Rexel released its 2024 Q1 financial results today. Sales stood at $5,027.43m, down (4.6)% on a same-day basis, in line with expectations, on high electrification comparable base, notably in solar activity in Europe.
- Restated for electrification (22% of sales, down c.(12)%) and cable, core ED activity remained resilient, with a limited decline of (0.8)%
- Stable non-cable pricing and price increase in our core products. Restated for electrification, non-cable pricing rose by +0.7%
- Cable pricing at (1.5)% from high copper prices in Q1 23 and continued price normalization in North America beginning at end-Q2 23
The company states that the non-residential market and industrial automation business were resilient, especially in North America.
There were further market share gains in key countries (including France, Germany and Switzerland). Improvement in backlogs in North America provided visibility.
→ Digital penetration rate at 31% of sales in Q1 24, up +273bps
→ Continued focus on margin resilience, leveraging the key initiatives of the Power Up 2025 plan
→ Active capital allocation in the quarter
- Solid M&A pipeline
- End-April, Rexel reached an agreement to acquire Itesa, reinforcing its position in the security & communication business in France
- Share buyback for €23m in the quarter, or €223m on a cumulative basis since the launch of the plan
→ 2024 outlook confirmed: Stable to slightly positive same-day sales growth with high comparable base in H1 2024, adjusted EBITA margin between 6.3% and 6.6% and conversion of free cash flow before interest and tax above 60%
Guillaume TEXIER, Chief Executive Officer, said:
“Rexel delivered a solid performance in the first quarter, amidst an anticipated more challenging environment. Our core electrical distribution business, excluding electrification categories and cables, was resilient, supported by healthy demand in non-residential markets and industrial automation as well as positive pricing on non-cable products. Electrification activities were impacted as expected by a high 2023 comparable base but continued to grow by double digits over two years. The start of the year is in line with our expectations and demonstrates the solidity and resilience of our model, allowing us to confirm our 2024 guidance. We are also announcing an acquisition in France focused on the datacom/security space. Rexel continues to focus on value-enhancing acquisitions to strengthen its growth profile and increase its exposure to secular trends.”
Sales review for the period ended March 31, 2024
- Unless otherwise stated, all comments are on a constant and adjusted basis and, for sales, at same number of working days.
SALES
In Q1, sales were down (4.5)% year-on-year on a reported basis and (4.6)% on a constant and same-day basis.
| Key figures ($m) | Q1 2024 | YoY change |
| Sales on a reported basis | 5,027.43 | (4.5) % |
| On a constant and actual-day basis | (6.0) % | |
| On a constant and same-day basis | (4.6) % |
In the first quarter 2024, Rexel posted sales of $5,027.43m, down (4.5)% on a reported basis, supported by the scope effect. They include:
- Constant and same-day sales evolution of (4.6)%, including a (3.1)% contribution from volume, a stable selling price on non-cable products and a negative price of (1.5)% on cable products
- A calendar effect of (1.5)%, which will reverse in the course of the year
- A positive net scope effect of +2.2%, mainly resulting from the Wasco acquisition in the Netherlands, completed in September 2023
- A negative (0.5)% currency effect, mainly due to the depreciation of the US dollar against the euro
| % mix 2024 | SD sales growth | ow price | ow volume | |
| Core ED | 63 % | (0.8) % | +0.7% | (1.5) % |
| Electrification | 22 % | (11.7) % | (1.9) % | (9.8) % |
| Cable | 15 % | (8.2) % | (9.4) % | +1.2% |
| Total | 100 % | (4.6) % | (1.5) % | (3.1) % |
On a constant and same-day basis, sales were down (4.6)% (or (6.0)% on a constant and actual-day basis). More specifically:
- The four product categories related to electrification (Solar, Electric Vehicle charging infrastructure, HVAC and Industrial Automation), represented 22%1 of sales and decreased by (11.7)% in Q1 (group contribution: -280bps) as a result of a challenging comparable base, a negative price effect in solar panels and lower demand. In particular, the lack of visibility on government regulations and low electricity prices have temporarily reduced the immediate payback from installing photovoltaic solutions. Overall, the longer-term growth drivers remain intact, notably driven by the net zero agendas and government policies.
- The pricing environment for non-cable products (stable contribution in the quarter) was favorable for the majority of our offer and more than offset the temporary negative carryover effect on limited categories of non-cable products (solar panels and some Industrial Automation products in China). Restated for electrification, non-cable prices were up +0.7% in the quarter.
