverage of playbook, contributes roughly 1/3 of the overall Signifiy profitability improvement. The turnaround playbook contributes 2/3 Importantly, the third playbook, which is about maintaining profitability in our lower growth portfolio is neutral. So what neutral means is that the outcome is to contain the drag effect and the overall profitability of Signify moving forward. So each of the playbook play a very important role. It's very important here, if you look back -- a step back, it's the point was made by us earlier, the fact that you have so much that is dependent on the disciplined execution of the playbook 2, the turnaround means that it's a lot of self-help, right? So the dependency on the growth, which is typically what will be more in the operating leverage is actually not the biggest part. And that's also very important because that's also because we know in the details what does it take to drive that. So this is also why we are so concerned. So again, this is a simplified overview looking at the 2 lenses, the portfolio lines, the playbook lens. But behind this, there's again, a lot of very granular accountability. We've done a lot of work on P&L architypes design to really be catered in a much more specific way and this is, again, what is behind the confidence we have on our ability to deliver on our commitment to deliver to this profitability target. So again, it is very solid, it's grounded, and it is based on a very tangible foundation with a strong ownership behind. So zooming in one important element of gross margin strength, of course, is a foundational element of our profitability story has been and will continue to be. So this is really to show why we are confident on our ability to actively and drive and sustain it. So here is just another angle to look at the gross margin development over the last 2 years, which we believe is important because when you look at -- so the gross margin from 39.7% in '23 to 40.1%. So an improvement already. But within that, if you look first at what was the impact of the price and mix erosion compounded. It's a 210 basis point headwind. So it's very substantial. At the same time, we've been able to more than offset that through bill of material efficiency and also all the actions we've taken on cost of goods sold efficiency in general. So these are very different elements that have been at play. So the message here is that the gross margin discipline is proven. Now looking forward, how we make it proven what is proven sustainable. Well, there is no automatic pilot button very clearly. So there are 4 concrete levers that will really allow us to sustain and build on that strength of gross margin resilience. First, price discipline, systematic and proactive. And here with our commercial excellence step-up, we have identified opportunities to do better. It's also, by the way, an area where AI use cases are extremely helpful to drive at a very granular level. We have a lot of SKUs, so the pricing discipline power we can apply can be enhanced. So we have very clear opportunities defined. Second, the structural mix improvement, and that's a very direct outcome of our portfolio focus. The portfolio focus leads structurally to a stronger and a more favorable mix on the gross margin. Third, procurement. So it's about procurement scale, but it's also about the R&D-driven efficiency. As has made the comment earlier, and this is an important element when you look at our -- how we yield the return of our R&D investment -- it's a big component. And here, we are yielding very, very attractive return that flow into our gross margin strength. So it's a very important element, and it's a substantial part of our overall R&D investment, the value engineering feeding into our ability to extract the most competitive and the cost leadership in our bill of material and cost of goods sold. Fourth, manufacturing and supply chain gains, productivity gains. So here, again, the step-up on supply chain excellence is offering a clear opportunities to strengthen. So together, these are 4 drivers that are giving us, again, a structural path. It's not just an assumption of an extrapolation, right, at a high level top down. It is really with a very granular path being defined across each and every portfolio for the whole of Signify. So moving from gross margin to indirect costs. So I said it earlier, if we look back, we did take a lot of measures to downsize, but we have clearly not fully right-sized. So the goal, the objective is very clear. We will resize overall for Signify or indirect cost to 30% or below by 2029. Now what I want to share is a bit more clarity on how we will do that. But also what it means contrasting with the execution and disciplined execution of our strategy and also how we feed for the investment. So this is extremely important because this is really an anchor point between the portfolio focus and the performance step up. First of all, it's permanent universal cost efficiency across the board, across all portfolios. So each and every performance area is held to the same standards of cost discipline and cost competitiveness. So As used the world business as usual in the DNA. So this is very important. And this is the baseline. Now how we define competitive costs. They're in our very, very granular and P&L archetype design. We also identified and you heard earlier what it means to be benchmarkable cost competitive in the stock and flow business in the U.S. is very, very different than what it means for the consumer connected portfolio or performance area. And this is really the differentiation is also on the definition of what competitive means. We've been doing a lot of external benchmark to make sure that how we define what good looks like in terms of cost competitiveness is really, really sharp and adapted to each of those performance area. So now what is also differentiated is what do we do with that efficiency. So it's efficiency across the board. We do have opportunities in all the portfolios whether they are built or harvest. Now how do we apply the generation of efficiency and the liquidity that we extract out of those focused efficiency actions. Well, depending on the portfolio you are in -- or depending on the playbook you are executing, simply put either all that efficiency flows to the bottom line improvement to the operating margin improvement or is partially redirected to focused investment with a very, very sharp definition of where we will apply those investments. But again, here, the very simple basic logic, but which is extremely important, is that efficiency funds growth. Now I just want because this is also the question we get a lot from many of you as how much more can you get? So here, I think the distinction in the path to get from the 32% to 30% as you can see in the chart, in the proportion, it really means that we go after all the opportunities for cost efficiency, which allows us to fund and to create the liquidity tools the adequate level of investment that we'll keep doing in order to