In a building market in retreat, Legrand
reports lower sales and good margin resilience in Q1
Sales: -5.6%, i.e. -3.7% excluding exchange
rates and Russia Adjusted operating margin: 20.5% of sales Net
profit attributable to the Group: 13.6% of sales
3 acquisitions announced since the beginning
of the year 2024 full-year targets unchanged
Regulatory News:
Legrand (Paris:LR):
Benoît Coquart, Legrand’s Chief Executive Officer,
commented:
“Our first quarter results for 2024 are in line with our
expectations in terms of both revenue and margins, as well as free
cash flow. In Q1, the building market that represents approximately
80% of Legrand's revenue experienced a marked slowdown across most
geographies, as expected. Against this backdrop, our limited
decline in revenue and the resilience of our margins and free cash
flow highlight the strength of our business model, the solidity of
our market positions, and the execution capabilities of our
teams.
In this context, we are continuing with our strategic
investments in order to fully benefit from our markets’ recovery.
Thus far this year, we have announced three acquisitions, and will
keep up the strong pace of external growth in coming quarters. On
the innovation side, we will be launching a large number of iconic
product lines this year, including the Céliane range of wiring
devices in France.
Moreover, the remarkable success of Legrand's first
international employee share ownership plan testifies to the
Group's investment in its teams and to the confidence and full
commitment of its employees.”
2024 full-year targets unchanged1
In 2024, the Group is pursuing the profitable and responsible
development laid out in its strategic roadmap.
Taking into account the world’s current macroeconomic outlook,
with confidence in its model for creating integrated value, Legrand
has set the following full-year targets for 2024:
- low single-digit sales growth (organic and through
acquisitions2); - an adjusted operating margin before acquisitions
between 20.0% and 20.8%; - at least 100% CSR achievement rate for
the third year of the 2022-2024 roadmap.
Financial performance at March 31, 2024
Key figures
Consolidated data
(€ millions)(1)
1st quarter 2023
1st quarter 2024
Change
Sales
2,149.6
2,028.2
-5.6%
Adjusted operating profit
477.2
415.9
-12.8%
As % of sales
22.2%
20.5%
20.6% before acquisitions(2)
Operating profit
450.4
387.5
-14.0%
As % of sales
21.0%
19.1%
Net profit attributable to the Group
330.5
275,9
-16,5%
As % of sales
15.4%
13,6%
Normalized free cash flow
389.3
362.6
-6.9%
As % of sales
18.1%
17.9%
Free cash flow
331.5
146.1
-55.9%
As % of sales
15.4%
7.2%
Net financial debt at March 31
2,305.0
2,270.3
-1.5%
(1) See appendices to this press release for definitions and
indicator reconciliation tables (2) At 2023 scope of
consolidation
Consolidated sales
In the first quarter of 2024, sales fell -5.6% from the same
period of 2023 to reach €2,028.2 million.
In a building market in retreat, sales decreased organically by
-5.4% for the quarter, including -5.0% in mature countries and
-6.5% in new economies.
The impact of broader scope of consolidation was +0.7%,
including +1.8% linked to acquisitions and -1.1% to the impact of
the Group’s disengagement from Russia. Based on acquisitions made
and their likely dates of consolidation, their overall impact
should be close to +1.0% full year, of which nearly +1.5% linked to
acquisitions and -0.6% to the impact of disengagement from Russia
as of October 4, 2023.
The exchange-rate effect on sales in the first quarter of 2024
was -1.0%. Based on average exchange rates in April 2024, the
full-year effect should be close to 0% in 2024.
Changes in sales by destination at constant scope of
consolidation and exchange rates broke down as follows by
region:
1st quarter 2024 / 1st quarter
2023
Europe
-4.7%
North and Central America
-6.0%
Rest of the world
-5.8%
Total
-5.4%
These changes are analyzed below by geographical region:
- Europe (43.7% of Group revenue): with the building
market still severely impacted in most countries, sales at constant
scope of consolidation and exchange rates were down -4.7% in the
first quarter of 2024, reflecting in particular the high basis of
comparison in 2023.
