Legrand – 2024 First-Half results

• Good resilience in the first half, including sales growth in the second quarter and very firm margins
• H1 sales trends: -2.0%, i.e. -0.7% excluding exchange rates and Russia 
• Adjusted operating margin: 20.7% 
• Net profit attributable to the Group:13.7% of sales
• 5 acquisitions announced since the beginning of the year, including 3 in datacenters 
• More than €200 million additional revenue on an annual basis
• Strong product innovation momentum 
• 2024 full-year targets unchanged

 

 

Benoît Coquart, Legrand’s Chief Executive Officer, commented: “Our first-half results for 2024 show a limited retreat in sales and very firm margins and free cash flow. In the second quarter alone, a moderate rebound in sales (+1.5% organic growth) stemmed notably from datacenter business, while the building market remained depressed. Margins and free cash flow hold steady at very good levels.

This performance highlights once again the relevance of our business model, and we stand by the annual targets announced in early February.

We are continuing to roll out our strategy, as illustrated by the very strong pace of external growth since the beginning of the year, with five acquisitions including three in the datacenter segment. This momentum will continue in the quarters to come. We are innovating relentlessly, with launches of a large number of new products including the new Céliane iconic range of wiring devices in France.”

 

 

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.

1 For more information, see Legrand press releases dated February 15 and May 3, 2024 

2 Excluding exchange-rate effect and impacts linked to the Group’s disengagement from Russia

 

 

Financial performance at June 30, 2024 

Key figures

 

 

Consolidated sales 

In the first half of 2024, sales were down a total of -2.0% from the same period of 2023, reaching €4,210.3 million.

In a building market which remains depressed in many geographies, the organic decline in sales was -2.0% over the period, including -0.9% in mature countries and -5.1% in new economies.

The impact of broader scope of consolidation was +0.4%, including +1.3% linked to acquisitions and -0.9% 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 +2% full year, of which nearly +2.5% 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 half of 2024 was -0.4%. Based on average exchange rates in June 2024 alone, the full-year effect should be close to -0.5% in 2024.

 

Changes in sales by destination at constant scope of consolidation and exchange rates broke down as follows by region:

 

 

These changes are analyzed below by geographical region: 

• Europe (41.5% of Group revenue): in a persistently tough building market in most countries, sales at constant scope of consolidation and exchange rates fell -3.2% in the first half of 2024.
  • In Europe’s mature countries (36.3% of Group revenue), sales decreased organically by -3.1% in the first half of 2024, including -0.9% in the second quarter alone, with robust resilience in the first six months notably in Italy, the United Kingdom, Spain and Scandinavia.
  • Sales in Europe’s new economies declined by -3.8% in the first half. In the second quarter alone, sales decreased -5.5%, including a marked decline in Central Europe
• North and Central America (38.9% of Group revenue): sales were stable from the first half of 2023 at constant scope of consolidation and exchange rates.
  • In the United States alone (35.6% of Group revenue), sales rose +1.0% in the first six months of the year, including a steep +7.9% rise in the second quarter alone. This solid performance in the second quarter was driven by marked growth in the datacenter segment and an increase in non-residential applications. 
  • Over the first half, sales declined in Canada and Mexico
• Rest of the world (19.6% of Group revenue): sales marked an organic decline of -3.1% in the first half of 2024. 
  • In Asia-Pacific (12.2% of Group revenue), sales declined by -4.1% in the first half of the year and by -2.6% in the second quarter alone. This downward momentum reflects growth in India offset by a strong decline in China where building markets are in a sharp slump.
  • In Africa and the Middle East (3.4% of Group revenue), sales were down -5.3% in the first six months of the year and -4.2% in the second quarter. Over six months, sales trends were sustained in the Middle East and showed a double-digit decline in Africa.
  • In South America (4.0% of Group revenue), sales were up +1.9 % in the first half, with marked growth in Brazil, and advanced a strong +9.8% in the second quarter alone.

 

Adjusted operating profit and margin 

Adjusted operating profit for the first half of 2024 stood at €873.1 million, down -8.5% from the first half of 2023. This corresponds to an adjusted operating margin equal to 20.7% of sales for the period.

