Good morning, good afternoon, and good evening, ladies and gentlemen. Welcome to the Signify Capital Markets Day 2020, our first Capital Markets Day since our IPO in 2016. My name is Rogier Dierckx, and I'm heading investor relations for Signify and happy to be here with you today. We have an exciting program, but before we go to the details of the program, I'd like to point your attention to some important information. This information is also included in the presentation, or the hard copy of the presentation, that we have made available for you right now on our investor relations corporate webpage. Let me introduce you to the team today who are with me in the studio. First of all, we have Eric Rondolat, CEO of Signify. Nicola Kimm, our head of sustainability. Javier van Engelen, our CFO.
Maria Letizia Mariani, the Leader of our Division Conventional Products, and also member of the Board of Management. Per video connection from Hong Kong, we have Rowena Lee, who's leading our Division Digital Products, and also in the studio with us is Harsh Chitale, the Leader of Division Digital Solutions. Now let me take you to the agenda of today. We have split the agenda in two sessions. The first session will be kicked off by Eric Rondolat, who will talk about our strategy and our vision for the future. This will be followed by Nicola Kimm, who will talk to you about our corporate sustainability program. Finally, Javier van Engelen will talk to our performance management and shareholder value creation at Signify. After these presentations, we'll have a Q&A session. Eric, Javier, and Nicola would be most happy to answer your questions.
After a short break, we will reconvene for the afternoon session or the second session, where our division leads will give a presentation on the strategy of our three divisions. Also, this session will be followed by Q&A, where Eric and the division leads will take your questions. When we were preparing the Capital Markets Day the last couple of weeks, we started with an investor perception study. Many of you have provided your candid and constructive feedback on our equity story, which we greatly appreciated. Let me give you a few examples of the topics that you pointed out to us. When will Signify return to growth? You've shared with us some interesting growth platforms, but can you tell us a little bit more? How is the market evolving, and how do you see yourself? You've made a recent acquisition of Cooper.
How are you progressing with that integration? You've showed resilience in managing your profitability, but can we expect more? How do you consider and look at M&A opportunities? We've listened to you, and we've made sure that the program we have for you today is really tailored around your needs. We will go to the program in a minute, where Eric will kick off the strategy. Before we go there, I'd like to show you a video, to also show you my passion and our passions. Those passions really are all about a passion for innovation, a passion for technology, and a passion for sustainability. Most of all, a passion for life, and our purpose of unlocking its extremely interesting potential for Brighter Lives, Better World.
I'm very happy to welcome all of you with the team here to our Capital Markets Day. As Rogier has said, the video that you have just seen is a true expression of where we are heading as a company. For my part, I'm going to talk a lot about the future. I'm going to talk a lot about the potential growth of the company. I will also briefly start talking about the past, because I believe that what has happened in the past is a good indication of what can potentially happen in the future. What has been achieved in the past gives also credibility to what can be achieved in the future. We're going today to talk a lot about the markets, and we have in Signify our teams that are doing market modeling, and this is where the numbers are coming from.
Let's look at the past, and I will start on the upper left part of the slide talking about the market. We see that the transition to LED has happened in the period 2013 to 2019. Strong decline of conventional, strong growth of LED, while at the same time we start to have the revelation of the connected market growing at 21% over the period. If we go just down, we realize also that, I would say only 50% of the socket base are LED equipped at this point in time, leaving still a big potential to further penetrate and LEDify in the future. If we go on the right-hand side, let me start to talk about LED lamps. We've seen a market that was very fast-growing at the beginning of the period, and then growing a bit less in the second part.
When we look at the price erosion just below, still a high price erosion in the second part of the period at 15%, but divided by two across the period. If we go to LED luminaires, we see a kind of a different pattern. The growth has declined over the period from 29 - 13, but still a healthy double digit. With also a declining price erosion, which is operating at a much lower level than for LED lamps and at 5% CAGR for the second part of the period. If we look at the two businesses, lamps and luminaires, we realize the fabulous penetration of connected in the market from 1% - 6% for LED lamps and 12%- 22% for LED luminaires. This fabulous transformation in terms of technology had also consequences when it comes to the actors and the players on the market.
We have recorded that only three of the top six players in 2013 are still in the top six in 2019. At the same time, more than 40% of the global lighting corporate assets have changed hands in the past five years. How did we face this fabulous transformation of the industry? I would say that Signify had to undergo many transformation, and we've counted them, and they're about seven. I'm going to run through all of them very quickly. First, we had to move from a conventional company to an LED company. 74% of conventional sales in 2013 and 78% of LED sales in 2019. Well, it's like having lost EUR 3.8 billion of business coming from conventional. On the other hand, we created a business of LED growing EUR 3 billion during the same period.
We had to decline our conventional factory, the numbers of our conventional factories by more than half. As we are operating on a different industrial model, which is more about assembly, we diminish the CapEx intensity of the company by a factor two. The second transformation that I want to talk about is the move to connectivity. If we were weighing close to zero in 2011, it's now 15% of our turnover at the end of 2019, close to EUR 1 billion. We like to talk about connected points because this is a very interesting metric. We're talking here about, we say 56 million connected points, and we've increased by more than six times the number over the period. If we look at the consumer sales and the professional sales, they respectively account for 26% and 30% in terms of connected businesses.
On the consumer side, you know Hue, you know WiZ. On the professional side, you know that we have launched the Interact brand, which is not only software suites dedicated by application, but also our IoT platform. The next transformation is not always well known. We used to be much more a light source company, and we are becoming a luminaires company, from 37% of the turnover to 45 at the end of the period. If I would add Cooper, this number would go above 50. We've done the same thing when it comes to the profit split by more than doubling the contribution of the luminaires to our profit over that period. Now, managing a company which is doing luminaires is slightly different because the approach is much more regional than when we talk about a light source and what we commonly call lamps.
We had also to acquire and gain market share in the geographies where we wanted to have a better footprint, namely in China and in the U.S. We had also to move the company from complex to simplify. We inherited a strong cost base, and when I look at the fixed cost, I look at the fixed cost in two different areas. The first one is what we call the manufacturing-based cost. This is basically the fixed part of our Cost of Goods Sold. We reduced them quite drastically by EUR 275 million over the period. It's not only achieved by closing factories, but also by making our manufacturing plants much more efficient. On the side of the non-manufacturing cost, we reduced by EUR 544 million with a lot of different alternatives, having a very strong belief that we need to manage cost as a percentage of sales.
We reduced our cost substantially also to be able to achieve a percentage of cost, which is in the interval that is our target, 25% to29%, as we have always said. We achieve the upper level of that band at the end of 2019. In the meantime, we also invested, and we invested strategically in LED and connected for above EUR 1 billion. We also had to do another transformation, which is to make sure that our financial profile was based on the future growth and profit pool. If we look at our growing profit engine, they were both impacting negatively our profit and our cash in 2013. In 2019, they account for 81% of our profit and 72% of our cash generated. The next transformation is a fundamental one for the company.
Back eight years ago, we understood that we could contribute like few companies to making the world a more sustainable one. We, at the time, set to ourselves very ambitious objectives. They were objectives and commitments at the time, and we're happy to say that after all these efforts, we are now a recognized leader. We've achieved a very ambitious objective when it comes to the way we operate the company with carbon neutrality, but also with what we sell to our customers and how we contribute to the society at large, and this has been externally recognized. Nicola will give many more information about what we achieved in the past and the new ambitious objective we have for the future. Last but not least, in the meantime, we had also to move from a sub-segment in a conglomerate to a standalone company.
We underwent, if you remember, two track. It was a dual track, private and public. We ended up becoming a public company, and we changed the name in the meantime. All these required a lot of effort from the team. At the end of the day, we are today the number one in lighting. We have kept our leadership in conventional. We have become a leader in LED, and we have become a leader in connected lighting. Today, if we add Cooper, we are 2.5x bigger than our next competitor. We're very proud of the achievement of carbon neutrality, which has been a very important objective acquired over many years.
We have been able to light the world with 56 million connected light points. We have a permanent commitment to sustainability, but also to innovation, which is, at this point in time, showing probably the biggest portfolio of patents with close to 20,000 patents. We're investing two times more in R&D than our nearest competitor. At the time of the IPO in 2016, we redefined the purpose of the company, which is to unlock the extraordinary potential of light for Brighter Lives, Better World. We will also illustrate this in the coming hours. Enough about the past. Let me now talk to you about the future. Here, I'm going to talk about how we see the market moving forward. This is what we call our base case.
Javier will talk to you later, and he will show to you that we have studied different scenario. I'm going to take the scenario which is for us the base case. You see effectively, in 2020, the market dropped due to the pandemic from EUR 70 billion to EUR 61 billion, and subsequently, the growth of the market, which is a combination of a market rebound after the crisis and also a market growth driven by some growth pools. The connected part of the market is certainly one, growing at 14% CAGR over the period. We see that in our divisions, we're still going to expect a decline on the conventional part, but a growth on digital products and digital solutions.
If I look on the right-hand part, and I do the same exercise as the one we did previously for the market with a past view, if we take a future view at the market, we see that the LED lamps market will start to decline over the period by a CAGR of - 8%, which is the consequence of longer burning hours and a replacement market that comes a bit later. While also we experience the move from LED bulbs to integrated LED luminaire, what we have said for a very long time.
We also expect the price erosion, which has been quite steep in the previous period, to soften to minus 2% CAGR over that same period. It's a different story on the LED luminaire, where we see still growth and also a diminution of the price erosion, which was much less important than in the case of LED lamps, but moving from minus 5% CAGR in the previous period to minus 2% in the upcoming one. Once again, in both cases, we see a further penetration of connected offers from 7%-12% for lamps and 22%-27% for luminaires. Let's move to Signify. What we wanted to show here are a few things. First of all, it's true that we operate on the full value chain, I would say the downstream value chain in the lighting industry.
We present in LED electronics or lamp electronics, light sources, luminaire systems, and services. There are some segments of the market where we are not present and that we are not focusing on. Specifically in the luminaire segment of the market, we are not focusing on conventional professional luminaires. This is a low-profit market declining. We are not focusing on consumer decorative LED luminaires. In that case, it's a growing market and it's a profitable market, but it doesn't play to our strength. We're talking here about high-mix, low-volume offers, very local. This is not what we know how to do well. This is not where we can win. All in all, when you look at the market that we are really accessing with our offers, it's 70% of the lighting market.
The exercise that we've done on the right-hand part was to try to understand how the growth profile of the company is mechanically or mathematically evolving. Let me guide you first through the gray bar, the one in the middle, which is basically the difference between the market growth, the overall general lighting market growth, and the weighted market growth of Signify. Let me take an example. If we go back to 2017, if the general lighting market was globally flat, our Signify weighted market average would be declining at 6.7%. We see that over the years, that gap is reducing, potentially becoming positive at one stage. That is an indication that the growth profile of the company mechanically, as we lose conventional or as conventional becomes a minor proportion in our all turnover, our global growth profile is improving.
If we go specifically now and we zoom at the period 2020 to 2023, we've talked about the market CAGR of 5%. The impact, if we look at the weighted market average of Signify, is -2.5%. This means that we have a Signify weighted market average, which is growing by 2.5% over that period. Let me now move to another part of the market, which is not contemplated in the numbers that I've given right now, which was about the general lighting market. Now we're focusing on what we have called growth platforms, and we've called them growth platforms for sustainability because they have very specific characteristics. They all contribute to sustainability. They all need technology, innovation, and sometimes also an adapted go-to market. All in all, we're talking here about an additional EUR 5 billion market opportunity. Let's start with agricultural lighting.
We talk about a very exciting opportunity here because it solves one of the fundamental issues that we're going to have on the planet, which is food availability and security. As you've seen in the video, we cannot feed 10 billion people in 2050 if we produce food in the same way as what we do today. This is a market that we see growing by 6%, getting closer to the EUR 2 billion at the end of the period. We have a unique position with 150 plus light recipes when it comes to our crops and also animals. We're very well positioned in a business that we have been focusing on for many years. Solar lighting is next, and this addresses very directly what needs to be done when it comes to climate action and within climate action, clean energy.
We see this as a very important trend in the future, and we can see these requirements happening in many of the green funding initiatives that we see flourishing around the world. This is a market that we see growing at 16% at CAGR over the period to reach EUR 1.7 billion at the end of it. Once again, we are here a leader in technology because when we talk about solar, it's fundamental to have a technical and technological consistency between the solar panels, the battery, and the light source. The quality of the combination of those three elements is fundamental to be able to have solar reliable offers and technologies. The next one is UVC. This is something that you know we have pushed a lot, during the pandemic period. It directly targets another sustainable element, which is health and safety.
Yes, it's needed during the pandemic, but we believe that that pandemic will create new reflexes, and we see also a future need for disinfection in general from germs and bacteria moving forward. This is a market which has 2 components, water. With a slight growth of 2%, that's a EUR 1 billion market. Then the emergence of a new market, which is about surface, air, and object disinfection that we've talked about quite substantially in the past quarters, moving from 0.6-1.1 with a CAGR of 19%. Here we have a decade-long expertise, and we know the applications fairly well for that market, and we have started to move there very swiftly, improving also our capacity, our production capacity, which was needed in that period. Let me move now to 3D printing. 3D printing is clearly targeting a fundamental sustainable objective, which is circularity.
Here we see a market which is more expressed here in terms of potential, that could go up to EUR 1.2 billion, growing double digits. Here we have clearly a first-mover advantage because we started to talk about 3D printing offers three and a half years ago. We worked on materials, we worked on the industrial process, the type of machines that are needed. We improved greatly the performance and the yields of this machine. We think we have a clear mover advantage there. These are some of the very interesting growth platform that we have. You wanted numbers. We worked a lot, and now we're giving to you numbers about how we sized those markets moving forward and their respective growth.
Let me talk about two others that are slightly different in the sense that they are at an early stage of their development, but with very high growth potential. I want to talk about Li-Fi, where we see a market potential in terms of substitution of what is existing that could go over the period up to EUR 2.5 billion. Here we have a very strong position in terms of IP portfolio and offers that are already brought to the market. It is a business that is using basically the infrastructure of light to transmit data. We know that there is one fundamental driver for that business. It's whenever there are going to be Wi-Fi emitters and receivers on our phones, that will really multiply and expand greatly the potential of that market.
Smart Pole is also extremely important for us because we have developed technology whereby, in the light pole, we are capable to put the base station and also the antenna for 5G, and that's going to be essential when the 5G networks have to be rolled out. Because you need basically to find spots where the antennas can be put. We need many more antennas in a 5G network than for the previous ones. Once again, this can be done through the existing lighting infrastructure. We've talked about organic growth potential, and if we try to sum up what I've just said, we're talking here about markets of EUR 10 billion and EUR 5 billion respectively, growing at a double-digit CAGR. If we go back to our portfolio, this is 20% of our portfolio that has a potential growth above a 10% CAGR.
Let me now move to inorganic growth. We have been, in the past, very heterogeneous in the way we target acquisitions. After the IPO, there were many years where we were not really active, and we said at the time, "Look, we're looking at the market, but we don't find anything which is strategically making sense." You've seen that between 2016 and 2018, we didn't do much. We were more active in 2019 because we saw opportunities that we thought were value creating and totally aligned with the strategy of the company. We always respected a very clear strategic mandate when it comes to acquisition. We were looking for companies that were improving our reach and our market share, mainly luminaire companies, and when it comes to the reach, mainly in terms of online access.
We signed a few JV in order to help us to have a better presence online. We also targeted companies that were helping us to build our technology, companies that were bringing a complementary offer to what we already had in systems and services. We also did acquire companies that were bringing additional elements, additional weapons for us to fight on the market when it comes to the growth platform that I've just been describing. Moving on, we keep the same focus in terms of inorganic growth. Of course, Javier will explain more about our capital allocation policy, and it's clear that our number one priority is deleveraging after the acquisition of Cooper that was fully debt-funded. If we were to do M&As, they would be bolt-on and they would be aligned with those three very clear targets.
I would just like to add that Klite was probably an acquisition, and you see that it's not circled in green, blue, or black because it was slightly different and we will explain why we did Klite, which is also answering to a fundamental strategic objective that we had to meet. A very important element for us because it's guiding the whole company, and we bring you here more inside the company and how it's being managed, and along which fundamental strategy guidelines. Part of our strategic process every year, we review the execution of the strategy at the end of the first semester, and then in the second semester, we look at what has changed in the world to see if the strategy needs adaptation.