Europe’s mature countries (37.8% of Group revenue) reported
sales down -5.1% organically in the first quarter, with solid
resilience in Italy, the UK or Spain.
Sales in Europe’s new economies were down -2.4% in the first
quarter, with growth in Turkey.
- North and Central America (37.4% of Group revenue):
sales decreased -6.0% from the first quarter of 2023 at constant
scope of consolidation and exchange rates.
In the United States alone (33.8% of Group revenue), sales
decreased -6.1%, in contracting markets excluding datacenters.
Sales rose in Canada and saw a sharp decline in Mexico.
- Rest of the world (18.9% of Group revenue): sales
marked an organic decline of -5.8% in the first quarter of
2024.
In Asia-Pacific (11.5% of Group revenue), the drop in sales was
-5.8%. Growth in India failed to offset a marked decrease in
China.
In Africa and the Middle East (3.2% of Group revenue), revenue
fell -6.5%, reflecting a significant decrease in Africa that was
not offset by a robust growth in the Middle East.
In South America (4.2% of the Group's revenue), sales were down
by -5.1% despite a rebound in Brazil.
Adjusted operating profit and margin
Adjusted operating profit for the first quarter of 2024 stood at
€415.9 million, down -12.8% from the first three months of 2023.
This corresponds to an adjusted operating margin equal to 20.5% of
sales for the period.
Before acquisitions, adjusted operating margin for the first
quarter of 2024 was equal to 20.6% of sales, down -1.6 points from
the first quarter of 2023.
In the first quarter of 2024, the level of profitability of the
Group once again demonstrates Legrand’s ability to protect its
margins in a context of declining sales, thanks to its intact
pricing power and solid cost control.
Value creation and solid balance sheet
Net profit attributable to the Group came to €275.9 million,
down -16.5% from the first quarter of 2023 and equal to 13.6% of
sales. This trend is due primarily to a decrease in operating
profit, the negative impact of financial and exchange-rate results,
and a corporate income tax rate of 26.0%, stable compared to the
first quarter of 2023.
Net earnings per share stood at €1.05, for a decrease of -15.1%
from the first quarter of 2023.
Free cash flow came to 7.2% of sales over the period at a total
of €146.1 million.
The ratio of net debt to EBITDA3 stood at 1.2 on March 31,
2024.
Ongoing acquisitions strategy
Legrand is actively implementing its development strategy with,
since the beginning of the year, the announcement of the
acquisitions of MSS4, a New Zealand-based specialist in
cable management (with annual sales of more than €10 million);
Enovation5, the Dutch leader in healthcare software in the
market for connected health and assisted living (with annual sales
of more than €60 million); and Netrack, an Indian specialist
in server and network rack manufacturing, notably for datacenters
(with annual sales of around €10 million).
The Group has today announced a minority stake acquisition in
UIOT, one of the leading Chinese players in wireless IoT
smart-home solutions with strong innovation capabilities, which
will allow Legrand to strengthen its positions in the connected
building segment.
These acquisitions in the promising areas of datacenters,
assisted living and connected solutions further strengthen Legrand
Group's leadership in its faster expanding segments.
SBTi Net Zero commitment for 2050
2024 marks an important milestone in the Group's decarbonization
trajectory, with SBTi (Science Based Target initiative) validating
Legrand’s Net Zero 2050 commitment.
This commitment involves reducing the Group's GHG emissions by
90% across its entire value chain by 2050, and neutralizing
emissions that cannot be avoided.
The Group's 2030 objectives have thus been revised, more
demanding, with now:
- a 42% reduction in Scopes 1&2 emissions in current data
based on 2022, - a 25% reduction in Scope 3 emissions in current
data based on 2022, incorporating emissions related to purchased
goods and services and the use phase of Group's products.
Combined General Meeting of Shareholders on May 29,
2024
Board of Directors6
Jean-Marc Chéry's term of office as director expires this year.