successfully execute our build strategy. So this is very important to keep that in mind that in that equation of cost efficiency, it's part of it. So we have 4 concrete levels to make it happen. First, granular and differentiated resource allocation, by portfolio, by playbook sharper and more tailored investment decision within each of the performance area. Second, P&L accountability embedded at each and every level of the organization. Cost ownership where it belongs, and not delegated outputs. Third, AI forward cost efficiency. I think it was mentioned in one of the key areas. I am very excited not only based on the high but having also the proof points and many of the use cases that are running as we speak, that are really showing us we have a tremendous potential through AI-enabled capabilities to help us improve the intrinsic and structural cost efficiency. We have a lot in our back-end processes in each of our -- a function of each of our processes, which we can further optimize, and we have very, very concrete use cases that are running as we speak. Fourth, growth investment with rigor. Each and every incremental OpEx or CapEx really needs to earn its place. So it's the right portfolio, the right return and the right timing, very, very important. So in summary, overall for Signify lower indirect cost, cost efficiency driven across the board, which allows us to fund the required level of investment that are being applied with a very, very sharp and very tailored approach and a very focused approach. Now moving to cash. So strong cash generation has been a feature and a consistent feature of Signify through the cycle. And this slide is to explain how we will make sure that it's sustained and structurally strengthened by 2029. So our 2026 guidance on free cash flow is in the range of 6.5% to 7.5% of sales. Our target for 2029 is 7% to 8% of sales. So this range may not look dramatically different from our historical level. But what changes fundamentally is the quality and the structural nature of the drivers behind it. And there are 2 main drivers. First, margin expansion. The path to structurally improve our profitability towards circa 10%. The cash conversion that comes with it obviously flows directly into our free cash flow improvement. And this is the -- of course, the -- clearly the single biggest driver. Second, working capital improvement and more specifically, inventory optimization. And this is really one of the very concrete outcome of our step-up focus on supply chain excellence. So there, we do have opportunity. All level of inventory is clearly too high. And we know what is the path to bring it, structuring not just as a one-off, but structurally to a more optimized level. again, with a lot of granularity behind. So an element which I also wanted to highlight, which is part of the equation is the restructuring cash out component. So of course, in order to implement that consistent cost efficiency that I was just talking about. Yes, we need to be able to keep the level of restructuring that help us to do so and the yield and the return on those investment or cash investment that we put into restructuring are obviously very, very strong. Now if you look at the trajectory, I think this year, in '26, of course, we have a higher cash out linked to restructuring due to the program, the cost resizing program that we announced at the beginning of the year. Now from there forward, we will see that impact to lower year-over-year and from 2029 to be structurally much lower. So as a conclusion, an objective of free cash flow of 7% to 8% by '29, which is built on structurally better earnings, leaner working capital and a restructuring burden that will gradually fade. So again, there's a lot of granularity. It's a very grounded roadmap that we have developed to ensure that our cash generation engine continues to be structurally strong through the cycle. So let me close now with our capital allocation policy. So it's updated, balanced and designed to support value creation through 2029 and beyond. Our first priority remains to maintain investment-grade credit rating. So we have recently secured EUR 300 million in committed financing through the European Investment Bank to address our upcoming debt maturities. And this proactive step reflects our commitment to a robust capital structure and we will also reduce our gross debt by EUR 100 million. And going forward, we'll continue to manage the gross debt levels in accordance and the appropriate level of scale to our earnings. So with this, the balance sheet is in good shape and will remain so. So that's first. On dividend. So we are moving back to an earnings-based measure, so with a payout ratio of 40% to 50% of the continuing net income. So continuing net income, as a reminder, is the net income adjusted of nonrecurring elements such as restructuring. So this is another nonrecurring material element. So just for reference, the payout ratio of the dividend of 25 million paid in '26 is at 61%. That payout ratio in the previous 2 years was 52%, 53%. And in all the years before, it was between 40% to 50%, right? So we are back to a range that is also consistent with the underlying payout ratio we had over the past few years. So again, here, we -- so of course, let's be clear, that means a reset in the near term when we look at it from the dividend per share. But we strongly believe this is absolutely the right and the more sustainable approach. One that balances consistent shareholders' return with the financial flexibility to invest in growth and execute our strategy. So dividend growth that will grow with our earnings is more durable than one that is not synchronized or that doesn't reflect the underlying business. On investments, so we will remain extremely disciplined, both organically. I talked a lot about how we apply investment, a sharp focus in our OpEx part. The same applies, of course, in our CapEx. Inorganically, on M&A, you heard it from us earlier, our M&A approach is really focused on strategic fit, really contributing to growth and clear growth potential and, of course, value creation with very, very stringent metrics to assess any M&A opportunity that will be assessed, which would be bolt-on in nature and not transformational bets. Finally, on buybacks. So we do not intend to resume the share repurchase program that we had started in 2025 and that we have posed. But we will reinitiate share buyback programs when the right conditions are met within this balanced capital allocation framework and principles. So again, I really want to be clear here, residual cash will be returned to shareholders, that commitment stands. So taken together, this is a policy which is built on financial discipline and continued and genuine consistent commitment to shareholder value creation today and through 2029 and beyond. So on that, I will close the presentation. And I think now we have a 5-minute well-deserved refreshment break after which we will come back to start the Q&A session. Thank you very much. [Break]