Normally at the end of Q3, we come not with a new strategy, but with an adapted strategy to the reality that we're facing at this very moment in time. What you see here is what we call our Five Frontiers strategy. It came out of the process that I've just been describing, and it was launched in Q3 2019. This is a strategy which is not new. This is a strategy which is already in execution for a bit less than a year. It comprises of Five Frontiers, and let me run through them, each of them very quickly. The first one I want to talk to is our absolute focus on being customer-centric.
We have been implementing customer Net Promoter Score survey that are conducted every quarter, meaning that every quarter, worldwide, a set of our customers is receiving a survey that they fill in, and then we consolidate the results. You've seen that over the years, we've been improving that Net Promoter Score, and for us it is a fundamental objective in the whole company. Now, if we take a bit of distance and we try to listen to what our customers are telling us, they tell us the following. They love our brand, they love the width of our offers, the quality that we bring, the innovation that we bring, and they also tell us that we can improve on ordering and delivery, which is a very strong focus that we have for now a few quarters, and we're going to continue to have moving forward.
On the other end of the spectrum, we also listen to our employees. Here we also conducting a quarterly survey. We basically survey all the employees that have a computer in the company. You see that our participation rates are extremely high. We're talking about 80%, 84% in the course of 2020. This has been the case for many years because we run that process for, I would say, about seven years. Every quarter, we survey our people. The survey comes back, and by managerial entity, the managers decide on the one action to conduct with their teams per quarter on the basis of the results. We're focusing on many different elements that we can improve. Diversity and inclusion. We are very specific on identifying talents to be able to build strong succession paths.
We also very eager to provide a platform where people can develop themselves, can learn. It's not only for the future reskilling that we need with digitalization, but it's more broadly improving the knowledge of our people. We want to be a learning platform. You can see that the Net Promoter Score of our employees has also evolved quite a bit over the years. If I remember well, in 2016 it was 13, and it's 29 now at the end of 2020. The two other Frontiers I want to talk about are more business-oriented. The first one is about delivering differentiated lighting offers in, I would say, the more traditional market.
We've seen over the past years, and we've commented that many times with many of you, that there were a risk of commoditization, or there were actors coming to the market with very aggressive price, with the objective to take market share, even when these actors were making no cash and a little to no profitability. We had to fight against that. Also the disruption of the actors on the market, meaning that three of the top six were not anymore in the top six, changed quite substantially the actors around the table. It changed the market conditions. What we realized at that point in time is that we didn't want our A brand, which is backed up by a lot of investment and a lot of innovation, to go down in price.
We brought to the market alternative brands, we call them B brands, to fight in the more aggressive part of the market. At the same time, we need also to be equipped to be able to, especially with LED, to supply private labels. Our model was not allowing us to do so because the big private label companies were going directly to our suppliers. That's one of the reasons why we decide to do the Klite move, to make sure that we could access that market of private label, but that we would also control much better our supply chain. On these elements, there will be further deep dives in the division deck, so you will hear Rowena Lee talking about these elements in more details.
The other frontier is about driving Growth for Sustainability, and this is a fundamental belief and something that is driving us very strongly within the company. We can grow Signify to the benefit of the planet. This is an equation which is extremely appealing to us. You can imagine that the company can grow, generate growth, and that growth will serve the planet, and will try to tackle some of the key issues that the planet is going to have moving forward. We talk here about climate action, circular economy, food availability, safety and security, health, and well-being. Connectivity is, for us, a means to that end, because we're going to see that connectivity is a fabulous enabler. Where do we see that strategy playing?
Well, in systems and services, on the professional side with the Interact brand and the Interact IoT platform that Harsh will describe at length, or on the consumer side with the complementarity platforms that we have with Philips Hue and WiZ, which Rowena is going to talk about. When it comes to the growth platform, well, we go back to what I've just been talking to a few minutes ago, which is agricultural lighting, solar lighting, 3D printing, and UVC. Here you will hear Leti, you will hear Javier, and you will hear Rowena talking to it. Let me now move to the last of our frontier, and not the least, which is the digitalization of the company with a big C. It has three fundamental pillars. The first one is about digitalizing our customer interface.
The second one is about our processes, and the third one is about our offers. When it comes to digitalizing customer interfaces, we want to have more contact with our customers through digital. Rather than talking at length about it, we want to just give you an example of something that we have been releasing to the U.S. market very recently, which is an app that has the following objectives. It's for consumers, because we realized that consumers, when they have to make the choice of a light bulb today, they face a lot of choice and very little help. The objective of that app was to help consumers to make the choice based on the form factor of the bulb. Imagine you at home, you want to change a bulb.
It has a form factor, you can take a picture with the app and it will tell you, it will recognize through AI what form factor we're talking about. Subsequently, it will help you also to select the intensity and the color temperature that you need. We know and we have made surveys that indicate that consumers, when they buy a bulb, very often they're disappointed, and 30% of the time they go back to change it. Let's have a small video which is illustrating this. Available and launched already in the U.S. just in the past weeks. Let me move to the second part of digitalization, which is about our internal processes. There's a lot of work that is being happening at this point in time.
I want just to bring you in our kitchen and give you some information about how we do some things. We're reviewing performance in the company on a regular basis. At the global level of the group, we do that with Javier and the team on a quarterly basis. You need to know that the documents to do performance reviews are completely centrally and digitally created. These are formats that are completely fixed and closed, so our people don't spend time looking for the numbers, but they spend time analyzing them and trying to understand where are the points of improvement and coming to performance reviews with one objective, which is to try to discuss all together and to help them to improve on what needs to be improved. It has a very exhaustive set of data.
We first and we always start to talk about the customers, and we talk about the customers specifically. We talk about the consumers, we talk about the professional customers, and we talk also about the OEM. We have three slides for every customer type. We're going to talk about people, and we have a lot of metrics about our people. We talk about sales, margin. Normally, we talk about cost, P&L, and we finish with working capital. That gives you an indication of what happens in Signify at this point in time. It's clearly not exhaustive because we're doing much more, but we wanted to make that explanation more vivid and base it on an example.
When it comes to our offers, here I'm not going to surprise you because I've been talking about that and we have been talking about that for a long time. It's about selling products, systems, and services. At the end of 2020, all the products of Signify that have the potential to be have a connectable version.
This is an objective that we wanted to achieve, and we have achieved it at the end of 2020. When we move to systems, we are on the consumer side as well as on the professional side, very well equipped because we took the past period where we could still improve profitability, leaving aside some money to develop some platforms and some architectures that we believe are today unequaled on the market when it comes to what we're capable to sell in terms of system to the consumer, but also to the professional customer. Last but not least, we move 1 level higher, which is all the data that are generated by our systems can now be moved to a motorway of information, which is our IoT platform, to be able to deliver services. Harsh will talk to that.
It's a business which is developing and growing quite a lot. It's still small, and we believe that the market will be revealed probably in the coming years. This is what I wanted to talk to you about when it comes to digitalization. Let me finish my introduction by telling you that this growth-oriented and technology and innovation-oriented strategy will lead us to a higher level of performance when it comes first to our sustainability promise. Here we want to double our impact on society and on the environment moving forward. Nicola will talk about that quite extensively. On the other hand, we are now giving financial targets for the midterm, which is a 0%-5% growth on a yearly basis over the period, and adjusted EBITA between 11%-13% at the end of 2023.
Free cash flow and return on capital employed of respectively above 8% and above 11% over the period. For you to get more details, I will have Nicola talking about sustainability and Javier talking about how we're going to achieve those financial targets. Well, I thank you for your attention, and now I leave the floor to Nicola.
Thank you, Eric. I'm going to talk about our sustainability transformation. I'm going to talk about our achievements as we close our current program, and I'm going to introduce you to our new five-year program and our doubling targets. Now more than any other time in history, we're feeling the effects of global challenges like climate change, resource scarcity, demographic change, and urbanization. The last five years have been the hottest ever recorded. Waste is reaching epidemic proportions. The global population will reach 10 billion by 2050, with most people living in cities. We also see changes in how the world is responding. We see the rise of ESG-focused investments and reporting. We see companies aligning their strategies with the United Nations Sustainable Development Goals. We see increased interest in low carbon technologies, and we see new legislation like the European Green Deal.
Well, for us, this transformation started already a decade ago when we actively drove the ban of incandescent lighting and led the shift to LED. With our IPO, we seized the opportunity to put sustainability at the heart of our purpose. Every year, that purpose is coming more and more to life, both in what we sell, where we're driving the technology transformation, and in what we do with sustainability integral in our actions. We're now completing our five-year sustainability program. We've overachieved on all of our targets. 83% of our revenues are sustainable. We've delivered 2.5 billion LED, more than any other company. We're especially proud of being carbon neutral. This makes us one of the few manufacturing companies in the world to have achieved this.
Over the last decade, we've reduced our carbon footprint by more than 70% in scopes one, two, and parts of scope three. We've made our factories and offices more energy efficient. We've optimized our logistics. We've transformed our business travel. We invested in two power purchase agreements, one in the U.S. and one in Poland, and we invest in meaningful offsetting projects like reforestation and solar energy in off-grid areas. Our manufacturing sites are zero waste to landfill. We've created a strong safety culture and reduced injuries by 50%. 99% of our risk suppliers meet our highest supplier sustainability requirements through our audit and training program. We're really proud of all the external recognition in ratings and rankings. Yesterday, it was announced that we again reached an A rating for the Carbon Disclosure Project.
All four years since our IPO, we've been in the world index for the Dow Jones Sustainability Index, three of those years in the number one position. We're ranked in the number one position for the electronics industry in both Sustainalytics and EcoVadis. Sustainability is part of our company strategy. Our Five Frontiers strategy sets our direction in a changing world. With Growth for Sustainability, we've defined areas where we address global challenges and create value for our customers and for society. We'll deliver on our strategic frontier great place to work by investing in our people and providing a more diverse and inclusive workplace. The United Nations Sustainable Development Goals act as our strategic compass to direct our efforts where we can make the biggest difference.
We've aligned our business strategy and our commitments with the Sustainable Development Goals, and we've strengthened our focus on societal topics like SDG3 on health and wellbeing, and SDG8 on decent work and economic growth. Eric spoke about our transition in the last years from ESG commitments to recognized leader. Well now, with this new program, it's about shifting from reducing our negative impact to creating positive impact. It's about creating more stakeholder value. We'll grow as a company by improving the ESG performance of our customers, while at the same time solving some of the world's challenges. This September, we launched our new Brighter Lives, Better World 2025 program with even more ambitious commitments. We're committing to double our positive impact on the environment and society. With this, we fulfill our purpose and deploy our strategy.
We'll double the pace we achieve the 1.5-degree scenario of the Paris Agreement and over our value chain. We'll double our circular revenues from 16%-32%. We'll double our Brighter Lives revenues, which benefit society related to food availability, safety and security, or health and wellbeing, to 32%. We'll double our percentage of women in leadership to 32%. We'll also continue and strengthen our ongoing programs. We'll continue to be carbon neutral. We'll continue to have zero waste to landfill. We'll continue to light lives in off-grid areas. We're also going to strengthen programs on safety and on supplier sustainability with stricter targets and more comprehensive programs. Our sustainability initiatives not only drive long-term growth, but they also contribute to our financial performance. We're optimizing processes and supply chain. We're reducing energy use. We're eliminating waste.
Our zero plastics packaging program is an excellent example of where sustainability and cost savings go hand in hand by reducing bill of material costs and decreasing logistics costs. Our PPAs reduce financial risks related to procuring electricity and offsets. In this way, we're creating value for Signify and making the world more sustainable. Now I'd like to introduce you to our doubling targets related to the environment. Climate action is central to our company strategy. With this, we're addressing a serious challenge the world is facing. We'll double the pace of the Paris Agreement to achieve the one and a half degree target of the Paris Agreement over our value chain six years early. We'll achieve what the Paris Agreement sets for 2031 already in 2025. We'll continue to be carbon neutral, more importantly, we're going to make our customers more sustainable.
We're going to reduce the carbon footprint of our customers. We'll fuel increased demand for low carbon products. Our innovation and technology capabilities allow us to shift our product portfolio to make it more energy efficient. With Interact systems, we can reduce energy use by up to 80%. We're leading in solar technology, which as Eric mentioned, is growing faster than the market. Circular economy is the second of our growth strategy areas. We're going to double our circular revenues from 16- 32%. Here we have the technology because we invested in innovation. I want to show two examples of our leadership. The first is on 3D printing, where we were the first to develop 3D-printed luminaires at scale, and our customers are really enthusiastic about the 75% lower carbon footprint related to materials, manufacturing, transport, and end of life.
We were also the first to develop circular streetlights with reusable components and recycled parts. Our circular components extend product lifetime, and our intelligent systems enable luminaire monitoring and preventative maintenance. Our circular services provide customers peace of mind and upgradability. We're also doubling our positive impact on society. We're going to double our Brighter Lives revenues from 16%-32%. In food availability, we have a unique IP position. With 150 recipes, we can increase crop yield and quality. We increase nutritional value. We can increase growth predictability. With vertical farming, we can reduce water use by 90%, and we don't need pesticides. For aquaculture, we increase feed conversion, and we increase fish health. With animal farming, we also increase animal health, and we even have performance-based contracts linked to farmers' yields. We make cities smarter, safer, and more secure.
Our lighting can reduce street crime by 21% and nighttime traffic accidents by 30%. We can increase security at home and at work with connected lighting that connects to alarms and cameras. With Trulifi, we have industry leadership through innovation and technology, and we increase cybersecurity for customers who need an alternative to Wi-Fi. On health and wellbeing, our UVC lighting successfully inactivates viruses, including the COVID virus, in a matter of seconds. We have a deep knowledge about how light affects people. Our human-centric lighting adapts to our circadian rhythms. It optimizes our energy levels, and it helps us see, feel, and function better. We're also committed to create a great place to work and improve our diversity and inclusion. We already have good diversity in terms of generations and nationalities.
We want to increase our gender diversity, and we're committing to double our percentage of women in leadership to 34%. Our workforce needs to better mirror our stakeholders and markets, and we believe this will improve our business performance. We're already driving a variety of measures like succession plans, sponsorship, leadership development, and trainings. We're proud of where the sustainability journey has brought us. Our doubling targets for 2025 are bold and ambitious. Together with our achievements, we're securing our position as the most sustainable lighting company. We're making our company more resilient. Our leading technology and innovation drives our Growth for Sustainability strategy. We're in a unique position to enable our customers to deliver on their sustainability ambitions. We're helping to solve some of the world's most critical challenges. We're really at the frontier to meet these new demands.
In these ways, our Brighter Lives, Better World program delivers financial, environmental, and social value for our stakeholders and society. Now I'd like to hand it over to Javier.
Thank you, Nicola. And thank you, Eric. Welcome to all of you on the call, Virtual Capital Markets Day. I would have preferred to see you live, and I hope this is going to be possible in the near future as it's going to be again, a bit more safe to travel and to meet. Interestingly, we have a small role to play in making the planet a bit safer again to meet. It's interesting that we are also in that field. In the meantime, I'll talk for the next 30 minutes. I'm going to zoom in. I'm going to go back to the targets that Eric has talked about. I'm going to zoom into why I personally believe that these targets are achievable, and I'm also going to come back to sustainability and value creation.
Throughout the presentation, you'll see a bit of a red line through the presentation, which comes back to something that I've been impressed about since I joined Signify. It is the potential of the company to strengthen its financial profile in very different market conditions. In the past, in the current, and we won't stop there, also going further into the future. Eric already mentioned something interesting, and I believe also that the past is always perhaps the best indicator to understand how we can do towards the future. Therefore, to kick off the presentation, I decided it might be interesting to look quickly at the past performance and cement that reputation, the potential we have to grow in the future. On this slide, the question was: what is the value we have created as a company since the IPO by being innovation and transformation driven?
We've listed the key focus areas post the IPO, and we've made our assessment based on the achievements on what we have delivered yes or no. Some of those have already been touched upon by Eric and then also by Nicola. Let's quickly go through them. The shift to LED and connected lighting to the percentages you see, I think clearly demonstrate that the company has been able to innovate, has been able to reinvent itself in, and also by leading the transformation in industry. On the comparable sales growth, truth be said, we put a red cross behind that because the overall company sales growth was -2.7%. There's a bit of a silver lining to that, as Eric explained.