He will be proposed for re-election at the next General Meeting of
shareholders.
In addition, upon recommendation of the Nominating and
Governance Committee and after approval by the Board of Directors,
the General Meeting will also vote on the nomination of Rekha M.
Menon as an independent director.
Rekha M. Menon has nearly 20 years of experience at Accenture in
India, including over 7 years as Senior Managing Director and
Chair. Her skills (especially in digital, strategy, and CSR) and
her in-depth knowledge of Asia and particularly India, will be a
valuable asset for the Board of Directors.
Following these appointments the Board of Directors, with 75%
independent Directors, 42% women and seven nationalities
represented, would continue to reflect the industry’s best
practices.
Proposed changes to the composition of Board Committees are set
out in chapter 6.1.3.1 of the universal registration document -
Legrand_URD_2023_ENGLISH (legrandgroup.com).
Proposed dividend
As announced on February 15, 2024, Legrand’s Board of Directors
will ask the General Meeting of Shareholders to be held on May 29,
2024 to approve the payment of a dividend of €2.09 per share in
respect of 2023, representing a rise of +10.0% from 2022.
The ex-dividend date is May 31, 2024, with payment7 on June 4,
2024.
Success of the first international share ownership plan for
employees
To recognize and promote employee engagement at all levels in
rolling out the Group’s strategy, Legrand launched its first
international employee share ownership program from March to May
2024, proposed to approximately 63% of the Group's employees.
This plan, which is non-dilutive since it is funded through
share buybacks, was over 36% subscribed, reflecting the full
confidence of Legrand teams in the Group's development model.
---------
The Board adopted consolidated financial statements for
first-quarter 2024 at its meeting on
May 2, 2024. These consolidated financial statements, a
presentation of 2024 first-quarter results, and the related
teleconference (live and replay) are available at
www.legrandgroup.com.
Key financial dates
- General Meeting of Shareholders: May 29, 2024
- Ex-dividend date: May 31, 2024
- Dividend payment: June 4, 2024
- 2024 first-half results: July 31, 2024 “Quiet period8” start
July 1, 2024
- 2024 Capital Markets Day: September 24, 2024 – London (UK)
About Legrand Legrand is the global specialist in
electrical and digital building infrastructures. Its comprehensive
offering of solutions for commercial, industrial and residential
markets makes it a benchmark for customers worldwide. The Group
harnesses technological and societal trends with lasting impacts on
buildings with the purpose of improving life by transforming the
spaces where people live, work and meet with electrical, digital
infrastructures and connected solutions that are simple, innovative
and sustainable. Drawing on an approach that involves all teams and
stakeholders, Legrand is pursuing its strategy of profitable and
responsible growth driven by acquisitions and innovation, with a
steady flow of new offerings—including products with enhanced value
in use (faster expanding segments: datacenters, connected offerings
and energy efficiency programs). Legrand reported sales of €8.4
billion in 2023. The company is listed on Euronext Paris and is
notably a component stock of the CAC 40, CAC 40 ESG and CAC SBT 1.5
indexes. (code ISIN FR0010307819). https://www.legrandgroup.com
Appendices
Glossary
Adjusted operating profit: Adjusted operating profit is
defined as operating profit adjusted for (i) amortization and
depreciation of revaluation of assets at the time of acquisitions
and for other P&L impacts relating to acquisitions, (ii) assets
impairment in Russia and, (iii) where applicable, for impairment of
goodwill.
Busways: electric power distribution systems based on
metal busbars.
Cash flow from operations: Cash flow from operations is
defined as net cash from operating activities excluding changes in
working capital requirement.
CSR: Corporate Social Responsibility.
EBITDA: EBITDA is defined as operating profit plus
depreciation and impairment of tangible and right of use assets,
amortization and impairment of intangible assets (including
capitalized development costs), reversal of inventory step-up and
impairment of goodwill.
ESG: Environmental, Societal and Governance.