All right. I hope you enjoyed the presentation this morning. So I would now like to open the Q&A. [Operator Instructions] We will first have a few questions here from the audience. and will then also yes, also answer questions from our online viewers.

Thank you. So I'll keep to 1 question. It's Daniela from Goldman Sachs. Maybe, I mean, you talked us through the endpoints in '29. Can you talk us a little bit through how you see the cadence towards these targets? Should we expect maybe some of the headwinds from the actions you have to do to get first? Or is it sort of a linear pace maybe for both margins and cash, particularly focused on that?

Yes, I'm happy to answer it. And maybe Zeljko, you can also comment on how we see the numbers. Like I said, we have a transformation offers set up with about 40 to 50 kind of transformative actions. Some have a very clear time line and deliver a lot more linear. Some are a bit more one-off. So 1 of the -- of course, I said for some of the performance areas, we keep all our options open, and we are exploring what is the right answer in terms of portfolio. Now those could be things that come very sudden and could have an immediate impact. So it's a bit uncertain exactly on the timing of some of these actions. But in terms of the numbers we assumed, Zeljko, you want to talk about our path towards '29.

On the trajectory that I mentioned, I think clearly on -- I'll start first on profitability, it's gradual progressive improvement from where we are in the base of 2026, improving to '27, '28, '29. On cash, it's going to be more stable in the first year. And then what I mentioned earlier that structural stronger cash generation really to fire up in more as we see really the structural benefits, in particular, related to supply chain, inventory and the easing of the restructuring cash out to be more visible towards '28, '29. But it is a trajectory of improvement on the profitability. And there are paths to stabilize the top line. There, of course, we have -- this is more where you have more external market sensitivity, but still there, there's a trajectory of sequential improvement. So it's with stability on the cash generation.

That was first Martin, over here.

It's Martin from Citi. In terms of how we can measure your progress over the next several years. Obviously, some of the crown jewels are embedded in other divisions that are offset by some of the harvest portfolio. If we think of something like connected lighting, will you give us stage points in terms of how that's growing, how that's profitable. So that it's not sort of diluted at the group level when we sort of externally measure your performance, it's very difficult, I think, from the outside to differentiate from the build portfolio in the harvest when we see your numbers just because of the way that you report. And perhaps there's some idea as to what stage post you'll give us over the coming years to see how these different parts of the portfolio are working?

Yes. Thanks for the question, Martin. And that is very much recognized. I also feel we should create a bit more transparency about who we are, how our portfolio buildup and how we are progressing on the execution of this strategy. What we are not planning to do is to have a complete overhaul of the way we report, we'll stick with that structure. -- but we will create real clarity around how we progress on this strategy. But how that exactly looks like that is still work in progress.

The next question was over there in the front row.

Dani Fonesberg, ABG. Many questions, but I stick to 1 as well for Kraig. I was interested by the remark from us, tampon about benchmarking business unit managers to peers. So my question to you would be, if I benchmark you against your peer, how far are you off from your benchmark?

Yes. So there is a gap in terms of the profitability between us and the #1 player. It's primarily driven by 3 reasons. First of all, from a North American perspective, the P&L perspective, there's a scale advantage with the #1 player. But we have a lot of opportunities, which I talked us through as it relates to the mix of our business in terms of specification and connected that's already closing that gap, and we'll continue to close it. And the third reason is really around sort of the operations and supply chain piece I talked about. I think our competitor got an earlier start on some of that than we did with some of the ownership changes that we had and what's happened in the last 6 years with Cove supply chain and -- and so we think we have a long runway ahead there and are already closing that gap, and we'll continue to.

It's Akash here from JPMorgan. I have a question on connected consumer luminaires. I think this is a category where 8 to 10 years ago, a Signify was there and making losses and then it kind of disappeared within Signify. And then now today, you talk about it's a very large market, and there is a need for Signify to reenter in this to able to grow I. want to understand like what has changed in those last 8 to 10 years. Why do you think this is now a good market category? And then maybe perhaps you can also elaborate how much of this consumer luminaire is within Hugh, where I think probably the growth aspects may be stronger given the brand value and synergies? And how much of that is outside you?

SP-4 So it's true. They tried a long time ago to make lumens work, but they had a whole portfolio from low end to high end from chandeliers to -- it was basically a very, very wide portfolio, and it was a global approach. What's different is, first of all, consumer journey has changed. -- right, consumer journeys are not necessarily everybody goes offline to see the shop, but it's also going online. This is where we have strengths, right? Second is, we're not going as broad as in the past. We are not going into the chandeliers, et cetera. We are going specifically in a few family ranges, and I'm talking about 3, 4, 5, 6, 7 ranges with beautiful signs, which we did test it and the design will be adapted to a regional taste. What you do sell in the U.S. as a luminaire will not necessarily sell in Belgium because it's just a different taste. So we will specifically on the product designs have tailor-made solutions and the go-to-market will be different. I think those are the 2 main differences. On your question between you and Philips [indiscernible] nonconnected part, they will be on both. Equally both areas are a big opportunity.

And Michael, to add to it also in terms of geography footprint. You don't want to go worldwide. Do you want to go on that.

Yes. So we want to focus on Germany Belgium, Netherlands, U.K., Nordics and U.S. So we have really...

It's Mark, ING. I have a question you did a strategic review. And I think you mentioned a few times you're the only real global lighting company in the world. And I think it's quite clear what the benefits are on the backside of it, given the technology. But on the front side, given that you have so many different shops on the front side, is it possible to really start benefiting from being a global company with all these different fund sites? Or do you need to change stuff there also over the medium term to maybe reignite that growth even faster taking the benefit of being a global company.

Yes. So for me, the answer to your question and thanks, the best in both worlds. And the portfolio focus is not just about this is the business I want to be in. It's also the choices we make within the business. So like Michael just said, it's not around are we doing consumer luminaris or not? No, we play with distinct families in distinct market and distinct segments through distinct channels. That's where we win. Equally for profit, we look at which are the segments we really want to focus on. So really empowerment with clear choices within those businesses to go after where we are well positioned to grow. And that is really very choiceful, choiceful. So a lot less broad than we used to be playing in most segments across 55 beyond markets and in a very broad segment coverage. So that's 1 part of the answer. Then yes, there is part of being Signify is really advantageous. And Michael, you mentioned a few of these things. And I think I mentioned it myself as well as when it comes to sharing R&D or sharing corporate infrastructure, or benefiting from sourcing power, we really use the strength of Signify in the portfolio to be very competitive in those businesses where we choose to -- so that for me is really the answer. It's a lot more concentrated than where we won't want to compete, but fully leveraging the skill we have.