If you look at since 2016 to 2019, the LED business has grown by about 10.7% on an annual growth rate. On the profit side, things are back to clear green. We have improved our profitability by 310 basis points through the period 2016 to 2019, and we broke through the barrier of double-digit, which I understand at the time of the IPO, there were quite some people being skeptical that we could ever achieve that. On free cash flow, we generated EUR 1.7 billion in free cash flow, representing about 6.2% of sales. We therefore delivered an average return on capital employed of about 10%. Our balance sheet has been strong throughout the period. We've had a consistent investment-grade rating, and we're managing our leverage lower than 1 times reported EBITDA multiple by the end of 2019.
Nicola just explained that we overachieved on our ambitious Brighter Lives, Better World 2020 program. If you therefore sum all of this up, I think the story on value creation is quite positive as the share price appreciated since the IPO by about 78%, dividend payout since the IPO has a total of EUR 492 million, and we did share buybacks to the amount of EUR 669 million. That's the past. Before talking about the future and anticipating that we're going to get some questions on that, we decided to also give you a perspective on how we think we're going to end up the year 2020. Back to the red theme about my presentation. It's again, a year where despite being in unprecedented market conditions, the company has been able to strengthen its financial profile.
If you look at the dynamics on growth and comparable sales growth, yep, we will basically end the year at -13.5% to -13%, which obviously is severely impacted by the COVID-19 pandemic. If you look at it by division, on Digital Solutions, we see a slow recovery of the professional side of the business, and this is obviously due to continued impact of the COVID-19 restrictions. On Digital Products and on Conventional Products, they're obviously also impacted by the pandemic, but on both those divisions, we have a positive element which partially offsets that. On Digital Products, we have a strong demand for connected home lighting, and on Conventional Products, the impact of the pandemic is partially offset by a strong demand for UVC and horticultural lighting.
On adjusted EBITDA, we will end the year between a 10.2%, 10.6% adjusted EBITDA, which is roughly in line with last year, which shows clear margin resilience despite the top-line decline. On free cash flow, we continue performing very strong and will end up the year above 11% of sales, which is mainly due to a very strong structural and sustainable improvement in working capital. Mind you, this during very difficult market conditions, which I think is a stellar performance of a company. That's enough about the past and the present, and let's now then go into talk about our value creation framework, and let's talk about sales first. Eric already mentioned it. The guidance is clear. We will return, we will deliver sales growth for the total company. This will be based on a rebound from COVID-19 that offers us growth and market share again opportunities.
We believe our sustainability-driven businesses will target attractive new market opportunities, and the continuous innovation in connected lighting and new growth platforms will improve the overall Signify growth profile. Having said that, we have done quite some modeling, and we've spent a lot of time trying to understand the dynamics on what could happen in a post-pandemic business recovery. With the variability that we have, we end up with three scenarios, and we want to just talk through them that you understand how we got to our total sales guidance for the period going forward. We've condensed the market dynamics in three main drivers. One is online development. Number two is the severity of the lockdowns we'll see. The third one is how fast government stimuli will hit the market. There we have three scenarios.
The more optimistic scenario is that we continue having a very strong pull on the online side of the business. There will be a moderate impact of lockdowns, and the stimuli will come early in 2021. Our base scenario, which is the middle one, still counts on a strong pull from online, a slightly more impactful effect of the lockdowns, and still stimuli coming to the market in the second half of 2021. We have a more pessimistic scenario, which is that there will still be growth on the online side, impact of lockdowns will be more severe, and the stimuli will be more oriented towards a 2022 timeframe. We've also looked at it by vertical pillar because we understand and through the modeling, we look at different modeling of the consumer market versus the professional market.
We believe the consumer market will be more resilient because it drives on the first two pillars, which is on the one hand, an online that will grow a bit slower or faster, and that will be partially offset by the impact of lockdowns. That should be offset by the stimuli coming to the market. All in all, it gives us three scenarios. A more optimistic scenario where we expect the market to recover to 2019 levels by 2022. Our base scenario is a recovery by 2023. A more pessimistic scenario would be a recovery only by 2025. In the next slide, we translate that to our sales guidance. As Eric already said, we translate market growth to Signify weighted compounded annual growth rate.
Our base scenario is that at 5% average market growth will translate to a Signify weighted market growth of 2.5%. On the optimistic side, we think it might go to 4%. On the more pessimistic side, it will be roughly about 1% for the Signify weighted market growth. We'd also looked at timeframe because we do believe that the growth rates will be slightly different early in the period versus back end of the period. Early in the period, we obviously have the benefit of the rebound of 2020 crisis. We see an acceleration of the connected lighting and the growth platforms, but that will be partially compensated by still a higher mix of conventional and the erosion of conventional. In the second half of the period, we still expect growth. We will not have the rebound effect.
We will continue to grow the connected lighting and the growth platforms, perhaps not at such an accelerated pace. Also the impact of conventional and the erosion of conventional will be lower. In total, with the uncertainty that we still have around this, our guidance is that we will deliver yearly positive comparable sales growth between 0% and 5% over the period every year. We recognize it's a bit of a wider range, therefore, with more visibility as we go along, we commit to give you yearly guidance at the time of the quarter four earnings releases. Here again, the key message is growth platforms will offset conventional decline, and we expect digital products and digital solutions to account for more than 90% of total sales by the end of the period. That's on the sales driver. As we move forward, we go into the profit drivers.
On the profitability of the company, we build on a successful track record. Here what we are kind of anticipating is we're expecting gross margin to remain broadly stable. We'll get indirect costs to decrease due to cost dilution, but also due to continued cost efficiency efforts. Obviously, our dependency on the division Conventional Products will diminish over time. On the next slide, you see that a bit more visual, and it's explaining the dynamic change between the past and the future, and how we continue strengthening our profile that way. Between the end of 2015 and 2019, we delivered those 310 basis points margin improvement to get us beyond the 10% threshold. In the two first years of that period, it was mainly gross margin cost improvement, which contributed about 100 basis points.
In the second period, two years of that period, it was cost reductions, representing about 200 basis points to get us across the 10% barrier. As we look forward, the profit improvement plan changes. First of all, based on the numbers we just showed you for the range of 2020, between 10.2% and 10.6%, we expect solidarity measures that have an impact of about 50 basis points to be compensated. We have cost dilution that we get through sales, but we will still work on cost optimization. That cost optimization will basically be in three areas. First of all, we want to build a leaner headquarters. This is not just about cost savings. This is also being closer to the market, closer to the customer, and being more agile as a company. The second one is digitalization. Eric already talked about it.
We've got work to do on digitalization, not only our internal processes to generate cost savings, but also to make sure that the interfaces, both with suppliers and consumer customers, are more seamless and that we therefore, again, have a much better experience with our stakeholders. Last but not least, we will, in our inorganic growth, make sure that we drive synergies to the bottom line, and we'll talk about that in a second. With all of that, our adjusted EBITDA margin target for the period is to end up between 11% and 13%. This will be based on, as I said, a stable gross margin and dilution and optimization of the cost base. We're reinvesting innovation and digital to fuel the momentum. Digital products and digital solutions will disproportionately contribute to that margin improvement, and they will account to 85% of EBITDA.
Obviously, also, as we do cost optimization, it will have an impact on restructuring costs that will incur early in the period, but I'll talk to that in one of the next slides that we get to. The third driver of shareholder value creation is then our cash flow. Here it goes back again to the past on our capability to drive free cash flow generation. Here, we will further anchor digital products and digital solutions as key drivers for cash flow, as their maturity profile is getting much better in terms of their free cash flow generation. There will be a continued discipline on working capital, where we've made some structural improvements that we think are sustainable going forward. We'll keep on being very strict on CapEx investment and investment returns, and we will see a gradual decrease of post-merger integration and restructuring costs.
Again, more visual. Here I'll go straight to the guidance. On free cash flow generation, it will be driven by digital solutions and digital products. Throughout the period 2021-2023, we commit to a minimum of 8% of sales. If you remember, in the past, we delivered 6.2%. This will basically be driven by maintaining structural improvements in working capital, and we'll see a gradual decrease of restructuring and post-merger integration costs. You see the components on the left-hand side of the slide, where you see on working capital, we have made that structural improvement from being at 9.3% of working capital as a percent of sales to 6.2% over the 2019-2020 period. We believe this is the level sustainable towards the future, might even be slightly better if we manage to get digitization on inventories and a further focus on receivables and reducing overdues.
On the asset-light side of the company, we went down from 1.5% growth spend CapEx to 1.3%. Again, we believe we can structurally hold it at that level. The third component you see there is the restructuring costs between 2019 and 2020. You see that the restructuring costs were about 2.2%. In the period 2021-2023, we expect to go between 1.5% and 2%. The 2% in the initial year is more linked to the integration of Cooper, and also because we want to accelerate our savings program to deliver those results to the bottom line. With all of that together, as I said, we commit to a free cash flow above 8% of sale as an average throughout the period. With those three drivers explained, we'll come to investor return, and there we're going to guide on return on capital employed.
The simple equation here is you've heard about steady profit increase, you heard about maintaining the asset light profile, and therefore our guidance for the 2021-2023 period is to gradually increase, Signify return on capital employed in line with the company strategy and to reach above 11%. Compared to our internal calculated weighted average cost of capital, we are convinced it will anchor Signify at the upper end of our peer companies. We expect, as we said, a gradual improvement over the period. The importance of ROCE for us in adding that is that we don't just talk to you about the value we create, but also making sure that we deliver you a safe investment, a reliable investment, and that we know that the funds we employ, that they are properly used and efficiently improved, obviously.
That was the part more about what we generate as value, then we switch into the capital allocation, which is how we're going to use the value that we create. Here it's all about delivering on the promises we make. The first priority is to return dividends to our shareholders. Once we've done that, we talk about the priority, which is, as we said before, honoring our deleveraging commitments to cement our investment-grade rating, looking at inorganic growth on the condition that it will build shareholder value. If after that, we have cash left that we are not investing in growth, then we'll consider other things like share buybacks or extraordinary dividends back to the shareholders. Running through those, on dividend policy, this is about an annual increase that we're committing to for the future.
If you look at the past, we had a policy of 40%-50% of continued net income to be paid out as dividend. We have applied that. We have delivered on that promise. We paid EUR 492 million on dividends since the IPO. We had between 44% and 49% of continuing net income paid per year in the range that we had committed to, and we had a year-on-year increase in dividend per share. At the exception, obviously, of the 2019 dividend that we suspended due to the COVID uncertainty. Going forward, as also communicated at the acquisition of Cooper, we basically go forward with a commitment to pay out an increased dividend per share to be paid annually and making sure, therefore, that our dividend yields remain attractive.
The second component of our capital allocation is that we will honor the deleveraging commitment we have to go below 1x reported EBITDA by the end of 2020. Importantly, though, before getting to that one, we also portrayed at the left-hand side that we have had some significant intervention to balance the maturity of our debt profile. We had a important repayment of debt originally planned for 2021. After the acquisition of Cooper, we were able to refinance our term loan with now maturity between three and five years. As you know, we've accessed the Eurobond market to repay the bridge financings for Cooper with maturities between 2024 and 2027. That, combined with the deleveraging promise that we're making to go back from a 2.7 multiple at the time of the Cooper acquisition, going back to a one multiple, below a one multiple by 2022, makes us confident that we will maintain a strong investment grade rating. The last part of the capital allocation policy, I just wanted to briefly touch upon inorganic growth as we see it as a key driver for shareholder value. This is more about talking the robust, disciplined financial framework we use to evaluate inorganic growth. What you see on the left-hand side is that we use seven metrics across three buckets to look at proceeding or not proceeding with inorganic growth opportunities that we are presented.
On the right-hand side, you see that not only do we look at it pre-acquisition, but for a minimum of three years after the acquisition, we keep on tracking that those acquisitions do deliver on the promised value. As you see from the color coding on the most recent acquisitions, Cooper, Klite, WiZ, all traffic lights are on green. The iLox ONCE is basically the one that is slightly off track, and that is due to a slight deviation in profitability in the first year, where we had to air freight products in order to deliver on our promises to our customers as we faced a very low inventory at the time of acquisition. In the second year with the COVID, we see a bit of the lagging demand from farmers, but we do still expect that we can recover on that investment. This is not just about numbers.
This is also about the discipline of pre- and post-acquisition to be very close to the ball, because what it really drives is the potential for us to integrate fast and to drive savings to the bottom line as soon as possible. The best proof point of this is Cooper, where, as some of you have anticipated, we are indeed today capable, and we are able to commit to higher synergy targets than what we communicated at the time of the acquisition. We'll be raising the synergy target to be delivered over the next three years from $60 million to $100 million. Why is that? Very frankly, at the time of committing the $60 million was at the time of acquisition with little visibility on the P&L and the business of Cooper. Those cost synergies were identified on bill of material savings and on procurement savings.
As we now have full transparency on the Cooper business model and its economics, as we have a very close collaboration, obviously, with Cooper, we've been able to identify not only a slight increase in cost synergies, but at the same time, we have detailed the initiatives that allow us to get back office synergies. Closely working together between the two companies, we have also identified revenue synergies, and that totals up to $100 million to be delivered over the next three years. Again, the importance here is the collaboration and the speed at which we are able to deliver those synergies. The second is we have a very clear underpinning of those savings. We had it for the $60 million, and we've talked to you about that. We were accelerating those, and we'll deliver those.
We have the action underpinned for the $100 million, and again, we will also deliver on that promise. That's the three key components I want to talk about, different allocation, and then I wanted to get back to the point of sustainability. On sustainability, I still wanted to touch upon that because it is really at the heart of value creation. In the last couple of months, many people have asked me, said, "You've recently joined Signify, and what has struck you the most? What are the best surprises you've seen?" I tell you what I tell most people. Number one, I think the amazing commitment of the people and the values that the company carries are, I think, amazing. Testimony of that is the contribution of the people in difficult times in quarter two.
Number 2 is what I said before, the ability of the company to focus on improving the financial profile while at the same time driving innovation and going through a transformation. The word 'and' in between is the important one, because often they're portrayed as it's either/or, and in Signify, we combine both. The same goes to sustainability. Sustainability here is sustainability and value creation, and it's not put at different sides. It's going hand in hand. It's at the heart of everything we do. If I put on my human hat, the way I express it is, we grow to the benefit of the planet, not at the expense of the planet. If I put my CFO hat on, I change it slightly. It's sustainability in favor of value creation and not at the expense of value creation.
I'm going to give you one example, the slide gives you many examples on how we can slot the initiatives we have into sales growth, profit improvement, even options for future cash. I want to single out one, which is food availability. As some of you might know, I was working before in a food retail chain. A food retail chain that was focused on fresh food. The negative surprise I got working that industry is how difficult it was to get fresh products to our tables. Whether that was fish, where we're depleting the oceans, whether it was meat, where the CO2 footprint of the industry is extremely bad, or even fresh fruit and vegetables, where the distance to be traveled and the amount of water being used to produce fresh food to our tables is extremely damaging to the environment.
When I came to Signify and looking at lighting, and I see how we can help food availability, how it helps the overall company to grow, but how we are able to increase food yield, to decrease CO2 emissions, and to decrease the amount of water being used while doing that, I think it's something that really speaks to my heart. With that, I will basically say, let's go and wrap up this session. Let me just recap on the value creation framework, where you see that I've put value creation and sustainability now in the center. Our path to drive shareholder value creation is being clearly set. One, we'll have positive comparable sales growth between 0% and 5% in the next three years, driven by technological innovation and sustainability. Adjusted EBITDA margin will improve to 11%-13% by 2023.
We'll generate solid free cash flow with a minimum of 8% as an average across the period, and we'll see a steady increase of ROCE, but at least hitting 11% for the period. As Nicola said, we'll double the impact on society with our Brighter Lives, Better World program, 2025 program. All of this will be achieved while, on the one hand, we raise Cooper synergies to EUR 100 million to the bottom line in the next three years, by increasing dividends to our shareholders on a year-on-year basis, and by honoring the commitment we have to deleverage to below one times reported EBITDA by 2022. With that, I'd like to conclude my part of the presentation, and that concludes the first part, and I hand it back over to Rogier for the Q&A session.
Hi. Thank you, Javier. Thanks for closing the first session. We'll now prepare for the Q&A session. Many of you have already provided questions through the chat. Soon you will find the instructions to log into the telephone communication. We will first go to a break. I will use that time to set up the technical components on this side. We will welcome you back for Q&A. Thank you.
One, two, three, testing.
Hello, everyone, and welcome back. We will go straight into Q&A with the team. I would like to start with the first caller on the line, which is Daniela Costa from Goldman Sachs. Daniela?