Free cash flow: Free cash flow is defined as the sum of
net cash from operating activities and net proceeds from sales of
fixed and financial assets, less capital expenditure and
capitalized development costs.
KVM: Keyboard, Video and Mouse.
Net financial debt: Net financial debt is defined as the
sum of short-term borrowings and long-term borrowings, less cash
and cash equivalents and marketable securities.
Normalized free cash flow: Normalized free cash flow is
defined as the sum of net cash from operating activities—based on a
normalized working capital requirement representing 10% of the last
12 months’ sales and whose change at constant scope of
consolidation and exchange rates is adjusted for the period
considered—and net proceeds of sales from fixed and financial
assets, less capital expenditure and capitalized development
costs.
Organic growth: Organic growth is defined as the change
in sales at constant structure (scope of consolidation) and
exchange rates.
Payout: Payout is defined as the ratio between the
proposed dividend per share for a given year, divided by the net
profit attributable to the Group per share of the same year,
calculated on the basis of the average number of ordinary shares at
December 31 of that year, excluding shares held in treasury.
PDU: Power Distribution Units.
UPS: Uninterruptible Power Supply.
Working capital requirement: Working capital requirement
is defined as the sum of trade receivables, inventories, other
current assets, income tax receivables and short-term deferred tax
assets, less the sum of trade payables, other current liabilities,
income tax payables, short-term provisions and short-term deferred
tax liabilities.
Calculation of working capital requirement
In € millions
Q1 2023
Q1 2024
Trade receivables
1,105.0
1,125.2
Inventories
1,349.9
1,288.1
Other current assets
293.2
297.7
Income tax receivables
122.1
187.8
Short-term deferred taxes
assets/(liabilities)
110.0
111.9
Trade payables
(891.5)
(921.9)
Other current liabilities
(815.6)
(856.7)
Income tax payables
(111.4)
(107.3)
Short-term provisions
(150.7)
(155.1)
Working capital required
1,011.0
969.7
Calculation of net financial debt
In € millions
Q1 2023
Q1 2024
Short-term borrowings
806.0
1,005.0
Long-term borrowings
3,997.6
3,974.6
Cash and cash equivalents
(2,498.6)
(2,709.3)
Net financial debt
2,305.0
2,270.3
Reconciliation of adjusted operating profit with profit for
the period
In € millions
Q1 2023
Q1 2024
Profit for the period
330.4
276.1
Share of profits (losses) of
equity-accounted entities
0.0
0.0
Income tax expense
115.8
97.0
Exchange (gains) / losses
0.2
9.0
Financial income
(22.2)
(29.0)
Financial expense
26.2
34.4
Operating profit
450.4
387.5
i) Amortization & depreciation of
revaluation of assets at the time of acquisitions, other P&L
impacts relating to acquisitions and ii) impacts related to
disengagement from Russia (impairment of assets and effective
disposal)
26.8
28.4
Impairment of goodwill
0.0
0.0
Adjusted operating profit
477.2
415.9
Reconciliation of EBITDA with profit for the period
In € millions
Q1 2023
Q1 2024
Profit for the period
330.4
276.1
Share of profits (losses) of
equity-accounted entities
0.0
0.0
Income tax expense
115.8
97.0
Exchange (gains) / losses
0.2
9.0
Financial income
(22.2)
(29.0)
Financial expense
26.2
34.4
Operating profit
450.4
387.5
Depreciation and impairment of tangible
assets (including right-of-use assets)
48.3
51.7
Amortization and impairment of intangible
assets (including capitalized development costs)
33.9
31.9
Impairment of goodwill
0.0
0.0
EBITDA
532.6
471.1
Reconciliation of cash flow from operations, free cash flow
and normalized free cash flow with profit for the period
In € millions
Q1 2023
Q1 2024
Profit for the period
330.4
276.1
Adjustments for non-cash movements in
assets and liabilities:
Depreciation, amortization and
impairment
83.0
84.7
Changes in other non-current assets and
liabilities and long-term deferred
Taxes
19.5
11.3
Unrealized exchange (gains)/losses
3.2
2.9
(Gains)/losses on sales of assets, net