We now have a question from our online viewers. So I would like to read that out for you all to hear it. Is the 0% to 1% growth target, the organic growth you expect in 2029 over 2028? Or is it the average growth between 2026 and '29? If it's the format does it mean you expect a decline in each of the years between 2026 and 2028.

So if you have the exact trajectory in mind or do you want to...

No, I think -- first of all, a clarification on what that's 0% to 1%. So this is the 2029 comparable sales growth. And in the trajectory from this year, it's a continuous improvement. So it's a sequential improvement towards the 0 to 1 combined contribution of the different portfolio.

Let me say a few things about the growth. because I think it's a topic of real interest. First of all, we are confident and committed to outperforming market when it comes to growing the portfolio. And we do that despite the fact that we are more exposed to still of the conventional part of the business. So that's an important comment on growth. What the market is hard to predict the markets, the best prediction we came up with was a flat market. That's why I started with this morning. If market does better, we should do better, right? But that's -- the commitment is to outperform market. That's first. Secondly, the 0% to 1% you saw is an outcome if you have a weighted average between a build portfolio, which is 70% to 80% of Signify and a harvest portfolio. That bills portfolio should show growth, right? And let's be honest, we have seen declines. So we're not just turning it to 0 and stabilize revenue. We are growing that build portfolio. 2% is our best guess and is what we feel very confident we can deliver on. And we don't want to make false promises. That 2%, however, is offset by continuous decline in our harvest portfolio. Portfolio is currently at minus 11%, and we predict will be around minus 5%. So if you do 20% minus 5% and 80% x2, you get to 0% to 1% CG. That harvest portfolio then assumes that all these businesses stay with us. And I've also made very clear that some of these businesses that belong to the harvest portfolio, we consider all options, including consolidation through partnership and divestments. So if any of these [indiscernible] the 0.1% to 1% growth needs to be really looked at and considered with those different perspectives in mind.

Question there.

This is Chase from Kempen. I have a question for Michael on the consumer space. So you had the nice video showing some of the competitive sort of new features you have -- could you speak a little bit about sort of where you see your main competitors in terms of their technology? Are they several years behind or less? And how do you think that sort of plays into your premium pricing that you have today? Should that see some pressure over the years? Or how are you looking at that?

Yes. It's a good question. Thank you. I think the main difference between, let's say, are mainly Chinese competitors is that they don't play the ecosystem game. They sell very good, very nicely, but a connected point-to-point solution, which you can change. And we're good at that. We're in a different game. The ecosystem that I tried to explain this morning makes a big difference. And that's also why you see in R&R, et cetera, the attachment rate of our ecosystem is much higher at 10.5% and [indiscernible] example of 17% and going up and up and up. That's just because once you're into the system, you're so happy with it that you just want to expand. That effect, if you look at our Chinese competitors, they don't have because they're not geared to do that. The average attachment rate would be there between 1, 2, maybe 3 at best over lifetime where we're in the Netherlands. And most importantly, yes, in the end, the consumer decides, right? So you see it on our loyalty, on our R&R ratings they leave the word of mouth with their friends and family, they make the ratings on Amazon, et cetera. But there's a big difference between selling just [indiscernible] Just a connected lamp with all respect or having an ecosystem. Having an ecosystem is really, really difficult, which goes back 10 years once you bought the first [indiscernible] and still works with the latest features.

Was 1 of the things when I came into my role that I was a bit surprised how fanatic customers are when it comes to Philips view, it's amazing. And actually, 1 of the constraints we had -- we want to get all these bricks out and we want to cross-sell devices on those bridges, like the ecosystem Michael is talking about. But our bridge was limited in terms of how many devices could actually operate on the bridge. Then you upgraded the bridge. And within weeks, we were sold out completely. So it's a very powerful system that once you get these bridges out in this household and you can start adding the device. The other thing, Michael, I think you're underplaying it. We have a really good roadmap going forward to -- and that is continuous. I mean, you saw some of the examples space awareness. But there's a lot more coming for those who love us. There's a lot more coming in terms of features.

Typically, if you see the demo, you will get a a taste of it, particularly special, where motional where there's more to come.

And Michael, versus Chinese, we also have a legislation data privacy, all of that, which is so very different for us.

It becomes more and more important. Where do you store the data.

I will first read another online question before we move back to the audience. Please, could you provide some further color on your M&A criteria? How much capital will you be allocating to acquisitions? What will be the sweet spot in terms of deal size? And what ROIC will you be targeting?

So maybe I'll come back to what I mentioned on the -- when you look at the lighting space, as I mentioned, first of all, when we look at M&A opportunity, it is more bolt-on by nature. And we have few very recent example that were also mentioned in -- by Kraig in his presentation for the U.S. small size, very, very suited and absolutely fitting very, very well in our strategic fit now on the criteria, the strategic fit is one. It has to contribute to growth. So this is also very important. It has to be as a priority strengthening the momentum and how it powers our build portfolios and in line with the day. On the return on invested capital, there are many criteria that we look at from, of course, the return and it has to be accretive from a value creation perspective compared to our cost of capital, obviously. But we also look at other parameters at the payback and how it is also contributing and how accretive it is to our operating longer. So there are different criteria we have always a very, very detailed screen test for assessing each and every M&A opportunity. But in a nutshell, contributes to growth, creates value accretive to the value creation and the return on capital employed and fits absolutely clearly with our portfolio focus.

Question over there.

Thank you Rajesh Patki from Barclays. I think 1 of the slides you presented today mentioned data centers. I'm just keen to understand what part of the business is currently exposed to that end market currently? And are you looking at that as an opportunity to invest for growth?