Thank you. The first question does come from the line of Daniela. Just as a reminder to participants, if you do wish to ask a question, you can dial 01 on your telephone keypad. Daniela, your line is open. Please go ahead. Daniela, if you have your phone muted, you will need to unmute.
Hi. Good afternoon. Can you hear me?
We can now. Yes.
Perfect. Hi, everyone. Hope everyone is well. Thanks for taking my questions. I wanted to start with three questions, if you allow me. The first one was regarding the margin guidance, the 11%-13%. You had this guidance back at IPO time. You did Cooper, which as you showed today, it's going even better than you expected. You raised the synergies. It was accretive. You also are more confident on growth now. Why is the target the same? Are you just being conservative given the outlook, or can you elaborate a little bit there on sort of what the upside risks to that? On the second, I wanted to just ask you about the UVC opportunity, where you have the 10% CAGR. Understand it starts from 2020, but you're increasing capacity by eight times.
Can you help us map out, is it just the base effect from starting from 2020 and you already have a lot of that eight times in the 2020 number there, or why is the 10% not higher? The third thing is regarding the dividend policy. You removed the 40%-50% payout on the writing. Just wanted to clarify that. Also wanted to ask regarding buybacks, because you had a frequent buyback since IPO. Is it you didn't mention it because M&A is more of a priority now? Yep. I'll stay here and go back on the line. Thank you very much.
Thank you, Daniela. Let me take the two first questions, and Javier, you will take the last one.
Yep.
On the margin guidance. Effectively, we had a margin guidance of 11%-13% for the company after the IPO. I think we've learnt. A margin of 11%-13% was slightly below the lower part of that interval, and we realized that many things can happen. When you look at what's going to come in the years between 2021 to 2023, there's still a high level of uncertainty on when the pandemic will actually finish, how the market are going to rebuild. There's a lot of uncertainty behind that. 11%-13%, and if you look at the higher part of the range, it means that we would have to progress by 70 basis points on a yearly basis until 2023.
We've done a bit more than 300 basis points improvement after the IPO in a space of four years. This would mean a 250 basis points improvement in the space of three years. Which at the end of the day, we don't believe is conservative, especially given the uncertainty that we have ahead. Now, can we achieve it? Yes. It's part of the strategic plan that we establish once again, on a yearly basis. We do that for the upcoming three years. We have a plan in order to achieve this. As always, different situation that we're going to find on the market. If everything was going extremely well, if the market and the economies were rebounding very quickly, could we have the potential to do more and better? Maybe.
At this point in time, given the uncertainty, we think that 11-13 is ambitious and translates the reality of what we can achieve. For the UVC opportunity, Daniela, we didn't indicate a growth of 10% for the company. We indicated a market growth. The numbers that I have given were for the markets. When it comes to the increase of capacity, yes, we have already an increase of the performance, especially when it come to the light sources, because we are improving and we are increasing the capacity of the light sources. We start 2021 from a much higher base, because that increase of capacity has already generated a lot of growth on the components in 2020. Once again, I didn't talk about the growth of the company.
We talked about the growth of the market. We need to look at the second component of the UVC market, which is surface, air, and objects. Here, the market is going to be growing at a CAGR of 19%, and this is part that we targeting with UVC. Maybe Javier, for priorities, M&A, and buybacks.
Yeah. Hi, Daniela. Let me give a shot at the answer on the dividend policy. The policy in the past was exactly the 40%-50% range that we talked about. That translated specifically into a year-on-year dividend increase that we saw. That was pre the Cooper acquisition. At the time of the Cooper acquisition, in terms of the additional value we create in the company, we wanted to basically hold back to providing a decent dividend yield. Therefore, we believe that the policy going forward on a steady increase dividend year-on-year is the right policy to hold. As we said, from a capital allocation policy, the first one is we will indeed, of course, look into providing the shareholders with the proper return.
At the same time, we want to keep there the options open for, as we said, deleveraging, which has become a priority post the Cooper acquisition to honor our commitment, and then basically to look into inorganic growth. As I said in the presentation, if we look that there's less opportunities to invest in growth, inorganic or organic, we'll then basically have the flexibility to go back to either share buybacks or extraordinary dividends to then increase year-on-year decision on increasing dividend per share.
Thanks, Xavier. The next question will be from Andreas Willi from J.P. Morgan.
Thank you.
Afternoon, everybody. Can you hear me?
Yes, Andreas.
Yes. I have a question on the Q4 guidance you provided today. It implies a bit of a reduction year-on-year on profitability. You've had a very strong delivery in the first three quarters this year where you improved margins despite the lower sales. What's different in Q4 that kind of changes this dynamic, and also, what does this mean for the run rate into next year? Consensus looks for margins to improve meaningfully next year over this year, but then if the run rate into Q4 is weak, what does it mean into next year? You haven't commented on next year's margins. I guess you will give that guidance in February or January with the results. Maybe in terms of high-level picture. If margins slow in Q4, when would you expect to go back to year-on-year margin improvement again?
Thank you, Andreas. Let me take it that way. The big difference in Q4 is a very high base of comparison in Q4 2019. We compared to a very high compare. When it comes to the top line, what we are seeing in Q4 is a continuity of what we've seen in Q3, meaning that on the consumer side, the business is quite dynamic, and I would say in most of the geographies. We see headwinds on the professional side of the business because of the lockdowns that are being applied not always in a very homogeneous way in the different geographies. It's not all the countries of Europe, but we see also a slow pace in North America. That is impacting the top line more than what we had originally expected in Q4. There's another element, which is the availability of containers.
It seems a bit of a trivial subject, but it's a real one that we're facing on a daily basis. Finding containers that we can use to ship our product from one continent to the other one. We are not the only company to experience that at this point in time. That has an impact on the top line in Q4. Nevertheless, when the performance that we are at this point in time forecast to achieve in Q4 is very strong. The basis of comparison of last year is a very strong base of comparison. At the end of the day, if we were finishing the year with a -13% to -13.5% top line impact with the profitability as a percentage, which is going to be stable.
Look, I think given the conditions that we had to face this year, I think it is a reasonable achievement. We don't see Q4 as having a negative trend in terms of pattern. I think it's pretty much in the continuity of what we've been doing all along, and we are quite confident on our ability to continue to drive our profitability in the right direction moving on.
Thank you, Andreas. Next question is from George Featherstone from Bank of America.
Hi. Thank you very much for taking my questions. The first one would be, can you help us understand the base level of sales for each of the growth platforms, perhaps in 2020 or 2019 in agri, solar, UVC, 3D printing, et cetera?
That's an indication that we have given for all of them, but we don't give individual indications. All of them, it's about 4% of our sales, it's around EUR 240 million, and that's valid for the four growth platforms.
Of those four growth platforms, which would you say is the largest?
Agriculture.
Okay. In terms of the profitability for those growth platforms relative to the group, how should we think about that?
You have to look at it as for all of them, we talk about an accretive gross margin, and depending on the cases which is linked to the amount of investment we have to do to grow, we can have a slightly dilutive operating margin or accretive gross margins. For the business that are the biggest and the most deployed at this point in time, we are going to be accretive at gross margin level and at operating margin level. For the businesses that are smaller, we are in general accretive at gross margin level but dilutive at operating margin level.
Okay, thank you. The next question I have is around your revenue growth assumptions for next year. Just a query, really, how the charts on slide 17 relate to the charts on slide 41. It would appear as though, for 2021, the organic growth next year would be perhaps lower than what's also indicated by the higher growth in terms of phasing indicated on slide 41. Can you just help me understand that a little bit?
Basically, when you look at, I don't remember exactly which slide you're talking about, but let me picture it this way. The growth in the coming years will have two components. One of them is, I would say, the technical rebound because of the crisis. That's one. That will play more in the two first years in the period. Another element is the growth platforms on two sides, the growth platforms, the four that we have just talked about, but also all the connected offers that we have. Those ones will play all along the period. Now, if you compare Signify at the beginning of the period and at the end of the period, we believe that the impact of conventional, or the negative impact of the decline of conventional will be more important at the beginning of the period than at the end of the period.
You have a lot of different elements playing, but what we have assumed is that we would get a bit of a higher growth, as Javier was saying, in the initial part of the period than in the end.
Okay. That's super helpful. Thank you very much.
Thank you, George. Let's go to the next question. The next question will be from Martin Wilkie from Citi.
Good afternoon. It's Martin from Citi. Just quick clarification on that. The slide 17 that I think was referred to shows the Signify weighted market growth. It does seem to suggest that's a headwind in 2021. I know you are looking to outpace the market to take some share. Is that going to be a particularly important point next year in terms of you gaining more share so that you can more meaningfully outpace the market in 2021? That was my first question. The second question was just a question on clarification. Obviously, the dividend for 2019 had been suspended. I just want to clarify, is there any intent to revisit that, or is effectively it nilled for the year, and then we just look to the 2020 payout for the next dividend? Thank you.
Thank you, Martin. I will take the first question. You take the second one, Javier?
Yep.
You're right. When we look at Signify weighted market average in 2021, we still have quite an important gap versus the market growth. This is also the period where we believe that the technical rebound of the market, or this is the way we have simulated it, will be quite strong, especially on the consumer side. We expect a higher rebound on the consumer side, and a bit later on the professional side. We think that this should help us with our growth businesses to offset that gap. You're right, there's a bit of a hurdle here in the first year. Absolutely. Javier, to you, the second question.
Hi, Martin. The answer to this one is quite simple. We have, at this point in time, not changed our guidance that the dividend is basically suspended for 2019. That's basically the latest guidance, and that doesn't change. You refer to 2020, for what's happening 2021, again, we will follow our capital allocation policy, the way we explained it in terms of dividend, de-leveraging, M&A, and then we see what else we can do, and that's a decision that we'll then take early next year.
Okay, thank you.
Thank you, Martin. Next one on the call is Joseph from Redburn.
Good afternoon. Hi Eric, Javier, Nicola, and Rogier. Thank you for taking my questions. I have a couple of them, and one on margin and one on growth. On margin, and specifically on the indirect costs as a percent of sales, you had suggested an industry benchmark of 25%-29%, and your metric here has improved in recent years, but still at 29% in 2019, which is at the high end of the industry. What is your target here by 2023? My next question on growth is about your market share in the four growth markets that you talked about, agriculture, solar, UVC, and 3D printing. If you could share some color on that as well, please. Thank you.
Do you want to take it away first?
Hi, Joseph. Javier here. On the indirect cost, I'll go back to what was presented. You correctly spelled out that the guidance that we have and the benchmark that we look is indeed the 25%-29% range. That's the benchmark that we maintain. As we explained in the presentation, the reason why also in 2021, 2023, we look at the profit evolution. You've seen there's two elements that we're going to have to steer on in order to be firmly within that range. One is, as we talked about, we count on having top-line growth and therefore dilution of the cost base. In any case, on top of that, what we'll do is that efficiency drive to take further cost out of the system. The combination of those two, also, of course, depending where sales will come out, will steer us within that range.
If stars align, towards the lower end of that range. The range is confirmed. That's still our target because especially after the COVID pandemic, we want to make sure we go to that range, and that's also the profit improvement we show over the years.
Joseph, on the market share on the four growth platforms, I think we have three of them where we have a leading market share, which is 3D printing, which is what we indicated in agriculture. This is a business that we've been running for a long time and also in UVC. We believe that in those three growth platforms, we have a leading market share. That is not the case in solar because it's a market which has been managed in a totally different way before what we see coming as a new period where low level of quality were giving difficulty to access the market because of the price points that were extremely low.
We see that changing, and we have been developing new offers, especially on hybrid solar that Harsh is going to talk about that really make a difference and provide fantastic benefit in terms of climate action and clean energy that we believe are going to have a different type of traction on the market. If I look at the four growth platforms, three of them, we have a clear leading market share and not the case set on solar, but to be developed in the coming years.
Yeah. Any chance of quantifying that a little bit? For example, I think your traditional lamps business has more than 20% of the global market share. For these specialty areas, would you say the three areas have higher than 20% of market share or lower than that?
Yeah. We're trying to refrain at this point in time to give too many information on the individual growth platforms for competitive reasons. There's no other reason behind that. We thought we still needed to give a kind of information from a size perspective. We said it's about 4% of our sales. If you put the four combined, it's around EUR 240 million. That's to give an indication that it's quite sizable already. Joe, we want to refrain at this point in time to give indication by individual growth platforms.
Understood. Thank you.
Thank you, Joseph. Next question on the call is from Lucie from Morgan Stanley.
Hi, good afternoon, everyone. I hope everyone is well. I hope also you can hear me as I see you on the screen without any sound and speaking on the phone right now. I have a couple of questions, if I may. The first one is around the performance of the company versus the market because I understand from your central scenario that you are expecting the market to be back to 2019 level in 2023. If I grow your pro forma sales base of EUR 7.7 billion in 2019 by about 2.5% per year, it looks like you're far from going back to this level in 2023.
I guess this is coming to a more broader question on the fact that you've highlighted, you have maybe underperformed to some extent the market in the past, and you still expect it to underperform it over the next couple of years as per slide 17. Why is that the case? As you are the market leader in this industry, and as you are basically on pretty much every segment that there is in lighting. Just to understand that a little bit better, please.
Yes. Hi, Lucie. Look, we need to look at the numbers in more details, in our strategic plan on the scenario that we have retained as the base scenario, which is effectively a market which is going back to the 2019 level between 2023 and 2024. It was also the case for the company performance at large. When we look at these elements, there are a lot of different things we need to look at. CSG is taking into account currency effect, a lot of different elements that we need to take into account. We look into the details and maybe Rogier will be able to go back to you with more information.
In our strategic plan, we were in line with that anticipation and with a company that would be having a top line higher than its top line in 2019 on the base scenario between 2023 and 2024. Which was a growth that was slightly above the market growth that we have as an hypothesis in our plan. Look, we'll see where the numbers are not squaring. On our strategic plan, we believe that we're going to be above 2019 level during that period.
Thank you very much for that.
Sorry.
My second question.
Sorry, there's one thing, Lucie, that our 2019 level don't integrate Cooper. There's also change of perimeters that need to be taken into account, and as we cannot talk to you about anything else than the reporting numbers, it's very difficult for us to show pro forma numbers. There's a lot of other things that happen behind the curtain at this point in time, since we only started to consolidate Cooper at the end of Q1. The numbers are not totally comparable with what you see.
Understood. My second question, at the risk of maybe playing a bit devil's advocate, but I remember at the time of the IPO, you were expecting the lighting market to be growing actually quite substantially, between the period 2016 and 2019 and beyond. This is not what we have seen at the moment. What is your basis considering the data set we currently see, especially on non-residential construction, which is about 75%- 80% of your sales, to think that the lighting industry can now go from a declining one against initial expectation to a growing one at mid-single digits going forward. How is that changing? What is changed versus what hasn't happened in the past?
Okay.
Considering the macro is maybe even under more pressure.
Sure. Let me first make a correction, if I may, Lucie. We are exposed to the construction non-res at 50%. 30% will be investment in infrastructure, let's say a bit more than 20% is linked to the consumer market. Our exposure to construction non-res is about 50%, and in those 50%, 15% is on new and 35% is on renovation. If we were going and zooming a bit more in the different segments that we are serving, the biggest segment is industry, then would come offices and then retail and others. Our exposure is a bit reduced compared to what you're actually saying. I think that the situation between now and the time of the IPO is different. The company between the time of the IPO and now is also very different.
I think at the time of the IPO, we had still a market that had two very different trend. A declining big market and a growing LED market that was not in its infancy at the time, but still had big potential to grow. That was also the case for Signify. If you remember well, at that point in time, we were 55% conventional based. Now, if I look at what has happened in the market and what we have not been able to anticipate, is probably the extra competitivity and the aggression on the LED front. Which at one stage generated a high level of price erosions that didn't allow the market to grow according to the initial perspective.
We did that at the end of 2015, having a clear vision on how the market with that huge transformation would exactly be, was also something difficult to do and difficult to anticipate. We reacted at that point in time with Klite Lighting, and I think that's the right response to what we have been able to face. I would just tell you, I would have liked to do it maybe one or two years earlier. I very often blame myself for not having been able to do that in anticipation. Moving forward, the market is different. I think we have a market which is stabilized when it comes to the LED transformation, and we strongly believe we are moving to a new era. That new era is the continuous penetration of LED, but also the development of connected. Nobody was talking about connected at the time.