Before acquisitions, adjusted operating margin for the first half of 2024 stood at 20.8% of sales, down -1.4 points from the first half of 2023. 

Over this period, Group profitability confirmed the ability of Legrand to hold margins high despite a decrease in sales.

 

Value creation and solid balance sheet 

Net profit attributable to the Group came to €577.6 million, down -11.3% from the first half of 2023 and equal to 13.7% of sales. This trend was due primarily to a decline in operating profit, the negative impact of financial results and exchange-rate effects, and a corporate income tax rate of 27.0% for the first half of 2024. 

Free cash flow came to 11.1% of sales over the period, to total €468.1 million.

The ratio of net debt to EBITDA1 stood at 1.8 on June 30, 2024, a level that reflects the pace of acquisitions since the beginning of the year, as well as a solid free cash flow generation, and is fully consistent with the Group’s credit rating. 

1 Based on EBITDA for the past 12 months

Following a €600 million bond issue in June 2024, Legrand Group’s cash position stood at €2.1 billion on June 30, 2024, and the maturity of gross debt — with close to 90% in fixed-rate instruments — was 4.8 years.

 

Accelerating acquisitions strategy

In the first half of 2024, Legrand continued and accelerated its bolt-on external growth strategy through 5 operations, bringing acquired sales on an annual basis to more than €200 million: 

• in the buoyant datacenters segment, the acquisition of Netrack (Indian specialist in racks), Davenham (Irish specialist in low-voltage power distribution systems) and Vass (Australian leader in busbars); 
• in the assisted living segment, Enovation, the Dutch leader in connected health software; 
• lastly, in the cable management segment, New Zealand specialist MSS. 

Legrand intends to continue to strengthen its positions with targeted, complementary acquisitions in the coming quarters.

 

Strong product innovation momentum

As announced at the beginning of the year, the launch of numerous new products during the first half demonstrates the Group’s continued robust capacity for innovation, with, for example: 

• Core infrastructure products including new wiring device ranges: Céliane (in France), Ultra Thin and Eco Full Rocker (in China), Seano (in Germany and Austria), the extension of lighting solutions ranges Seem 1 and Rev families extension as well as Seem Sweep 2 and TruTile (in the USA), and the increased proportion of recycled material in tri-layer conduits Standard and Octogliss ranges (in France); 
• In faster expanding segments, Linkeo DC and NX1 PDUs (datacenters, energy efficiency and connected products), DPX3 et DMX3 connected power breakers, KNX Mallia Senses lighting and temperature touch screens control panels (energy efficiency and connected products), Cable Bus cable management solutions, and M70 critical power monitors (datacenters and connected products), new LCS3 accIAIM and OM5 fibre digital infrastructure solutions and Cablobend cable management offer (datacenters), Green’Up metering cabinets for electric vehicle infrastructure (energy efficiency), renewal of the NMR dynamization IOT connected wiring range in China, and 4-Wires Kit new video door entry system range for India (connected products).

 

 

The consolidated financial statements for the first half of 2024 were subject to a limited review by the Group’s auditors and were adopted by the Board of Directors at its meeting on July 30, 2024. These consolidated financial statements, a presentation of 2024 first-half results, and the related teleconference (live and replay) are available at www.legrandgroup.com.

 

KEY FINANCIAL DATES 

• 2024 Capital Markets Day : September 24, 2024 – London (UK) 
• 2024 nine-month results : November 7, 2024 “Quiet period1 ” starts : October 8, 2024 
• 2024 annual results : February 13, 2025 “Quiet period1 ” starts : January 14, 2025 
• General Meeting of Shareholders : May 27, 2025

1 Period of time when all communication is suspended in the run-up to publication of results

 

 

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/ impacts related to disengagement from Russia (impairment of assets and effective disposal) and, iii/ where applicable, 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

 

Calculation of net financial debt

 

Reconciliation of adjusted operating profit with profit for the period

 

Reconciliation of EBITDA with profit for the period

 

Reconciliation of cash flow from operations, free cash flow and normalized free cash flow with profit for the period

 

Scope of consolidation

 

 

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.