Great. I think you're best positioned, Kraig, do you answer this?

Yes. So data centers has been a very fast-growing segment for us. That's the good news about data centers. One of the challenges with data centers is lighting as a percent of that total bill of material is as big as some other segments, let's say, hospitals or education or offices space, for example. But given the rapid pace of growth here, our data center business is probably up between 30% and 40% year-over-year. And it tends to use more I'll say, general lighting there, but there's also a high degree of sort of specification around that because speed is so important here to sort of have a standard bill of material from a lighting and control standpoint that you can roll through projects very rapidly. And we're very well positioned here, especially sort of given in the U.S. where we came from out of Eaton, who has a big focus in this area. We have some folks that are still with us from Eaton that they used to call on that area that have really amplified our growth in this space, and it's a very significant number for us this year.

And may I just add this is a good example of how we also leverage global portfolio because equally in Europe, we expect a lot more data center capacity to be built. And we can also take, right, what we learn in the U.S. into Europe, where we are working on a specific lighting offer for data centers as well as, for example, a specific lighting offer for defense right? So we're really agile in terms of where the music is we want to be. And obviously, you know that the defense spend in Europe has gone up significantly. So that's one of our focus segments as well.

Over there in the second row.

Wim Gille, ABN. In the capital allocation policy, you rightfully moved up the investments in growth, both organic as well as inorganic. However, if I look at the cash flow bridge, the other component, you expect it to be stable. So how should I read into this? Is like the ability to invest in growth, a function of kind of the P&L that you have available? Or are you making deliberate choices to invest and to drive top line that, let's say, marriage between these 2 elements. And the follow-up question would be on the growth side, the 0 to 1% growth. And that's purely looking at the current portfolio, if you will. You also gave quite a number of examples of adjacencies where you intend to move the fan business in India, but also some -- quite a lot of other opportunities there. Is that embedded into the 0% to 1%? Or is that a cherry on the cake that you can actually use to outperform the expectations that you've set out today?

I will take the first question, and thank you for the question. It's an important clarification. So when we look at our capital allocation, when we look at supporting organic growth, I think we have to remember that our we have a very CapEx-light model, right? So all the efficiency and the focus on our investment to support organic growth is a lot to do with that and structural efficiency and how we redeploy our investments. So you see that already built in in the free cash flow, but the CapEx element, which was not mentioned on the slide, relatively stable. It's low last -- in '25 was EUR 140 million, half of it being tangible, half of it is intangible, so more software related. So the CapEx part, I think, is is very limited as part of the equation, but it's very fundamentally how we are insuring and there we are back to the playbook. I think the answer to your question is fundamentally sitting in how we are applying our different playbooks to the different portfolio to make sure that the level of investment required is applied in the right portfolio with the right timing and with very clear ROI returns associated with. So this is really what builds into our choices to support organic investments, mostly OpEx while we keep of core dispute on the CapEx part of our investments to support growth.

And on the second question, when it comes to adjacencies, I would like to separate a strategic play from an opportunistic play. And what I mean with that is if it is a strategic play, it's really around we have unique capability or we have technology or we have a product linkage where we say this is an adjacent space we want to move into. And that should be a strategic choice how we want to position the company. That could be an energy efficiency. I showed some examples in security, intelligent traffic. We, as a leadership team, we have asked a small team to investigate all these different value spaces. And we are kind of now bringing that down to a few set of opportunities that we believe are very promising yes. But it's too early to conclude any of that, while we keep the rest of the company focused on the lighting becoming a better performance focused lighting company. So that's on the strategic play. Then there is the opportunistic, which is a bit more the cross-sell in channels. And in India is a good example. We have an enormous distribution power, so it so that we have all this retail presence. If you start to put fans through that, yes, you talk millions, but it's actually tens of millions of fans that we will generate revenue from. We can play that on a broader set of products within those markets where we have that strength, and we could also play it more widely. So -- but I see that as more opportunistic. Now to your question, none of that is in these numbers. So I would not say it's a cherry of the cake, but it's probably the cream on the cake, right? This could be very significant. But again, I don't want to make any false promises or create false expectations. But it is definitely an area that we will continue to explore.

I would like to ask another question from the live -- from the webcast. And after that, I've seen it here. With the new dividend policy, do you see the 2026 dividend being cut, do you still commit to a growing dividend going forward?

So to be very clear, do we commit to a growing dividend going forward? Absolutely, and we commit to an attractive dividend reset what we do, and that's the reset that we apply in updating our capital allocation policy now is to come back to an earnings base or payout based on earnings. As I said earlier, if we look at the trajectory of the dividend payout over the last few years, it has been historically always in the 40% to 50% of continuing net income. Then over the last 3 years, it increased so 52% payout in 3 years ago to 53%. And then last year, so 25% dividends distributed in '25, then we moved to 61% there. So of course, what we've seen is that you saw the chart earlier, significant compression of the top line, significant of course, compression on the earnings in that cycle, while the continued dividend was increased on the dividend per share. So what we are applying here is the reset have the balance. We spent considerable amount of time. And we've also included a lot of the inputs and feedback from many of you here in the room and also many online to make sure we really cater for that balance. Again, it's fundamentally and that's the commitment to ensure consistent shareholder return while we support the execution of our strategy and support our growth. So I think this is where, yes, the reset is needed now. and we strongly believe this is the right timing, and this is absolutely the more sustainable coal that we need to have. But again, the commitment on growing dividends forward is absolutely there in line with our commitment to structurally improve our profitability.

Second row.