It's 15% of our sales. You've seen the penetration in our business. It is a reality. It has a potential to differentiate further, and it has a higher potential in terms of growth. The people in the division will explain that because the unit price point of connected is much higher than for non-connected and with a higher level of differentiation. At the end of the day, the market is not the same, the new phase is not the same, and we are not the same as a company. We have done the transformation to LED, which still needed to be done at that point in time and was taking a lot of energy, and we have developed all the weapons to be able to fight in the connected part of the market. On top, we have the growth platform that we have talked about.
I think we're talking about two very different periods. The uncertainty is less on the market, but more on the economy at large. At the end of the day, these are two very different situations you see.
Thank you very much. If I can have a follow-up question on the growth platform, which is also following on some of the other questions. It's about 20% of sales. You're talking about a CAGR of at least about 10%. If we look at your guidance, it implies probably at the midpoint that the rest of the 80% of the business is not expected to be growing that much. First of all, is that the right way to think about it in terms of the dynamics? Secondly, when we think about that 10% CAGR, you mentioned 2020- 2023. Obviously in 2021, as you were mentioning, we expect a strong technical rebound from COVID.
If we think more of a normalized growth rate for this businesses, i.e., 2021 to 2023, how does that compare versus the 10% you're mentioning for the whole of the period, please?
Let me try to give a general answer to this. What we expect is continuous decline in the conventional part. We see a growth potential in digital products and Digital solutions, and we see a higher impact of the technical rebound positive at the beginning of the period. That's basically what we have already said, and I will finish here.
Thank you.
Thank you.
Thank you, Lucie. This will conclude the first part of our Q&A session. Thank you, Javier, Eric, and Nicola. We'll now start a short video and then straightaway continue with the second part of our session, where we will give you more insight into the strategies of our divisions, and we will start that part with Conventional Products. Hello again. It's my pleasure to introduce you, Maria Letizia, who will provide an update on our division, Conventional Products.
Hello, everybody. Good afternoon. Good morning. It is my pleasure to open the second part of this session, talking about the Division Conventional Products, where we serve a broad range of segment and customers with our conventional light sources and electronics. The first channel is the professional. This is the largest one, is also the one where we have the highest market share. Here, just to give you an idea, the largest category is represented by the fluorescent tubes, weighing close to 50% of the market. We serve OEM customers, specifically in three application area, horticulture, purification, and projectors. Those three application area, they have a very different dynamics.
While projector is declining in line with the conventional general lighting, horticulture is a business that is growing now, will enter into a phase where the conventional part of the business will have a slow decline, but still with a significant market opportunity also for the hybrid solution. Purification, that has been, for a long time, a very stable market that is now experiencing a very strong growth. Of course, we also serve the consumer channel, where the biggest category is the compact fluorescent, that represent around 40% of the market. We are in the market with our Philips brand, but also we use in specific geography and for specific technology, the brands and second brands. An example is Pila, that we use in Central Europe for fluorescent, with a very strong penetration.
When we look at the performance of the market in the past, obviously, no need to say that conventional is a declining market, and is a market that is declining double-digit. As you can see in the second part of the period that we are analyzing, the decline has even accelerated. In the period between 2013 and 2019, the market divided by more than four, and the market lost close to EUR 10 billion. The main factors that are driving the decline are, first of all, the LEDification. LEDification is driven by energy efficiency objectives, and also by the improved price point for LED alternatives. The second big driver is legislation, where we have observed in the period, specifically two major event.
One is the ban for halogen in Europe that has been completed in September 2018. The second one is the ban for GLS in U.S. and in China. When you move to the right part of the slide, you can see that in the period, of course, the business decline, our performance went down. The relative size that we have versus our competitor increased significantly. We started in 2016 being 1.8 times bigger than our next competitor. In 2019, we reached the level of being 2.2 times bigger than our nearest competitor. Competition is, of course, also facing the decline of the market. Many traditional players are divesting, are consolidating. We observe in the market a long tail of Chinese manufacturers, where the biggest one is 10 times smaller than us in the same perimeter.
There is a lot of changes happening also in that part of the market. In 2019, we listed 27 companies, 27 Chinese manufacturer, and already this year we have seen 11 of them stopping their activity in conventional. This is showing that the market has a very strong dynamic, and that being capable to operate in this market is an exercise that requires scale. We are fully leveraging our scale advantage in gaining share and space in this market. Let's have a look at our performance over the same period. You can see that while we have seen in the previous slide that the market divided by four, our performance, our sales divided in the same period by three, and the footprint divided by two. We are in a market that is declining less than the market, and gaining market share.
As you can see in the central part of the slide, top, our market share gain has been even accelerated while the market was declining and squeezing. Our strategy, that is to represent the last company standing, is successful. We are declining less than the market, we are gaining market share in a profitable way, and we are delivering solid cash flow. This bring us to be global leader in the lighting industry, and we keep our focus in line with the Five Frontiers strategy that Eric presented at the beginning on customer at the center of our strategy, where the customer NPS is for us a strong element. Our customer appreciate specifically the brand, the quality of our product, the availability that is linked to our ability to continue to serve properly, and the connection with our sales and pre-sales organization.
Those are the winning factor that drives the customer preference. We also take care specifically of our employee. Measuring the employee NPS that stays constantly very high because we align with the Great Place to Work strategy frontier. We drive with our employee a continuous effort to bring them to the next level of development and to offer them career opportunity in the company. When you look ahead of us and starting on the left part of the slide, we see that the market will continue to decline. Will continue to decline double-digit, even if in the second part, we see the decline a little bit slower than before. Our performance will continue to be better than the market. Our strategy is to continue to gain profitable market share in a declining market by declining less than the market and performing better than our competitors.
Of course, in a business that is declining, one key success factor is the ability and the agility to restructure when and ahead of time. Here you see on the right the comparison with our restructuring plan that we shared at IPO time and the actual for the first part of the period and what we have as an updated latest view. At the time of IPO, we said that between 2016 and 2018, we talk about EUR 300 million for restructuring. Reality is that we invested less, around half of that amount for a series of reason. The first one is that we closed less factories than what was initially planned because the business actually performed even better than what was in our plan. It is also clear that when you have factories that are efficient, the later you close the factory, the less cash it costs.
By moving the closure later on time, we have also a lower cash impact. We have learned, and we continue to learn, how to do that in a very efficient way and we take care of our people with a very accurate talent flow objectives that we continuously pursue. For what is left, we said that EUR 200 million should have been needed. You see already that in our plan we see 20% less, EUR 22 million has been already invested in 2020, so you can easily do the math to see what is left in front of us for the restructuring charges. The Five Frontiers strategies is driving our daily behavior. We have talked a lot already about the customers, and we have talked already about employees. Now we talk about what do we drive in terms of business implication.
Deliver differentiating lighting offer is at the core of what we are doing. Winning profitable market share, using our brands, using our leadership in terms of scale, leveraging our customer reach and our intimacy with customer is what drives our daily activities in general lighting. Our growth opportunity is also connected to sustainability and is strongly linked to food availability, where we have a historical leadership in horticulture, where we continue to leverage our customer connection, the strength of the brand, our IP connection with light recipe that help us differentiate. Where we continue to also drive the evolution of the market with hybrid solution together with Division Digital Solution. On the last part, we have a strong connection with the health and wellbeing, with the UVC opportunity that I will describe a little bit more in the next slide.
Even if you have already seen the video in the opening, you know a lot already. I just want to remark a few point. Even the slide is a bit intense and dense, I will guide you through the slide. First of all, UVC is not a new technology. We are leader in UVC for 35 years now. We know the technology, it's proven, it's safe. We master the technology. We traditionally use the technology with our OEM partner in different application, but mainly in water disinfection and water purification for industrial scope. Now, we knew that the technology is capable to deactivate viruses and bacteria. At the moment of the pandemic, we immediately partner with the Boston University to also specifically validate the efficacy against the virus that causes COVID-19.
We had the results of the test, and we have the proof point that UVC is also capable to deactivate the virus that causes COVID-19. The same time, we have immediately accelerated our investment to increase our capacity with plan to increase by a factor of eight. We continue to partner with our OEM partners to more than 300 in more than 50 countries. We have start partnering with our colleagues in Division Conventional, sorry, in Division Digital Solutions and Division Digital Products to also serve end user with specific application. When you look at the market, we have seen already the market increase by 50% in a few months. We see this market continue to grow.
The component, the part of the market that we address specifically with lamps is a subset that is also growing, both because the demand is growing, but also because there is a replacement market that is creating a higher base of recurring revenues. A quick example on what our OEM customer are doing. The first one is Finsen Technologies. This is a company that is active since many years in the UVC disinfection for HCAI. They address specifically the HCAI in the care infection that are caused in the hospital, that you take in the hospital. This is a big cost for HCAI system. There are only U.K. more than 300,000 people that take infection in the hospital, it costs more than GBP 1 billion to the sanitary system to address that infection. There, UVC knowledge is applied to create robot that prevent those kind of infection.
With the pandemic, they are exporting their knowledge and applying the robot in many different environments, schools, gyms, industries, offices. Their knowledge is exported and is expanded. In summary, when we look to our performance in the past and what is in front of us, we are convinced that our Last Company Standing strategy will continue to bring us in a declining market to win profitable market share, deliver solid cash flow, and deliver our profitability in line with a stable performance over time. To conclude, our strategy is built around two main elements. One is to continue to gain share in the traditional general lighting market. The other one is to invest in innovation and capacity to grow the UVC business, leveraging our knowledge and our expertise and our ability to expand the capacity in line with the demand.
We will continue to deliver solid operating margin and free cash flow, and we will continue to apply flexibility to optimize the industrial footprint in line with the requirement and the needs in the market. With that, I thank you for your attention, and I leave the floor to Rowena.
Thank you, Letizia. Hello, everyone. As with pandemic, I will be presenting from Hong Kong. Let me start first by introducing digital products. Can you move to next slide? Digital products, we serve multiple customer segments, ranging from consumer, professional, and OEM, with our wide range of technology-leading light sources, luminaires, components and connected system. Our products and systems serve different applications, ranging from residential to office and industry, hospitality, retail, and also outdoor. Our components business mainly serve professional luminaires manufacturers. Consumer and professional are roughly equal in size for our division. We offer multiple brands, obviously with Philips brand and also with Pila, and ranging from mass to premium in order to address different customer tiers. Next slide, please. The market went through a big transformation, shifting from conventional to LED in the past years.
Market value grew by EUR 10 billion from 2013 to 2019, a CAGR of 6%, very steep growth in the first three years of 9% CAGR. In the second half, a bit more stable at 3% CAGR. Digital products, we focus on LED lamps, LED functional luminaires, LED electronics. Also consumer connected. These are the categories that are largely developed based on global platform. Also scale. We do not focus on decorated luminaires. Also conventional luminaires because these are largely either high mix, low volume, local to local, or decline heavily. Our focus represents about half of the market size at EUR 16 billion. That business in that period grew very fast. Let me take an example, UVC lamps.
In the first three years, from 2013 to 2016, we grew over 30% CAGR. In the second half, a bit more stable at 3% CAGR in the market. What has driven the growth in the market? The government regulation with the sustainability agenda certainly is one. For example, in Europe, the halogen ban and also the utility rebate push in the U.S. have stimulated conversion from conventional to LED. LED innovation has also driven a lot in the energy efficiency improvement in a big way. That has also bring a lot to the cost breakthrough as well, allowing the technology to be much more affordable to the mass market. Significant cost breakthrough, as I said. Have led to also average price erosion.
If you see from a table on the right, from 2013 to 2016, there's a very heavy price erosion of about 29% in a period. This is largely because of the technology and cost breakthrough. In the second part of it, we see a bit more tempered price erosion, which is mid-teens, and that is driven mainly because of the intense competition. Connected technologies in a period have emerged and grew at a very high rate. By 2019, they're roughly EUR 900 million in size. LED electronics generally follow the growth of the professional luminaires as they become more LEDified. Competitive landscape for digital products, I would call it very intense competition with a lot of Asian competitors. I'm sure all of you know a lot as well that there are a lot of Chinese companies. There are more than 30,000 of them that's participating in the business.
In the industry transformation, not all the traditional global actors are equally successful. Quite some of them have actually changed hands. Only 3 out of 6 stay, and they're not very active in developing consumer connected in that category. Next slide, please. The market is characterized as intense competition, and also the technology shift demanding very frequent product launches for every six-nine months, which is very different from the conventional dates. Digital products, I'm quite proud to say that we have mastered the innovation strength and built our profitable market leadership. We are number one in most of the categories, as you can see on the slide, that we focus, and we are the widest distribution across the world. Our sales grew by 10% CAGR in the period, and for the focus segments, we grew 16%.
Particular for connected, we built the entire category from scratch through our technological innovation and also demand generation activity. We made a remarkable progress also on our profit. You can see in 2019, we made a double-digit adjusted EBITDA. This progress was much ahead of our competition. Not being complacent. This was achieved via, one, margin improvement through portfolio innovation, of course, pricing, and also mix management. Second, cost innovation through global scale. We improved our cash 1.6 times in the period. I want to call out specifically also our brand. We are very strong in our brand presence across all the segments. You can see from B2B, B2C, and on the rightist bar, you can see on the chart there, our connected. Our brand presence are even stronger.
Our customer net promoter score have improved over the year. You see that our improvement across consumer, professional, and OEM. In short, we build a sustainable, profitable growth engine and a brand of innovation. Also, together with our distribution, we lay the foundation for future growth. Next slide, please. We've talked a lot in the past. Let's take a look in the future. The market is forecasted to have a stable, healthy growth of 3% CAGR in the next three years. The focus segments of ours are also growing or projected to grow at a 3% CAGR as well. It is driven from a very high growth of LED connected with a 26% CAGR. There is a continuous shift from the LED lamps towards LED integrated luminaires, which is growing at 9% CAGR.
LED lamps market is projected to start to decline of 9% in next 3 years. While LED lamps market start to decline, there still exists 50% of the conventional socket remain to be LEDified, and continually to be driven by the sustainability agenda. For example, government regulation. In Europe, the one single lighting regulation of the fluorescent tube manufacturing ban in Europe in end 2023 will be another catalyst for LED conversion. We will still see a tailwind for LED conversion in coming days. The component business, LED electronics, as I've mentioned, generally are following the growth in the professional luminaires. It is forecasted to grow at 4.5% in the coming three years. Among that, we see the outdoor application will grow faster than indoor a bit. Also the connected LED components, including the sensor, including wireless, and also the sensor-ready drivers.
These will grow at a very high speed. We see, also the connected system, the connected luminaires, are growing in the professional space. LED market price erosion, if you see on the right-hand side, is anticipated to be much lower than the early dates because the technological breakthrough has already flattened out in the period. We see competition generally are also less aggressive in throwing prices. During COVID, we don't see them anymore throwing away prices. We anticipate this trend will stay. Consumer connected will be driven by the smart homes adoption and grow at a very high speed, as I said. If you see the market price erosion for the consumer connected, we do not anticipate it will be as steep as the LED lamps.
Consumer connected business are generally driven from use case innovation, its experience in software, therefore stickiness to the system is much higher than just the hardware specification differences. Therefore, we see connected system generally are holding prices better. This differs from the LED lamps, which is much more a push model, therefore, much higher price erosion in the early years when they are of high growth, but they're also being expected in the coming days to be much more flattened out. In short, the market is projected to grow healthily at 3% CAGR towards EUR 32 billion. Our focus segment would similarly grow at 3% CAGR and at EUR 16 billion. Among that, very high growth in connected, whether it is in consumer or in professional. Here we have a leading strength. Next slide, please.
While we talk about the market growth, how are we going to take opportunities and what is our strategy towards it? Building on the Five Frontiers strategies of the company, digital products will focus on differentiated offer and Growth for Sustainability. Differentiated lighting offer for LED lamps, we will focus on converting the 50% conventional socket and also drive market share growth via our multi-brand strategy. Of course, we continue to innovate and differentiate with Philips brand. At the same time, we will also offer B brands and private label to cater for different customer tiers. This will leverage on the global scale of manufacturing and also the distribution strength of our conventional colleagues. With the transition from LED lamps towards the LED integrated luminaires, we will innovate, we'll expand our portfolio. I will talk about more details later.
For the component business, we will focus on innovating in professional connected and also with a particular focus to drive growth share in China, a big OEM market. Of course, another priority is to increase insourcing to Klite Lighting, which will strengthen our supply chain control. Going for Growth for Sustainability, we will accelerate our growth in the consumer connected with a complementary two system offer, Philips Hue and WiZ. This is riding also on the market growth in the connected market. Last but not the least, consumers will adapt to the new norm with the pandemic. They're wanting to keep safe and clean living, and we are entering into the UVC consumer application to address this health concern. We just launched the UVC consumer desk light, which will disinfect surface, and also the UVC box, which will disinfect objects like mobile phone or wallets.