(0.2)
2.4
Other adjustments
(1.3)
6.4
Cash flow from operations
434.6
383.8
Decrease (Increase) in working capital
requirement
(71.5)
(205.0)
Net cash provided from operating
activities
363.1
178.8
Capital expenditure (including capitalized
development costs)
(31.8)
(32.9)
Net proceeds from sales of fixed and
financial assets
0.2
0.2
Free cash flow
331.5
146.1
Increase (Decrease) in working capital
requirement
71.5
205.0
(Increase) Decrease in normalized working
capital requirement
(13.7)
11.5
Normalized free cash flow
389.3
362.6
Scope of consolidation
2023
Q1
H1
9M
Full-year
Full consolidation method
Geiger
3 months
6 months
9 months
12 months
Emos
3 months
6 months
9 months
12 months
Usystems
3 months
6 months
9 months
12 months
Voltadis
Balance sheet only
6 months
9 months
12 months
A. & H. Meyer
Balance sheet only
6 months
9 months
12 months
Power Control
Balance sheet only
Balance sheet only
9 months
12 months
Encelium
Balance sheet only
6 months
9 months
12 months
Clamper
Balance sheet only
Balance sheet only
Balance sheet only
11 months
Teknica
Balance sheet only
4 months
MSS
Balance sheet only
2024
Q1
H1
9M
Full-year
Full consolidation method
Voltadis
3 months
6 months
9 months
12 months
A. & H. Meyer
3 months
6 months
9 months
12 months
Power Control
3 months
6 months
9 months
12 months
Encelium
3 months
6 months
9 months
12 months
Clamper
3 months
6 months
9 months
12 months
Teknica
3 months
6 months
9 months
12 months
MSS
Balance sheet only
To be determined
To be determined
To be determined
ZPE Systems
Balance sheet only
To be determined
To be determined
To be determined
Disclaimer
This press release may contain forward-looking statements which
are not historical data. Although Legrand considers these
statements to be based on reasonable assumptions at the time of
publication of this release, they are subject to various risks and
uncertainties that could cause actual results to differ from those
expressed or implied herein.
Details on risks are provided in the most recent version of
Legrand Universal Registration Document filed with the Autorité des
marchés financiers (Financial Markets Authority, AMF), which is
available on-line on the websites of both AMF (www.amf-france.org)
and Legrand (www.legrandgroup.com).
Investors and holders of Legrand securities are reminded that no
forward-looking statement contained in this press release is or
should be construed as a promise or a guarantee of actual results,
which are liable to differ significantly. Therefore, such
statements should be used with caution, taking into account their
inherent uncertainty.
Subject to applicable regulations, Legrand does not undertake to
update these statements to reflect events or circumstances
occurring after the date of publication of this release.
This press release does not constitute an offer to sell, or a
solicitation of an offer to buy Legrand securities in any
jurisdiction.
Readers are invited to verify the authenticity of Legrand press
releases with the CertiDox app. Learn more at www.certidox.com
_________________________
1 For more information, see Legrand press release dated February
15, 2024 2 Excluding exchange-rate effect and impacts linked to the
Group’s disengagement from Russia 3 Based on EBITDA for the past 12
months. 4 For more information, see Legrand press release dated
February 15, 2024 5 For more information, see Legrand press release
dated April 23, 2024, subject to standard conditions precedent 6
Subject to the approval of the General Meeting of shareholders to
be held on May 29, 2024 7 This distribution will be made in full
out of distributable income 8 Period of time when all communication
is suspended in the run-up to publication of results
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502429504/en/
Investor relations & financial communication Ronan
MARC (Legrand) +33 1 49 72 53 53 ronan.marc@legrand.com
Press relations Tiphaine RAFFRAY (TBWA) +33 6 58 27 78
98. tiphaine.raffray@tbwa-corporate.com
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