Philips Lighting reports improvement in comparable

Press release April 21, 2017

Philips Lighting reports improvement in comparable sales growth, continued increase in operational profitability and free cash flow

First quarter 2017 highlights

• Sales of EUR 1,690 million, with comparable sales of -0.8% (Q1 2016: -1.3%)
• Total LED-based sales growth of 19%, now representing 61% of total sales
• Continued year-on-year improvement in operational profitability
  • Adjusted EBITA of EUR 142 million (Q1 2016: EUR 121 million)
  • Adjusted EBITA margin improvement of 130 basis points to 8.4% (Q1 2016: 7.1%)
• Net income of EUR 61 million (Q1 2016: EUR 14 million)
• Free cash flow of EUR 2 million (Q1 2016: EUR -78 million)

Eindhoven, the Netherlands - Philips Lighting (Euronext Amsterdam: LIGHT) today announced the company's 2017 first quarter results. "Our comparable sales growth improved in comparison to previous quarters, driven by double-digit growth in our business groups LED and Home and a return to growth in Europe and the Rest of the World, despite ongoing challenging conditions in some markets. We continued to increase our operational profitability and free cash flow compared to the first quarter of last year, demonstrating the rigorous implementation of our strategy," said CEO Eric Rondolat. "These results reinforce our confidence that the company is well positioned to achieve its 2017 outlook and medium term goals."

Key figures

Outlook

We are on track to further improve our Adjusted EBITA margin by approximately 50-100 basis points in 2017, in line with our medium term outlook to gradually improve the Adjusted EBITA margin to 11-13%, and to deliver solid free cash flow. While we remain cautious given global economic uncertainty, we are committed to our ambition to return to positive comparable sales growth in the course of this year.

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For the full and original version of the press release click here . For the presentaton click here .

Conference call and audio webcast   Eric Rondolat (CEO) and Stéphane Rougeot (CFO) will host a conference call for investors and analysts at 10:00AM CET to discuss first quarter results.

For the audio webcast click here .

Financial Calendar 2017

For further information, please contact:

Philips Lighting Investor Relations Jeroen Leenaers Tel: +31 6 2542 5909 E-mail: jeroen.leenaers@philips.com

Philips Lighting Communications Elco van Groningen Tel: +31 6 1086 5519 E-mail: elco.van.groningen@philips.com

About Philips Lighting Philips Lighting (Euronext Amsterdam ticker: LIGHT), a global leader in lighting products, systems and services, delivers innovations that unlock business value, providing rich user experiences that help improve lives. Serving professional and consumer markets, we lead the industry in leveraging the Internet of Things to transform homes, buildings and urban spaces. With 2016 sales of EUR 7.1 billion, we have approximately 34,000 employees in over 70 countries. News from Philips Lighting is located at http://www.newsroom.lighting.philips.com

Important Information

Forward-Looking Statements and Risks & Uncertainties This document and the related oral presentation contain, and responses to questions following the presentation may contain, forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Philips Lighting N.V. (the " Company ", and together with its subsidiaries, the " Group "), including statements regarding strategy, estimates of sales growth and future operational results.

By their nature, these statements involve risks and uncertainties facing the Company and its Group Companies and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are not limited to: adverse economic and political developments, the impacts of rapid technological change, competition in the general lighting market, development of lighting systems and services, successful implementation of business transformation programs, impact of acquisitions and other transactions, impact of the Group's operation as a separate publicly listed company, pension liabilities and costs, establishment of corporate and brand identity, adverse tax consequences from the separation from Royal Philips and exposure to international tax laws. Please see "Risk Factors and Risk Management" in Chapter 12 of the  Annual Report 2016  for discussion of material risks, uncertainties and other important factors which may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group. Such risks, uncertainties and other important factors should be read in conjunction with the information included in the Company's Annual Report 2016.

Additional risks currently not known to the Group or that the Group has not considered material as of the date of this document could also prove to be important and may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group or could cause the forward-looking events discussed in this document not to occur. The Group undertakes no duty to and will not necessarily update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law.

Market and Industry Information All references to market share, market data, industry statistics and industry forecasts in this document consist of estimates compiled by industry professionals, competitors, organizations or analysts, of publicly available information or of the Group's own assessment of its sales and markets. Rankings are based on sales unless otherwise stated.

Non-IFRS Financial Measures Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth, adjusted gross margin, EBITA, adjusted EBITA, EBITDA, adjusted EBITDA and free cash flow, and other related ratios, which are not recognized measures of financial performance or liquidity under IFRS. The non-IFRS financial measures presented are measures used by management to monitor the underlying performance of the Group's business and operations and, accordingly, they have not been audited or reviewed. Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures and ratios may not be comparable to measures used by other companies under the same or similar names. A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures is contained in this document. For further information on non-IFRS financial measures, see "Chapter 17 Reconciliation of non-IFRS measures" in the Annual Report 2016.

Presentation All amounts are in millions of euros unless otherwise stated. All reported data is unaudited. Unless otherwise indicated, financial information has been prepared in accordance with the accounting policies as stated in the Annual Report 2016. As part of the financial reporting improvement process, the presentation of the line item "Results relating to investments in associates" was moved into the subtotal "Income before taxes" in the Condensed consolidated statements of income. This change did not impact the income of operations or financial position. In addition, we have simplified our Q1 and Q3 reporting by excluding the cash flow statement. In our semi-annual and annual reporting we will continue to present this statement. Cash flow analysis is provided in the Financial condition section of this document.

Market Abuse Regulation This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

^[1] This press release contains certain non-IFRS financial measures and ratios, such as comparable sales growth, EBITA, adjusted EBITA and free cash flow, and related ratios, which are not recognized measures of financial performance or liquidity under IFRS. For a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures, see appendix B, Reconciliation of non-IFRS financial measures, of this press release."