We just launched in Asia in the early period, and we are ready to launch now in Europe. Our know-how of how to make a safe application based on 35 years of experience in UVC lamp knowledge ensure we take the consumer safety very close to our heart and will enable them to have a clean and hygienic living space. Next slide, please. Now, let's take a deeper look into the key growth area, capturing the growth from transition towards the integrated LED luminaires. If you see from the market size, it is projected at a 9% CAGR growth towards a EUR 5.8 billion. The growth are mainly driven from a mega trend of population growth and urbanization. Of course, sustainability agenda still drive for the conversion. As I said, that 50% of the conventional socket base remain to be converted.
As LED quality improve, consumers are much more comfortable with the integrated LED luminaires, and therefore we see a higher adoption. You can see our multiple offerings in the center in the different living spaces, including the spotlights in the Europe home, the ceiling in the China living room, the desk light, and also the outdoor application. Lastly, these are the product ranges that could leverage on the similar platform as LED lamps. Product platform are transferable. For example, spotlights and downlights are pretty much the same in the LED design. Therefore, we can fully leverage on the strong R&D innovation capabilities of LED lamps and being transferred that or leverage that to the integrated luminaires. We also leverage our proposition across categories, for example, eye comfort proposition.
This is designed with a light recipe with no flickering and low glare, which are extendable across LED lamps and luminaires. This is an important proposition because according to World Health Organization, WHO, by 2050, one out of every two people, they will have myopia because of the increased usage of smart devices and also the increased time they spend indoor. Therefore, our light recipe, which we create light that create less stress on the eyes, are unique and important. Of course, luminaires, we have to talk about the design as well. As you can see from a customer testimonial that our design award are good for points. We will fully capitalize also on the in-store presence and demand generation activities across the categories. You can see from the picture there that indicate our full range offer from non-connected to connected, from lamps to luminaires.
With our category management know-how, we know how to position integrally our offer on the upgrade continuum. Equally important, of course, is the online presence as the consumers are also moving much more towards the online purchase. You can see from the Tmall store rating on the slide there with very strong rating. Tmall, as you know, is a Chinese online platform. Together with LED lamps, we also offer multi-brand so that we can address the different customer tiers from premium to affordable. This will allow us to stay competitive at the same time have an improved price mix management. Now, I would like to show you a video that shows how eye comfort light recipe work. Video, please.
Experience personalized Philips Hue smart lighting throughout your day. To transform your home and the way you feel. Whether relaxing after a day of work or playfully lighting a dinner party. It is easy to set up and effortless to use. Light your home smarter. Philips Hue.
You just watched also a Philips Hue out of the eye comfort video, the leader in connected system. We have just shown you a different use case, and now let me walk you through deeper into consumer connected lighting. Very high growth, as I said, 26% CAGR, and the market will become EUR 1.8 billion by 2023. The key growth drivers for the high growth is consumers. They're increasingly looking for personalized lighting experience. They're no longer just looking for on, off, and dimming, but instead, they're increasingly looking for how light is being used and blend in a different location. As shown in the video, you see that a relaxed moment for the evening, a gradual wake up in the morning, or a party mode with your friends. Technology enhancement also allow or enable ease of installation, customization, and also automation.
Very easy to make it for the consumers to set up the personalized lighting experience as they prefer. Increasing consumer awareness and the adoption of smart home ecosystem, like the smart speakers accelerate. One of the easiest entrance into the smart home system is lighting. Because of the DIY nature, consumers, they do not require installers to make it work. Even I can make it within minutes and synchronize and set up the light experience which I like. We see markets are growing on two technology platform, Zigbee and Wi-Fi. We expect these two technologies will stay side by side with one another. Signify has a unique leading complementary system with these two technology. Philips Hue in Zigbee and Bluetooth and Wi-Fi. The consumer decision journey in a consumer-connected lighting is very different.
A much higher involvement in the decision-making than traditional LED lamps replacement, which is largely a push model. Consumers for connected, they really spend time to understand and compare, and they're not buying lamps, they're buying system. They're looking for use case and how light is being used. Both system, Hue and WiZ, with well-featured use case, and we're by far leading the market. Take, for example, both system will offer ambience creation with the best-in-class light quality, not only embedded in software but also in the hardware design. On Hue, we've uniquely offered the enhanced entertainment use case with our TV Sync Box and the pixelated radiant light strips, and we are the only one in the world that offer this use case and our hardware. Both Hue and WiZ, they work with third-party brand.
For example, our Friends of Hue switches, which will complement the lighting solution. There are more than 700 apps are working with Hue light. For WiZ, it is an open platform which will enable third-party brand, which is going to compatible with the WiZ apps, including private label. Take an analogy, its light is similar to the Intel Inside approach. You can see from a picture where brands from Russia and brands from U.K. already being WiZified with very strong customer testimonial. You see that Fortune has named Hue the greatest design of modern time. CNET recently have rated WiZ as the best overall Wi-Fi platform. They were pleasantly surprised with the full feature on offer. Our competitive strength in a nutshell, our innovation leadership in use case and also the hardware design are by far leading the market.
Our brand is very strong, and this is important as high brand preference will drive higher conversion. With millions of household that has been constantly engaged and can drive further expansion. With a very unique direct to consumers interface with Hue, for example, meethue.com or through Hue apps, we can send direct notifications to the user when we have new product launch and therefore able to drive expansion of light further within home. As we are a leader in connected lighting, we work very closely with our ecosystem partner in cross-industry alliances to shape the future technologies and protocol. In short, we are well-positioned to lead the growth. I've shown you how Hue works. Let me now show you another video on how WiZ looks like. Video, please. You've seen how these two systems work. They're complementary to one another.
In go-to-market, we're presenting these two systems simultaneously so that we can reach more consumers and also cater for two different set of markets. Let's move to another important priorities for digital products, Klite, an acquisition that we made in 2019. We are on track for the synergies with Klite, leading to higher sales, high profitability and working capital improvement. The strategic rationale on this acquisition is because we would like to gain control on the supply chain for LED lamps, luminaires, and connected. We need to keep the IP, the manufacturing know-how, and also the testing know-how within the company, and particularly important as we go towards more connected space. Private label is still an important customer segment in Europe and North America, particularly for the non-connected. This represents 40% of the consumer market. The big ones, they usually source direct from China.
Now with Klite, we can improve our reach to these private label customer. In direct costs, we are able to dilute further with increased top line and also achieve cost synergy in different areas like R&D, et cetera. We will consolidate our supply margin, and we have consolidated supply margin as we go for vertical integration. Cash are being optimized as we go for more insourcing and also driving working capital improvement. If you look from the table on the right-hand side, which shows our synergy progress, I will call out a few points to make it easy for you. Our COGS synergy, we are ahead of our plan, and we are leveraging on the component supply base and are able to drive high procurement savings. Of course, we continue working to improve further on the competitiveness there.
Including trying to drive our high manufacturing savings through automation, better process cycle manufacturing. On insourcing, we're slightly behind plan. We're supposed to be at 16%, and we're now at 15%. The marginal difference is because of the COVID, that we had to close down the factories for two months in quarter one. Now we are on track to catch up for the insourcing in subsequent quarters, and we're working very closely with Klite also to expand the capacity. On R&D, we are spot on our cost synergy there. We're reusing the R&D competence between the teams to develop products, and we've identified opportunities further in supply chain. For example, running VMI in order to have much better supply chain performance. On private label, we have one new customer in Europe and also in North America. The revenue will start for these new accounts from 2021.
To be much more customer-centric and competitive, Klite will further look into new modelings. For example, offering better added service like utility rebate handling for the U.S. customers. Klite contribute positively to the division results with increased insourcing. We will increase three times more in the coming three years. Because of the margin consolidation with the increased top line coming from third-party brands and also private label, our indirect costs are being diluted. Klite contribution to the division adjusted EBITDA will increase over time. Working capital improvement are also being achieved as we insource more high payables and also with optimized inventory management. That will help to support the improvement of the working capital. In summary, Klite already is delivering positive result.
Through the first step of integration in the first year, Klite is creating value, and we expect that will continue to improve the contribution to the division. Next slide, please. In line with the company focus on growth, sustainability, and cash improvement, digital products will strengthen our financial profile through growth, innovation, and Klite integration. Our top line will grow through consumer connected and LED luminaires. While the LED lamps market is declining, we will drive share gain just like what we have done in conventional. We will use multi-brand strategy and also private label which by Klite. Our electronics will grow through innovation in a professional connected and also share gain in China.
Our adjusted EBITDA, Klite will consolidate margin, and we will address with different brands so that we can have a better price mix and our indirect costs will be diluted with our increased top line, and therefore, we will improve further on our profit. Finally, on the free cash flow. Of course, with the increased improvement in working capital contributed by the inventory optimization and Klite synergies, plus the EBITDA improvement, we will further grow our cash and will become a strong cash contributor for the group. Next slide, please. I would like to close my presentation with the following key takeaway. We transformed successfully to a market and innovation leader in the categories that we focused. Our strategy is focused around capturing growth from a transition to the LED luminaires, riding on the sustainability socket-based conversion. IoT technology for consumer-connected lighting will see the growth.
We continue to innovate in our user case and also we are by far leading the market. We will strengthen our financial profile driven by growth, innovation, and Klite integration. In short, we are very well-positioned for future profitable growth for the division. Thank you. I'll now hand over to Harsh for digital solution.
Thank you, Rowena. We'll now spend next 30 minutes to deep dive into Division Digital Solutions. What do we do in Digital Solutions? We sell luminaires, connected lighting systems, and then services that use data and offerings to enhance our systems that we sell. That's the world of Digital Solutions. We go to market through multiple channels. Indirect channels such as our trade wholesale partners, various system integrators, but we have also built a strong end-user sales force that goes to market, especially for large global accounts, large marquee customers who want to engage directly with the solution provider and the technology provider. We have different segments to which our customers belong. We have office owners, industry, manufacturing, as well as warehouse and logistics companies, retail and hospitality, public and infrastructure, where government is a customer, and then different types of farmers in agriculture.
Range of offerings, multiple channels, and different segment of customers. How has the world of digital solutions evolved over the last few years? Just like what we heard from Eric earlier for overall Signify, digital solutions, the professional lighting space also transformed substantially. Back in 2013, two-thirds of the entire market was conventional, and now just about 15% is conventional. Market changed rapidly from conventional to LED. Transformation also from unconnected to connected lighting started happening over the years. If you look at the bottom left part of the chart, you'll realize that LED penetration in the sockets in the installed base is still just at about 34% when we look at professional space. Eric spoke about 50% as the overall penetration as overall lighting.
In the professional space, it's just about 34% because lot of the change to LED gets also associated with the renovation cycle, which happens for public infrastructure over 20-25 years. Cities change their light points once in 20-25 years, and in office or retail space, once in 7-10 years. While lot of LED-ification has happened, still there is a lot more headroom left. The transformation to connected is just about beginning. Only 2% of the light points, 2% of the sockets that are out there are connected today. While this entire transformation was happening, one other interesting dimension emerged. What we saw is when a light point gets connected, its value increases by almost 40%-50%. Every connected light point is far more valuable than unconnected because the value that it delivers to customer is far more. It's not just illumination.
Hence, as more and more connected penetrates into the industry, into the sockets, there is a scope for value increase, for the increase in the pie. What we also saw over last few years was emergence of many Asian players who expanded into Europe and Americas. With their entry-level, simpler, cost-competitive offerings, they were very aggressive on the price, and we experienced close to 5% price erosion that Eric had referred to. We also saw significant M&A activity happening in the industry. While this entire transformation was happening in the industry, in the professional lighting industry, how did we transform ourselves? Over that period, we emerged to become a clear leader, a clear innovation leader, and a market leader. We transformed ourself on the strength of investment that we had done in innovation.
From 61% of our business being conventional fixtures business back in 2013. Now just about 8% is conventional fixtures. What's even more interesting is from business that had hardly any connected lighting in 2013, now almost one-fourth of our business is connected lighting. To drive this transformation, we invested ahead of the curve. While we were doing this technology and portfolio transformation, we also had to change our manufacturing footprint. Over this period, we shut down close to 12 factories, and we had to make some investments, some cash outflow associated with that change. While managing both of these transformations, operational footprint as well as technology, we were also able to increase our customer NPS score from 29 to 52. 52 is what customers told us just a few months back in our last quarterly NPS survey.
We also transformed our profitability profile, and we doubled our profitability from 5% to 10%. While we grew our portfolio organically, we also did many bolt-on acquisitions, and Eric spoke about 3 different types of acquisitions that as a company we have focused on. Acquisitions that give us access to special application, high growth applications. Like GLA, that's a small little acquisition that we did to expand into air disinfection solutions. Just in five, six months of having acquired that company, now our order book on that is six times more than the annual sale of that small little company when it was standalone. We also then acquired to get into animal lighting space. Agricultural lighting is another attractive space that was spoken about earlier. We added technology building blocks to make our connected lighting space even more powerful.
Then we expanded into attractive geographies and got more reach and share through acquisitions such as Cooper Lighting, and we'll speak more about that. At the end of this entire transformation, where are we now? We've built a business that's unmatched in its global scale, while it also has a very strong local presence in every geography of interest. We are bigger than every other competitor that we have. What's interesting is that this entire scale is not concentrated in one geography. It's balanced across different geographies. Also there is no concentration in one channel. As I had explained earlier, we go to market through different channels. Hence it gives us more balance and robustness in terms of a business model. Where does this scale help us? Where does it create competitive advantage for us?
If you go to the right side of this page, you'll see that as a Signify, as an entire company, we have a procurement spend of close to EUR 3.5 billion. That's more than the turnover of the nearest competitor. That kind of a procurement scale gives us advantage in offering better volumes to our suppliers and extracting better costs for our bill of material procurement. We saw examples of that within first few months of integration of Cooper Lighting. One of the reasons why we are able to increase our guidance on synergies is such procurement savings.
This kind of global scale also gives us advantage when it comes to making investments in technology-intensive areas like connected lighting or new growth areas, where with this larger scale, we can afford to make those R&D investments which are far more than anyone else and then leverage them, spread them over larger base. This unmatched global scale is now what's going to help us stand in good stead as we get into the next phase of our growth journey. Where is that next phase of growth journey going to be? What's the market going to look like? Next phase of the growth from 2020 to 2023 is going to be driven by connected lighting and new growth platforms. Connected lighting in professional space is already over a EUR 10 billion of a market. It's already very sizable, and we have a clear market and innovation leadership in that.
Growth platforms such as agricultural lighting, solar lighting, disinfection lighting, all of them are also sizable and material in terms of contributors. They are going to grow in double digits in our professional space. It's connected lighting driven growth and specialty applications driven growth. This growth is actually underwritten with good tailwinds, supported by good mega trends that we see around us right now. Sustainability focus, whether it be climate change, food availability, extra focus on circular economy, health and wellbeing, all of those are actually mega trends that support various growth platforms in which digital solutions is very active. A lot of government recovery programs are also focusing on the same mega trends. For example, European Green Deal or even some of the new reconstruction programs that are being talked about in China or in U.S., in Germany.
All of them are focusing on national recoveries of their respective economies with focus on sustainability and making the economies greener. I think this is going to give us a very good tailwind as we get into this next phase. Connectivity is now here to stay and ubiquitous connectivity will continue to drive penetration of connected lighting. We are going to enter into this next phase of growth, of course with a good base effect where in 2020 industry had declined, and now with that lower base it starts to recover, and on top of it there is connected lighting and these mega trends that will support growth on various growth platforms. What's our strategy to play in this new emerging space? Our strategy of growth is technology led, again focusing on two different dimensions.
First dimension is about our traditional luminaire play, where we are going to focus on delivering differentiated lighting offers. This market has now matured. We now see multiple tiers have emerged in luminaire space. There is now an entry level, let's call it good enough kind of a product category, to highly differentiated, specialized, performance-driven category. In between then there is, let's say, good and better category. There are multiple tiers that have emerged in the luminaire market. Leveraging our scale, leveraging some of the innovations that we've done in areas such as optics, innovations in 3D printing and circularity, as well as access to having Klite. Rowena spoke about Klite. That gives us a back-end vertical integration. Leveraging all of that, now we are able to play in each and every tiers.