Frank Claassen of Degroof Petercam. A question on your inventories. Do you have some kind of targets where you think you can reduce your inventories as a percentage of revenues? And what are the main drivers why you think you can reduce inventory?

So maybe I can -- so we have, of course, and there, you need to go, obviously, because as you see in the composition of our portfolios is diverse. But yes, I think we have clearly and very thoroughly defined what Optimum should look like. So that's very clearly defined compared to the base today. I think we have clearly, a few percentage points of improvement, as we know absolutely how to go after. Now on the levers, I think there are many elements coming into play there. I think there's a lot to do, of course, with our planning accuracy, right? I think our ability to predict. And when you think about the granularity of SKUs to sell, that's a big. We have also a lot of structural actions improving, and this is also linking to how we deliver better to our customers. So there's a lot of actions that are on hard core supply chain efficiency. So I think there are a few key levers. I think the step-up in supply chain -- very clearly, is one of the very, very powerful levers of structural value creation that we have. But again, it takes time, right, because when you want to do that structural I think you really need to go , but I think it's really fundamental about the planning upstream being better at forecasting and improving our cycle in delivering value to customers while eliminating somehow the waste that we generate fundamentally more linked to that port play. So I think we have been extremely granular and I'm very confident, of course, going in all those details on the ability, and this is really a big element of our self-help contribution to improve and develop a leaner working capital.

And so got add to your answer is we have looked back as well about how -- what is good look like when you look at our own history of inventory management. And of course, the current levels of inventory are slightly higher also because we have seen so much disruption, right? We had COVID, we had the tariffs, we had other blockages. So it has been also tough to manage supply chain. And if we get in a bit more stable context, I think we should be able to bring it down. And the other thing I want to say about this is this is a good example of how we manage performance. So we now have a Chief Supply Officer, who works with a small team and the business units on what is best practice and what is expected in terms of norming on supply when it comes to demand forecasting, new product introductions and so on, portfolio health. And we will systematically across all performance areas, start implementing that best practice. Teams empowered to do it themselves, but with very clear benchmarking and very clear norming of what good looks like, and that's the way.

[indiscernible]. You mentioned that your free cash flow ratio improves from what you target this year, 6.5% to 7% to 7% to 8%. You can also argue it deteriorates because the gap between your adjusted EBITDA and free cash flow will increase sharply. It's 1% for this year. And if I look at the past 7 years, it's 1.7% and now the gap increases to 2% to 3%. Will you say inventories will go down to your working capital. You don't have to spend that much more on provisions for reorganizations or whatever. So I'm a bit puzzled about this gap of between 2% or 3% between adjusted EBITDA and free cash flow. And as a follow-up on free cash flow, at what level leverage ratio do you consider share buybacks?

So I'll try to address the different components. First of all, on the building bricks of what I mentioned earlier, which is how we develop structurally stronger. So of course, the adjusted EBITDA, right, which is what matters in the end on the free cash flow. That's the biggest component -- then part of what we need to invest to ensure structurally this cost efficiency step-up that is going to come from also partially, not entirely, but partially from cash out that we need to invest. So this is an element that has to be balanced with the structural improvement of our profitability driver. So that's one. Second, on the working capital, yes, it's inventory. So you do have an improvement in inventory, but then also you have part of it, which is offset because we have payables, right, that are in the short term, funding to this inventory. So net-net, I think that's going to be the second element. And third will be that easing of the restructuring effort while we get the return. And so yes, I think it's kind of logical in a way that, that gap should change. Also remembering that in the past, a big part of our restructuring was linked to our conventional decline right. It was the most substantial met. As we go forward, it's very much linked and centered on our intrinsic operational excellence efforts. So that's also changing a little bit the shape how we should look at from profit to free cash flow. Now on the second question on the leverage, I think we are -- we still -- and this is consistent with what we've indicated 1.2 to 1.3x is what we believe is the right healthy level of leverage consistent with our overall capital allocation policy. With regard to share buyback, as I said earlier, -- it will be determined looking at all the right conditions, right, to make sure that once we are very clearly securing and that's important, our balance sheet strength making sure, of course, and this is back to the previous question that we can go back to an attractive and growing dividend in line with the adjusted approach, making sure that the investments that are needed are funded. And then, of course, any excess cash will be returned. So I think on the share buyback, I can't give you a straight answer to your question on the when and the rig, but at least securing the foundation of our balance sheet strength is absolutely fundamental and that we are absolutely committed to, and we are committed to grow dividends. And we are committed to implement and reinitiate share buyback programs where the conditions are met. So that's the principles in our framework.

Question here in the front row.

Peter Sande from Antares Capital Management. Mr. Tempelman earlier in your presentation said that you want to provide a bit more transparency on the various subcomponents of your large portfolio. So please let me have a shot at it. If we talk about one of your largest businesses, the U.S. professional business. On the one hand, we had a very strong story from Cooper ever since it was acquired. But then on the other hand, we heard a story about the incumbent Philips business, Genlyte where you even mentioned the word turnaround. So I'm just curious for the U.S. professional business as a whole, what is roughly the profitability difference between on the 1 hand, Cooper and on the other hand, the Genlyte business?