We are going to play in those different tiers by combination of different brands. A brand B, it could be Mazda or Pila kind of brands, then a good and better brands, which is Philips, and then we have specialized brands, which are very performance and high-end spec-driven brands. Multiple brands, scale, and vertically integrated back-end would help us offer these differentiated lighting offers. Growth driven by sustainability. We'll deep dive into each of them, what are those growth platforms, and how those we believe are exciting growth areas for us going forward. Let's deep dive into the first one, the growth platform of connected lighting. Here we are clearly a leader, not just as a market leader, but also innovation leader when it comes to connected lighting. We've invested ahead of the curve over last five, six years.
It would be fair to say that we pretty much pioneered connected lighting as an entire space. Now, that space is as big as EUR 10 billion annual sales. What we've done over last few years is built out the entire architecture, starting from sensors, switches connected to different luminaires, different forms of connectivity, wireless, wired, radio frequency, all of that feeding data into a data lake on which then different data-enabled services can be offered. The full stack of offering has been developed over last few years. It's not just one stack, but it's a stack which is optimized for different subsegments of customers. Because office customer, their needs are very different. They value space optimization. They value employee productivity. Whereas a retail customer wants to know how is the shopper moving in the shop.
They want to optimize the promos that they run in different areas of the shop. Different value drivers exist for different customers, and hence, we've created this stack optimized for every different subsegment. We have such 10 different subsegments for which we've created these stacks today. What's our competitive strength in playing in this attractive space? First and foremost, we've learned over the last five years that connected lighting is not just about technology. It's a different business model. It's a different skill set. We've built over last five years organization for that. Dedicated sales teams, dedicated solution architects, a different delivery organization. All that is now built and invested in already. It's invested in not in one part of the world, but in every market in which we play.
We've built out end-to-end offering, as I said. We've also built out an IoT platform where all of this data finally comes. We've heard Eric speak about millions of light points that are already connected and giving data in our IoT platform. Over a period of time, we believe that data will start getting monetized for asset tracking, for space management, for optimization of real estate footprint. All of these services will emerge, and we are already ready for it with the infrastructure that's built. All of this is not just technology and geek speak. It's actually creating quantified value for different customers. For example, Deloitte here in Amsterdam is using our lighting system, our Interact system, to not just save energy efficiency, but also optimize space utilization, and they've reduced up to 40% space per employee.
They've estimated that EUR 1,800 per employee has been saved by this system for them. On the other hand, Globus, which is a retail chain in Germany, they have been able to drive 15% more traffic using our Interact Retail offering through various promos that they are able to do with dynamic light settings using Interact Retail. Quantified value delivered by Interact to different customers. You don't have to believe this just because I'm saying so. Let's hear it from one of our customers in Germany.
The NSG Group is one of the world's leading manufacturer of glass and glazing solutions operating in three main sectors: automotive, architectural, and technical glass. For us, it was clear from the beginning that we need a smart LED lighting system to keep our operational costs low. With Interact Industry, we received a connected lighting system which offers more than just providing light.
Interact Industry does not just increase energy efficiency in our site. It also offers software applications that help us to understand operations on the floor. For example, now we can see which areas are most frequently passed. The software enables us to analyze all data collected through smart sensors. With these data, we can improve our warehouse and process layout continuously. We can distribute the workload evenly, we can optimize our storage locations, and we can enable a more efficient working process. We are very satisfied with this solution and will take it into account when modernizing existing warehouses.
Interact Industry, examples like this gets us into warehousing and distribution space. As you know, this is something that is attracting a lot of investment, even in this time. Now let's hear from a very different kind of a customer, a city. That's also a space where we see a lot of investment happening, thanks to various reconstruction programs that governments are spending on. Let's hear from New York State.
Smart Street Lighting N.Y. was announced by Governor Andrew Cuomo in his 2018 State of the State. The state has more than one million streetlights. This effort will have a major impact across N.Y.
When we first started the streetlight conversion project, it was about reducing our carbon emissions. As we looked at the technology and as we saw what was possible, it really became about a social justice and equity issue.
Streetlights are an important asset within a community, as they are typically installed throughout all the neighborhoods. The streetlight system acts as the critical backbone for smart city deployment by providing the physical infrastructure to install IoT devices.
NYPA decided to leverage the Smart Street Lighting NY program to incorporate smart city technology on the street lighting infrastructure since it provided a unique location to physically install the devices as well as provide a power source. These devices can be used to collect data and information to help improve policy making and decision making for local governments and communities.
I wanted to plan for the city of the future. We need to ensure that we're investing now for generations to come.
Okay. From world of connected lighting, let's go to our second growth platform. It's equally exciting. That's agricultural lighting. This is also a space which is now over EUR 1 billion in size and addressing the big trend, the big need of providing food security to growing population. Here, we don't just offer lights. What we offer is light recipe. What we offer is better nutrient-rich food, or ability to grow nutrient-rich food to that farmer. We offer improved yield. We've developed these light recipes for different types of crops in our horticultural lighting. We've also developed these light recipes for animal barns, be it chicken or swine, or also for aquaculture. We have solutions today for horticulture, aquaculture, but also interestingly, vertical farming, where we see customers wanting crops being grown closer to where they are getting consumed. That's a big trend.
That's a big demand that we see coming. What are our competitive strengths in agricultural lighting? We come with decades of know-how. We come with unique light recipes, over 150 of them, and now we are taking that strength even further. We are now utilizing AI for yield prediction. There are actually six sites here where we are helping the farmer predict the yield out of that entire crop season so that they can go and talk to the grocer and do the negotiation and contract for selling that entire produce to the grocer. We have also built partnerships with the ecosystem because it's an ecosystem play, whether it's a greenhouse builder, agricultural universities, seed providers, or feed providers.
We've built this full ecosystem, and we've also made this entire offering connected so that you can remotely monitor how is that plant or animal growing and what intervention is needed. Again, just like in connected lighting, we have lots of interesting case studies and proof points. For example, a vertical farm in Ontario, Canada, GoodLeaf Farms, they're using our entire solution, horticultural system, for growing baby greens. This has given them ability to grow baby greens throughout the year in Canada in a pesticide-free environment, and all of them come with a very predictable output. We've also been able to demonstrate success in salmon production, where in Norway, we have a farmer who is seeing 10% improvement in the yield and also better feed conversion. Let's also hear from some of these customers on what their experience has been.
These taste just as good as our summer crop and are grown in the dead of winter. It's a big bang for your buck. It's getting light into the crops, where you want the light.
More growers should be looking at this because it is the future, it's sustainable, and our customers want it.
Color is much deeper, darker, richer with LEDs. The taste is better with LEDs. There's a lot of ways to evaluate it. It depends on what you grow and when you grow it.
To build a farm that was commercially viable in a city like London, where space is so important, we had to be able to grow up as well as using the space around us.
Every harvest that comes off is predictable, and that's huge.
At the end of the day, it's just a high-end product that we can rely on that comes with amazing customer support.
Let's now move to our third growth platform, which is solar lighting. World of solar lighting is changing rapidly. It's no longer now a space only for off-grid. It's no longer an application only for off-grid areas, where you use this to give light to those who don't have access to electricity. That, of course, stays, and that continues to grow. However, what's now emerging is ability to offer these solutions even in New York, even in London, even in Amsterdam. What's enabling that is advancement in energy storage technologies, advancement in charge controllers, which are now more efficient, and the costs of solar panels and batteries have come down rapidly. As a result, you can now make every outdoor light point, be it streetlight or a floodlight, solar.
It can be a hybrid solution, which can be grid connected, but at the start of the evening, it starts using power that's stored in the battery, and after five, six hours of consuming that stored, it can then start drawing from the grid, but thereby probably reduce the consumption by 50%-60% of what it would otherwise have drawn from the grid. That's a huge opportunity that's now growing, and that's driving this double-digit growth of this market. In this space, we have applications for consumer. We have application for off-grid areas like remote villages, and now we've also introduced offerings of these hybrid solutions for the developed world. Here, what really differentiates us is our customer access, because it's the same customer who's buying the streetlight, who's now going to make their light hybrid connected.
Plus, a lot of these projects are also supported by development funding agencies. We've built a network and a good understanding with them. Our technology here, again, is something that differentiates us. We have a patented charge controller. We have integrated luminaire design, where the charge controller, battery, panel, luminaire, all of them are integrated into one single device. We've also got this connected so that remotely you can monitor the performance and see whether battery needs a replacement. Couple of use cases here again. City of Albacete, it's a municipality in Spain. They wanted to make their parks safer, and they used our 600 luminaires in one park, where they were able to save over EUR 650,000. If they were to do this with normal lights, they would have had to run cable. That entire CapEx was eliminated.
Energy Efficiency Services Limited in India, they use these lights to power remote villages. In fact, 16,000 villages and EUR 120 million of CapEx was saved than what otherwise they would have had to incur to provide light to those remote villages. Again, quantified benefit, impact on the society, and a great opportunity. Moving to the fourth platform, which is disinfection lighting using our UVC light source technology. Letitia spoke about how UVC lamp technology is something that we've proven, we are leading, and we've been at it for decades. We've got this tested with Boston University, and it's proven to kill COVID-19 and deactivate COVID-19. What we are going to do here in digital solutions with this is actually expand into the solution space and get higher share of the value capture, because these lamps finally get used in a solution.
It could be a fixture, it could be a robo, it could be a tunnel. We are using it in 3 categories of solutions: air disinfection, surface disinfection, and object disinfection. We've introduced 12 different families of products for each of these. These are the products that are getting used now in retail environment. They're getting used in offices. They're getting used for room changeover in hotels. They're getting used for baggage scanning, which is object disinfection, or they're getting used for disinfecting clothes that are tried in a fashion retailer, and then they would need to be put back on shelf for disinfecting such clothes. Lots of interesting use cases emerging using these solutions. Our customer base here is increasing literally day by day. I give you an example of GLA, a small technology acquisition that we did six months back.
In matter of few months, the order book is now six to seven times more than what it was last year for that standalone entity. We eat our own dog food, or we eat our own food. We don't just preach. We use what we make. Here is the office that I, Eric, Javier, Letitia, all of us work in. We've installed these upper air fixtures in our offices, and you can see that these upper air fixtures, UVC solutions, can be used even when there are people around, and they make us all feel safer. That's a great use case emerging for these solutions. Moving to the fifth growth platform, which is 3D-printed luminaire for circular economy. This is an emerging space. Emerging space driven by increased focus on circularity, where now customers value that 3D printing saves up to 75% carbon footprint.
It's not just the sustainability value that's driving the growth, but also the fact that you are able to customize and create some unique shapes at a very short lead time. For example, if you look to the bottom right, Albert Heijn, which is part of Ahold Delhaize, a big retail group in Europe as well as in U.S. They're using these fixtures in over 120 stores, over 6,000 luminaire that are custom printed to accentuate their different promotions that they run for bakery or for food section. They can reprint them depending on the promotion and different seasons for which they've created these promos. Marks & Spencer in U.K., on the other hand, wanted a unique signature design for their stores in U.K., and they wanted 20,000 of them in a very short interval. Again, something that we couldn't have done without 3D printing.
We've built up this entire capability, and that's what differentiates us. This is a capability built over the last three and a half years. We now have six manufacturing lines that are completely automated, manufacturing lines in Europe, in U.S., and also parts of Asia. We've built extensive knowhow on material sciences and also built software to allow customers to customize and then send that design straight into the manufacturing line. A lot of knowhow built into an emerging space where I think we are a clear leader and will stay a leader. Let's now move to a topic I'm sure all of you are very interested in knowing more about, and Javier spoke about this guidance of EUR 60 million of synergy. We are upping it to EUR 100 million, all to be realized in three years. Bottom line synergies to be realized in three years.
How are we going about doing this? First, before talking numbers and before talking integration strategy, it was all about meeting hearts and minds. We spent enormous effort in building a common culture, common HR systems, common learning platforms. We built a common employee value proposition, and we worked towards ensuring cross-mobility of talent. Already, there are over 20 leaders across the two organizations that have moved from one part of the organization to the other. We then saw immediate effect of that in terms of high engagement of our Cooper Lighting colleagues. The latest employee NPS score shows that the employee engagement is at a high 39. Once the meeting of hearts and minds was done, integration strategy had to click.
We had two tenets of the strategy, maintain separate front offices, maintain separate go-to-market, separate brands, and retain all customers and agents while we do this integration. We've succeeded in that. All customers and agents are retained. The second one was about capturing synergies in the back end, in the procurement, in the operations, in the SG&A. There, as we've indicated, we are already ahead, and we are, in fact, upping the guidance there. If you go to the right side, there are four buckets of savings that were identified. Procurement and insourcing, operational costs, SG&A, and growth synergies. The horizontal bar there indicates the total opportunity that we had over three years. The green indicates where are we on that.
What that tells us is that while we've captured a lot of synergy, there is a lot more that's yet to come over the next two to three years. The dotted line that you see there shows where had we planned ourselves to be for 2020. You will see on each of those four dimensions, we are ahead. More synergies identified, but a lot more is yet to come, and we are ahead on every dimension. For example, we've completed our driver insourcing from digital products. We've now started the next phase of insourcing some products from Klite Lighting. That's again, a synergy available within the group. New area that we've identified on the bottom row that you will see, which we didn't have access to earlier, are logistics cost optimization.
Just putting together the DC network of the two organizations and having an integrated DC footprint creates additional synergy and a saving opportunity. It's a saving not just in cost, but also in inventory, and hence it also releases some cash. Lots of detailed action plans around each of these, and we are ahead on them already. What do we see in terms of financial results of all of this? We see now a business that has a much stronger financial profile than when this entire transformation started. We now have a better growth profile because now share of conventional, which is declining, is less than 8%. We are starting this new journey with bulk of the business being the growth business. The growth business, such as connected lighting and the growth platforms that we spoke about, will power that growth.
When it comes to EBITDA expansion, we already have a good track record of having doubled it in last three years. We'll continue to expand our EBITDA percentage on the strength of better price mix management and also with additional Cooper Lighting synergies that we spoke about. Free cash flow conversion will also get supported by EBITDA expansion as well as better working capital management. Again here, some of the measures like DC network integration is going to help us. Key takeaway, just to summarize. Over the last few years, now we've emerged in digital solutions as a clear market leader and innovation leader. Our strategy is built around Growth for Sustainability. Sustainability is at the core of our strategy that gives us very attractive growth platforms.
We have invested ahead of the curve, and in all of those platforms, we are ready, and we are a leader when it comes to innovation. We now have built a strong financial profile with this unmatched scale, and we will see it growing from strength to strength. Thank you, and we now hand it over to Rogier to take us through Q&A.
Thank you, Harsh. Indeed, we will continue with Q&A. Please, as with the first Q&A, follow the instructions in the platform, dial into the call, and if you wish to ask a question, press 01, please. We will set up the call on our side. We will show you a short video, and then we will immediately return for Q&A. Thank you.
The world faces many challenges caused by demographic change, urbanization, climate change, and resource scarcity. 10 billion people will inhabit the Earth by 2050, two-thirds of them living in cities. Climate change and increasing waste threaten our planet. At Signify, sustainability is at the heart of our purpose: to unlock the extraordinary potential of light for brighter lives and a better world. To achieve our purpose, we're focused on sustainable growth and creating a great place to work. These are key pillars in our strategy, and we are the only lighting company to be carbon neutral and use 100% renewable electricity. Now, with our Brighter Lives, Better World program for 2025, we go beyond carbon neutrality. We're doubling our positive impact. Climate action means we'll double the pace of the Paris Agreement, so we achieve the 1.5°C scenario over our entire value chain six years early.
We're doubling our circular revenues. We're doubling our Brighter Lives revenues to benefit society with lighting to increase food availability, safety and security, and health and wellbeing. We will advance our commitment to diversity and inclusion and double our percentage of women in leadership. As we look to double our positive impact, we're using the UN's Sustainable Development Goals as our strategic compass, and we're focusing our efforts on the six SDGs where we can make the biggest impact. At Signify, we're doubling our positive impact. This is how we're contributing to Brighter Lives and a Better World.
Hello. Welcome back, we'll go straight into Q&A. Everything works well, the first caller is Andre Kukhnin from Credit Suisse. Andre, can you hear us?
Yes, I can. Can you hear me?
Yes, perfectly.
Great. Good afternoon. Thank you very much for taking my questions. I'll go one at a time. Firstly, on the pricing, than k you very much for sharing the detailed forecast. I just wondered if you could share a bit more detail on the drivers behind it. What do you anticipate in terms of capacity additions from your peers there, and whether that incorporates any potential impact from the potential tax revisions in the U.S.?