Well, in terms of size, first of all, [indiscernible], I think I'm right when Genlyte is about 1/3, right? It's right the size of Copper. So it's a much smaller business. I think it serves the market really well, but it -- the business model as it currently has evolved into, it doesn't work for us. So we are too spread out. with too many brands, too many SKUs and 2 small in the areas where we play. So we really want to refocus and that's actually also where the company originates from with having very strong specification brands for very specific segments, particularly on outdoor and within the outdoor segment, also very strong on the decorative outdoor. So when you see all these beautiful street lights in all these different places in the U.S., that could well be the Genlyte solution. So we want to really refocus the company, rationalize the brand portfolio, rationalize the product portfolio. But in a way that we are still meaningful and very relevant, right, for the agents that we work with. And that's the strategy going forward. And that then also means that we can be a leaner organization, much more focused on our R&D investments, much more focused also on rationalizing our supply chain on the back of some of these choices -- so that's clearly the strategy. We have new leadership in Genlyte that has fully embraced this way forward. And I believe we already see early signs of improvement. In terms of profitability delta, I mean the EBITDA percentage on profitability, EBITDA percentage on Genlyte now is a very low single-digit level, so that needs to be brought up. And it can be done. We know the way out.

Question over here.

Thanks for all the info on India. Maybe not a big market, which I think you were not really addressing today is China. You've, I think, in the past talked about a lot about increased competition. So do we need to see China as in the harvest bucket or in the build wicket or partially or...

It's a very good question. And actually, I apologize, I should have mentioned China probably much more proactive. But there's 2 stories to China. One is a manufacturing story in China. So if you say China for the world where clearly we see overcapacity in the market, we see production lines being underutilized -- and we think very strong relationships with top-notch manufacturers in China or Chinese manufacturers positions outside of China. So we will do that, and that is part of our strategic choice to be less exposed to the manufacturing of the more commoditized products, we will engage with suppliers around the world, but also a big part of that will be with Chinese manufacturers. So that's -- we will not try to beat the Chinese suppliers' air manufacturing game. That's not part of our strategy. We will focus on manufacturing efforts close to customers, make-to-order specification projects. Now then within China, China is a very fragmented market, where even the big players have 3%, 4% market share. So it's very -- a lot of players active. We are very strongly positioned in the professional business. where we have -- it's a business that is working well for us in terms of profitability, where we have a very strong partner network. So it's a business we like. It's a business that is stable and is working really well for us. The consumer business really has 2 dimensions: the online and off-line. Online trade channels, we have a strong representation. [indiscernible] also works for us. The online is really where the difficulties are. It's very competitive online China. It has its whole own ecosystem in terms of Tmall, JD, the big platforms in China. And we currently have a team on it to find our way how we best leverage those platforms. But the jury is out on whether we can succeed on that or whether we need to take a more fundamental choice about how we play in consumer in China. So that's where we stand. China works for us. It contributes positively to the overall performance of the portfolio. But clearly, the online because in China is a red ocean and we'll need to find a way there that is sustainable.

Thank you. follow-up question from my side on -- first, congratulations with your anniversary. It's almost 10 years now that Signify since IPO. I remember from that moment that you had this brand license deal with Philips. We know it was about 0.8% of sales, I think, at the time, let's say, if you take it from free cash flow as a percentage of paying license fee, it could be 15%, even if you take the 6% to 7% of sales today, of guidance. What -- can you give us an update? Because I think it was a 10-year license fee deal you made with Philips at the time? And how is it still continued? So that's the background of the question.

So we have strong brands across the portfolio. Some of that was also because of our history and heritage. We just talked about Genlyte has a very broad portfolio of brands. Some people say, "Well, don't you have far too many brands, but I'm always surprised around how specific brands are in certain segments. So some brands have a great reputation in indoors, some on outdoor. So it's quite specific in terms of its applications. Now Philips brand in France is very important and very valuable. We are particularly in our consumer business, we exclusively use of Philips on the B2B side selective use Philips India very much Philips. So Philips, the Files brand will continue to be an important part of our portfolio, and we also have a clarity with Philips in terms of how we deal with the current license agreement and how we want to take that forward. That said, we also have invested in building the Signify brand, and we truly believe that the brands can really coexist -- there are other segments where brand matters a lot less. It's about the company that provides the solutions and the services and that could well be Signify. So we are trying to optimize and not make choice for one or the other.

We have 1 more question here in the second row and then we'll take 1 last online question and a last question in the audience after that, but first over here.

It's Akash from JP Morgan again. I have a follow-up on this growth in adjacencies because I think 1 of the most interesting aspect of today's Capital Markets Day is this growth in adjacencies. And here, 1 of the interesting presentation was presentation on India because I am from India. And when I go there, I see that many of the competitors you have in Lighting are coming from these adjacencies. So I guess it kind of makes sense to you for you to go and approach in these markets. And again, here, you have a brand, Philips very well known in India. So the question I have is that, like when it comes to these opportunities, and I think so we talked about some inorganic possibilities as well, how you're going to address it? Because India, when we look at valuation, it's very high valuation market. And one thing that we see in India is that many multinational companies are coming and raising money in India because they can benefit from these like high valuation. So I want to ask, like, are you bold enough to do that kind of strategy where, let's say, if you want to grow rapidly in India and adjacencies, then maybe 1 week out could be to list in India to get a market value and multiple that allow you to make a platform in India. And on that point, also like when it comes to Philips brand and what you can achieve, is there any red line on which brand or which type of products you can put Philips brand name and which type of products you can't so at least we what is possible in this growth in adjacency and what is not? .

Yes. So maybe -- so we can leave it to you to talk a little bit around how you deal with some of the branding. When it comes to our strategy for India, and please complement me sit later. But the -- we look really at all options. So there's the organic growth option. There's the kind of bolt-on option and then there is making a bigger move option. Now whatever option we pursue, of course, we look at value creation. And you are right that the multiples in India are very high. So that value creation needs to work, right, whatever way you choose to go. So I would say, in that sense, the strategy is very clear. We want to grow in lighting and beyond lighting. How we do it, we are really exploring all options. Then on the brand question, Sumit.

Yes. So I would just want to add, I think 1 big difference if you see over the last few years is that what we have gone ahead and looked at these P&Ls in a different way. It is very clear that we need to do he always says that you have Mercedes, but you are driving it in a small line because we have all those advantages with us where we really can expand. Now of course, your point is valued at valuation there is very, very high. But as I said that we are looking at all the options to make sure that it is something which we could look at. That itself is a big change. So on brands, I think Philips is very clearly a lighting brand, yes. And 1 of the reasons we are able to manage the profitability in India is because we are able to make sure that Philips is up there and we introduced a brand in Ecolink, right? So I think it's an opportunity for us to really make Ecolink into multiple categories easily. And of course, if there are categories where Philips kind of fits in, then I think we have to go back to wherever if these are there. But right now, we are looking at Philips far more in lighting to be sure that we are able to extract value from them.

Now we have 1 last question from the -- our online viewers. The OEM segment has not been discussed much today. Where do you see the role in both the open OEM market and as a key component supplier to Signify [indiscernible]

Yes. So let me put that again in the context of our manufacturing focus where just to repeat that we want to focus on project specification, made-to-order, major engineering, anything that you don't produce in large batches, right? Components don't belong in that category. So the OEM business that is primarily focused on components business is something that in terms of our manufacturing strategy is not in the build category. It's 1 where we want to consider all options. The business has gone through really tough times. We have seen a really tough market. It has shrunk. The team has done extremely well managing the profitability to the best possible level. Personally, I don't think the OEM business offers the returns longer term that we like. So we are really looking at either optimization or seek some sort of consolidation in the market through a partnership or divest a business at good value. Now that -- then there's the question around, well, don't you need that components like in-house to serve your prof businesses. We want to make sure that we fully leverage our strategic partner relationships, not to make sure we get best cost of goods sold and that we get components at a competitive level, but also that we have supply chain resilience and security of supplies. So we will not go out with auctions from components. We will seek strategic relationships with suppliers if we choose not to keep the OEM business with us. But that is clearly 1 of the areas together with the labs manufacturing businesses that we really consider for portfolio moves. I hope that clarifies.

And now 1 last question here from the audience.

It's Adam Parr from Rothschild & Co Redburn. So just a question on connected, please, mostly on the pricing side. So I think on the market slide, it said minus 4% price erosion from 2025 to '29 and then in the growth directional side with the arrows for connected projects in professional -- connected and projects, then connected and luminaire in consumer, I think it was positive. So I just wanted to see, is this really an impact from the other 2 businesses that are there. So the projects and luminaires? Or is it just Signify out to price the market? And if so, what is your confidence in doing so?

Yes. Well, maybe I ask first the business, the P&L leaders to comment on your pricing.

Yes. So there's no question we have more pricing power. I talked today about how hard it is to build these systems in sort of the relative pricing power when you have fewer competitors and more differentiation compared to specification where there are a few more competitors, but still differentiation and stock and flow where it's least differentiated sort of the pricing power that you have sort of goes up along with your ability to differentiate how many competitors and how responsible the players are in that space. And in connected, just fundamentally, given the investments that it takes to be successful either in consumer or professional given the investments made people tend to be more responsible in terms of their pricing discipline in this segment than we see in others.

Yes. For consumers, pretty similar. Having an ecosystem is really, really difficult because it's not just about now connecting the current products, but if you bought one 10 years ago, you need to make sure that also works, right? That gives us a technology advantage. They've got the brand. Finish brand and consumer most powerful brand in lighting in the world, flips you the same when it comes to connected. Then you have the other one. That is consumer desire, do you want to have that product, right? And there, we're going to really stimulate demand with the product design, et cetera, we talked about. So at this moment, we are already the most premium let's say, 1 of the premium brands there. And that's going to remain. And with the design would we're going to explore that even further to creep up and get more value expression.

Yes. I think for -- what I learned is that on this connected lighting, you need the hardware and the software and the route to market. So it's complex. So you're quite protected in terms of pricing power. That said, what we predict, and we shared this morning is we see that inflection point coming on connected lighting, where volumes will go up much more. And yes, that's operating leverage for us, but we're not the only one. So that might -- yes, we have been maybe too conservative, but we predict there will be some price erosion as a consequence.

All right. This closes the Q&A for today. So I'm going to hand back to us now for some closing remarks and then I will come back with some logistics about the remainder of the day.

Great. Well, thank you to all my colleagues. I basically want to go back to where we started this morning. We recognize that we have an opportunity to do better. And that's why performance step-up is so integrated part of our strategy. We also clear that we want to be more granular on where we choose to play. So we've really taken that portfolio choice away what to build and what to harvest. Now the portfolio outlook was for 29 numbers. That is 24 to 36 months away from where we are. We come from a past where we have seen year-on-year decline. We're going to stop that decline and return back to growth. I really want to leave that as a key message, and that is subject to portfolio choices and a performance step up. In a market that is unpredictable, but our best outlook is that it will be flattish. We do that with a team that is fully, fully engaged. This is not something that I need to sell in the company. We have co-created this strategy. We have all committed and we are convicted that this is the right thing to do. And we are truly committed to deliver that. And the numbers are what they are. We think it's credible. We think it's doable. We are committed to delivering it. And if we outperform even better, with our commitment to keep that balance sheet strong to allocate the cash back to shareholders and to be very wise if we choose to make significant investments. Those are the key messages for today. I would like to thank you so much for coming to [ Antovo ] what is a very hot day for all of you online. Thank you for dialing in, staying with us, and we look forward to seeing you again soon. Thank you. .

Yes. Thank you very much for coming. We are now inviting you to the lobby of our lighting application center where we are serving lunch. And after that, in about 45, 50 minutes, we will start with the 2 tours that I mentioned earlier of the lighting application center and the hue experience.