Look, Andre, let's take it by part. Eric speaking. Maybe we can talk about the pricing for the LED business because we've talked about that quite a bit. I think that's one question that we could answer. I don't know if we have Rowena on the phone.
Hey, Rowena, can you hear us?
Can you hear me?
Yes, we can hear you.
Good. Thank you for the question. You're absolutely right on the pricing. We have shared that we expect the price erosion will be a bit slower compared to the early days. The main driver is because technology platform has already largely flattened out. We did not see a significant cost breakthrough further. The intense competition, which we have seen in the last period, partly also driven by COVID, but we see that competitions are generally holding the prices and we don't see that irrational behavior sustained. That we anticipate, in this case, the price erosion will be a bit slower than before.
Thanks, Rowena. Andre, to your question, nothing specific in the U.S. when it comes to price erosion, and not very specific for the two other businesses.
Andre, do you have a follow-up question?
Got it. Yes, please. If I could, I've got two others, I'll ask them straight away to speed it up. The second one is on the profit margin bridge that you gave, thank you for that. I see there's about 100 basis points, or just over that, from operational gearing or cost dilution, as you call it. My humble calculation using your midpoint of 2.5% growth rate between 0% and 5% suggests about 25% drop-through. I just wonder if you could help with putting that in historic context and whether that fully incorporates the mix effect that will still be some from conventional versus LED dynamics. The last question I had was just clarification on 2021 growth from earlier set of questions.
Did I get that right that your current market expectations and your mix adjustment point to a slightly negative development, but you're confident you can neutralize that with market share gains and that technical rebound that you mentioned? Can you go beyond neutralizing and grow in 2021?
I guess it's for me. To your last question, Andre, yes, that's exactly it. We believe that thanks to the rebound and what we're investing in growth, we could compensate the negative impact and be positive as we are giving a guidance of 0% to 5% every year. On the profit margin bridge, let me take it very simply. We see conventional products being stable in terms of profit margin, and we see the two other divisions being on an improvement trend when it comes to the profit margin. When you combine all of them, we see an improvement at group level.
Thank you very much for your time.
Thank you, Andre. The next question on the call is from Sven Weier from UBS.
Yeah. Thanks for taking my questions. Those would be three. I will ask them one at a time. The first one is also on the divisional targets. You have just mentioned those, Eric, where you go directionally. I was especially curious on DDP because there you said, you are going to see a structural decline of lamps by 9%. You see a structural increase of the functional luminaires by 9% and of connected. Historically, we know that those growing areas were lower margin and lamps was quite good, and you still want to have a net increase in the divisional margin, and that would be the question number one. How do you see that play out given the mix impact within the division?
No, the-- I mean, the-
Maybe let me-
Yes, you can go, Rowena.
I think, let me address the question as such. First, of course, on the non-connected. Yes, there is a transition towards the LED luminaire space. Here, we will be able to drive the expansion into that space because that is a growing market and because we are going to address by the multi-brand and therefore, but the price mix we achieved continually on the non-connected space. At the same time, the connected business, we have structurally already improved our profits since 2019. When we grow further on that part, the differentiation will actually increase further our margin, and therefore in totality, we're expecting in this case that, while we have a certain part of the market decline, it will be compensated in this case by luminaires, at the same time on the connected, and therefore able to drive further on our profits.
One important point, Klite Lighting with the margin being consolidated because we didn't consolidate the prime margin. That will also help us to improve further on the profitability.
Okay, understood. Thank you. I know back at the IPO, you had the target for professional to become a low teen to mid-teen business, I guess that's the only division that's unchanged in a way with the exception of buying Cooper, of course. Is a mid-teen margin still something we should be keeping in mind for DDS then?
We are not giving any guidance on individual divisional operating margin. Having said that, we definitely see opportunity for operating margin expansion. We have a track record of having doubled it, and we do have right now a number of levers. There is a cost reduction effort at a group level that Eric and Javier referred to, which reduces our non-manufacturing cost. We still see lot more scope in our procurement saving and synergies out of Cooper Lighting. What's also interesting is every connected light point is worth far more, and its mix is now increasing rapidly. That also becomes margin accretive. Yes, we will definitely be doing more than our fair share in the margin guidance that Javier has given over next three years.
Yeah. Thank you for that. The other question I had was just on your restructuring cost guidance, which is around 1.5%-2%. Back at the IPO, that was also the midterm guidance, but the long-term guidance was 0.5%-1%. I guess we are now basically at the long-term, I would guess, from a view from the IPO. Do you still think you can get to that ratio in the long term, especially given that you mentioned that you actually spent less on restructuring and lamps that you did expect?
Sven, first, you're very right. That's what we had said at the time. We are expecting now to have more restructuring charges than what we said at the time of the IPO for basically two reasons. First, is Cooper and the generation of synergies that we are aiming at will create some restructuring cash out, plus, a new adaptation of our cost structure. When we look at our performance in 2020, we've been able to maintain, and that's what we are guiding for our profitability for the full year. We had also to intervene on our cost with solidarity measures, a bit of help from the government. We look at our cost base today, and it's not adapted to the top line that we're generating.
We are undergoing, at this point in time, another wave of cost reduction with one very important principle that needs to be understood. We want to go to the next stage of evolution of the company, where we're going to have a very slim headquarters and a very limited cost at the central level of the company. This is what this new restructuring is aiming at. At the same time, we believe that given the fact that the market will recover only in a few years, we need to act now to be able to go back to the target, which is ours, between 25%-29% in the midterm.
At the end of the day, yes, we have to restructure more than what we had said at the time, and it's because of mainly Cooper and also because of the crisis, because we feel now that after a full year, we need to readapt our cost base. You know that we do that regularly, depending on the market traction, and we're doing that at this point in time. This is the explanation for the continued level of restructuring costs. What we can say is that over the period, this should go down, and we believe that the impact will be the most important in the first two years and much less in the third year.
It still sounds like it's a possibility beyond 2023 that it goes to the 0.5%-1%, because you are pulling things forward, basically.
Yep.
The final question, if I may, was just on Klite. Given the importance of the business to you, can you just remind us what the agreement was on the remaining 49% that you don't own? Is there an option for you to buy it or the wish to buy it? Can you remind us of that?
Rowena, I can take it.
Yes.
Go for it.
There is an option which we can take the remaining shares. Together with the Klite management, we are committed there to continue to grow the business. Therefore, at this point in time, there is no decision or there's no intention from Klite's side, the joint venture partner intend to sell it to us. We're having joint commitment actually to further grow the business. We may have an option to go for it.
Understood. Thank you very much.
Thank you, Sven. The next question is from George Featherstone from Bank of America.
Hi again. Thanks for taking my questions. First of all, on UVC, I wondered if you'd had any conversations with governments about regulations surrounding UVC applications, particularly as they relate to air and surface disinfection, both in terms of the framework for safety, but also in terms of governments looking to prevent against further pandemics.
Yeah. I can take this one. First, as we have said, UVC itself is a technology that is there since 35 years. It's proven, and many applications are existing and strongly available and secure. Of course, there is an evolving scenario where many governments are working on additional regulation for the technology for different applications. We have a team that is active on the standard regulation. We support that evolution, where we look at what is discussed, and we provide all the scientific data and information that are available on technology to secure that every government can safely promote the technology.
Okay, thanks for that. Maybe turning to the green stimulus that's going on in various different regions, how do you expect to participate in this? Are there any particular parts of the market where you expect the investment to occur and drive sales for Signify?
Okay. Thank you for the question, George. We see, especially now talking of green stimulus in Europe, we see activity picking up and really real funding of projects beginning to happen towards second half of 2021. Again, if you see where the money is going, money is going largely in Southern European countries, and we have tracked where exactly in each of those countries it's going. Also, the key principles behind where the money has to be spent. We see there are multiple areas where we have a role to play. For example, the entire green reconstruction, the renovation of building. That pace is expected to get increased by this reconstruction spending. That's a space we clearly have an opportunity in, both in the building side, but also in the city infrastructure reconstruction.
Second is also in the agriculture space, where we see funding getting allocated for projects such as vertical farms and land-based aquaculture. That is also an area where we see an opportunity. At this stage, we see a number of country proposals getting put forward, different project proposals getting put forward, and we are actively engaging with different stakeholders to see how some of these technologies get used in the reconstruction plans that are being put forward by different governments.
Okay. Thank you very much for the color there. Then my final one would be, how should we think about the business model for the Interact platform? Is it subscription-based or more of a one-off license fee? Also, where would you expect this product to be as a share of sales by 2023?
Yep. Very good question. Actually, the way the Interact platform works is there is a upfront CapEx that somebody puts in to install the system. On top of it, however, there is a recurring service opportunity that it creates. That recurring service has, I would say, three facets. First is some of the customers want to pay for the benefit out of the entire system over a year, so it then starts becoming light as a service. That's one facet where there is a recurring service. Second facet that comes is a recurring service out of charges for periodic monitoring and asset management. For example, many cities that have put Interact City, they are paying subscription charges on a quarterly annual basis for a time to come. That install base keeps growing, and that recurring service bank keeps growing.
The third one, which is not yet fully developed, and it's yet to mature, is the data that's all getting generated. Different form of data in terms of air quality, in terms of people movement, space utilization. That data getting used for different services. There, I would say, there are proof points emerging. There are initial subscribers emerging who are paying for it, but that space, that is yet to play out. We are extremely optimistic about that space as well, because we now see 380 different developers, development partners, who are accessing this data through our APIs that are there on our IoT platform. There is a CapEx and a recurring service. Part of the recurring service is established, part of it is still to emerge and play out.
Okay, are you able to share with us what the portion of recurring sales is as a share of professional, Digital Solutions now?
Yep. As I shared already, we are seeing almost one-fourth of our business, which is coming out of connected lighting. Share of connected lighting will continue to grow. Already by end of this year, every lighting fixture that we sell will have a connectable option. That should drive further penetration of connected. We would not be able to give a guidance in terms of what percentage it would be in the mid-term, but that share would only keep growing.
Okay, thank you very much.
Thank you, George. We'll now go to the next question, which is from Martin Wilkie from Citi.
Yeah, thank you. It's Martin again from Citi. Just coming back to Cooper, and you talked about some revenue synergies there, including getting some existing Signify content through the Cooper channels. When we think about some of your connected products and Interact and things like that, are they relatively plug-and-play when you go to a new platform? Is it as simple as you have these routes to market, you have some existing products, and therefore you can get the functionality that you've brought elsewhere in the world through those channels? Is there still a lot of work to get done to those products to make them ready for your sort of technology and software and so forth? Thanks.
Yeah, thank you for the question, Martin. This is one area where we've now identified many more synergies than what we could before the acquisition. This is one contributor to that $60 million going to $100 million. Where are we seeing these revenue synergies coming up? One is in area where Cooper business unit now has access to some of our technologies as components in their solution, which they didn't have access to. Now they can make a full offering out of it. To give you an example, UVC light sources. We bring lot of technology and leadership there. Cooper is able to now integrate those light sources and take full solutions to the market, just the way we saw other parts of digital solutions taking them to the market.
Clear revenue synergy where those offerings were not enabled earlier, whether it's for upper air disinfection or object disinfection. Now, they have full new range created using technology that was available from Signify. Second is when it comes to connected lighting, what we see is actually we have very complementary play. Cooper Lighting is very strong in North America in indoor systems, whether it's for office or retail or manufacturing. They don't have a very strong offering when it comes for city infrastructure. Whereas Interact City is a offering that can become a plug-and-play offering. These nodes that make luminaire connected can also be nodes that can make Cooper outdoor luminaire connected. Hence, the entire outdoor systems, like Interact City, also becomes available for Cooper Lighting customers. There is a complementarity in the two offerings.
Here the approach is going to be use of modules and components to accelerate the development of platforms, as opposed to just reuse of the same system. That way we are also able to maintain our first tenet of integration strategy, which is maintain separate front offices, separate brands, separate go-to markets. That doesn't get compromised, but we are able to power the launch of new offerings faster with this leveraging of common components.
Okay, thank you very much.
I think the next caller on the line is Rajesh Singla from Societe Generale.
Hi, thanks for taking my question. This is regarding the replacement cycle in LED. Can you please share your insights into where are we in the replacement cycle for LED, and when we could expect a replacement cycle to kick in and start giving some growth opportunities to us in the near future?
Rajesh, this is a great question. You're absolutely right. LED comes in with a longer burning hours compared to the conventional. Yes, we would expect there will be a replacement cycle coming from LED, but for now, we have not yet seen it happening. We expect that it will come, but at this point in time, we have not seen it yet.
Any guidance on when we can expect it to come? Five years, six years? Or there's no such insight into that?
We do not provide that guidance specifically, and to be honest, we have to look into specific segments, because some segments, like hospitality, whereby they spotlight probably a little bit earlier than some others. If you look into the lifetime generally when we are talking about LED, we usually talk about at least a 13 to 15 years lifetime. Therefore, I think we have to count back in this case from the start, and probably you can already estimate that. Yeah.
Maybe, Rajesh, to build on what Rowena said.
Yeah. Sorry, go ahead.
On what Rowena said, in the professional space, we have now seen that typical replacement cycle in various indoor applications is seven to 10 years. That's when offices get renovated or retailer renovates. Hence, we would see over seven to 10-year cycle, these replacements coming up. On the public infrastructure side, it's 20 to 25 years. It's a longer cycle. The good news here in professional, as I said, is still a lot of LEDification is still left. We still have almost 65% of light points that are yet to be LEDified.
Okay. Thank you.
Thank you, Rajesh. We'll go for the final question, which is from the next caller, Andreas.
Yeah, thank you very much for squeezing me in. I just had a couple of clarifications. You mentioned earlier in the digital products presentation, 30,000 Chinese competitors. I just wanted to make sure I have not misheard that, and I was just wondering what all of them were doing and what's going to happen with those and whether they look at expanding globally. Are these LED lamp manufacturers? Maybe a little bit more information on this competitive situation in China. The second is on consumer luminaires. You showed some products here, some more interest again in that space, using technology to go for that market a bit more again.
Are you confident that's different than in the past when consumer luminaires was always a very difficult type of business for a company like Signify, given your skills versus that type of industry, that you can do that profitably this time?
Andreas, thank you for the questions. Yes, I have mentioned that in the early time of the LED space, there are about 30,000 Chinese companies operating in the LED space. As we have seen actually in the data just recently being published also by the Chinese authorities, that we have seen now roughly that it remains only about 18,000 of them. In fact, some of them have already been phased out, given some of them are very small in size, so they are not able to maintain competitiveness. Quite some of them have also moved towards the LED luminaire space as well. The Chinese manufacturers are typically focused a lot in driving private labels and do continue. That is why it is extremely important for us to have Klite, which will allow us to have a better reach to the private label customers.
Regarding your second questions on the consumer luminaires, I want to make a distinction. The area that we focus is not a decorated part, which, in a few days, probably you will still recall. Those are a lot about the decorative side. Here at this time, we are concentrating where we are strong at, the functional LED luminaires. These are typically less variety in terms of the design by itself, and therefore, that is riding on the same distribution infrastructure, the same innovation that we can leverage on the LED lamp side. Therefore, we are confident in this case because of the similarity on the functional luminaire space that we are concentrated, that we will be well-positioned.
Thank you very much.
Well, thank you, Andreas. We'll now conclude the Q&A session. Any follow-up questions, feel free to reach out to the investor relationship team. We're happy to follow up on your questions. Now I'd like to give the floor back to Eric for some closing remarks.
Thank you so much, Rogier. Look, when we started on that journey and we very quickly realized that we could not do the Capital Markets Day with you being present or us being present with you, and we regretted it, but we wanted to make it happen because we also thought it was overdue. We wanted to do it just before buying Cooper, so we delayed, then we delayed because of COVID, and we said, this time, let's go do it, and let's do it remotely. It generated a few constraints that we wanted this to be done in a very short amount of time, so I think that we've respected that. It's just four hours, we didn't want to go beyond that. We understand that we have given to you a lot of information in a very little time.
I think you will have the possibilities to go back to our investor relations team and eventually us, if you need to have some more details on what we have been presenting. I just want to thank you for your attention and being present with us. We'll find another occasion to be able to expose you to the team. I was very happy to bring the team together, and probably we'll have other opportunities to be together. I thank the team, I thank the technical people for making that happen, and I wish you a good end of the day. Thank you so much.