1 Including positive scope effect and added product categories (notably in HVAC segment)
- The cable price contribution stood at (1.5)% in Q1 2024, due to a high comparable base (copper prices hit a year-high in Q1 23) and price normalization largely in North America, which started end of Q2 2023.
- We posted further growth in digitalization in all three geographies, with digital sales now representing 31% of sales in Q1 2024, up +273bps compared to Q1 2023. Europe reached 42% of digital sales (up +381bps), North America is now at 21% (up +200bps) and Asia-Pacific is at 8% of sales, up +244bps.
Europe (52% of Group sales): (6.9)% in Q1 on a constant and same-day basis
In the first-quarter, sales in Europe decreased by (4.0)% on a reported basis, including:
- Constant and same-day sales evolution of (6.9)%. This includes a negative volume contribution of (5.3)%, reflecting the high comparable base from electrification, notably solar. Selling price contributed negatively for (1.6)% ((0.6)% on non-cable products and (1.0)% on cable products).
- A negative calendar effect of (1.5)%
- A positive net scope effect of +4.3%, resulting from the recent acquisition of Wasco in the Netherlands, offsetting the disposal of Rexel’s business in Norway
- A positive currency effect of +0.5%, mainly due to the appreciation of the Swiss Franc and British pound against the euro
| Key figures (€m) | % of the region’s sales | Q1 2024 | YoY change |
| Europe | 2,425.6 | (6.9) % | |
| ow France | 39% | 940.8 | (1.9) % |
| Benelux | 17% | 409.5 | (10.6) % |
| Germany | 10% | 248.1 | (10.1) % |
| UK | 9% | 210.3 | (6.2) % |
| Nordics | 8% | 193.5 | (19.9) % |
| Switzerland | 7% | 181.1 | +8.1 % |
More specifically:
- Restated for electrification and cable, core ED business was down a limited (3.2)%, contributing for -200bps, with positive pricing.
- Electrification categories were down (17.6)% (contributing for -400bps), notably explained by solar activity
- Cable pricing contributed for -100bps in the quarter
Looking at trends by country:
- Sales in France decreased slightly by (1.9)%, including several effects:
- Further market share gains driven by numerous initiatives aiming at providing valuable and differentiated services to our customers
- Demand from small contractors, especially in heat pumps, temporarily impacted by lack of visibility on regulation.
- Benelux, Germany, the Nordics and Austria faced a high base effect on electrification, notably solar.
- The integration of Wasco is in line with plan. The business was resilient in the quarter, driven by a favorable regulatory environment
- In the UK, sales were down (6.2)%, or down a limited (1.6)% restated for the contribution of a large public project with the Department of Education (DofE). Our new automated distribution center, which opened in mid-2023, allowed us to gain market share in the London area.
- Sales in Switzerland stood at +8.1%, further gaining market share with positive momentum in all markets.
North America (42% of Group sales): (1.1)% in Q1 on a constant and same-day basis
In the first-quarter, sales in North America were down (3.7)% on a reported basis, including:
- Constant and same-day sales growth of (1.1)%, including a stable volume contribution of +0.1%, positive pricing contribution of +1.1% on non-cable products, and (2.3)% on cable products.
- A negative calendar effect of (1.5)%
- A negative currency effect of (1.1)%, mainly due to the depreciation of the US and Canadian dollars against the euro
| Key figures (€m) | % of the region’s sales | Q1 2024 | YoY change |
| North America | 1,995.9 | (1.1) % | |
| ow United States | 82 % | 1,634.2 | (1.5) % |
| Canada | 18 % | 361.7 | +1.0% |
In North America, the overall good performance was driven by our capacity to capture reshoring trends and to enhance backlog execution.
- Core ED business, excluding electrification and cables, was up +2.4%, contributing for +150bps
- Electrification categories were down a limited (3.2)% (contributing for -70bps), with positive trends in EV charging stations notably driven by a contract with US Postal, and resilient industrial automation activity, offsetting lower demand in solar, mostly in California
- Non-cable prices excluding electrification were positive (contributing for +40bps) and cable prices were negative (contributing for -230bps).
Specifically, in our 2 countries :
- In the US, slight decline in same-day sales evolution at (1.5)% in Q1 2024
- By market: Resilience in non-residential and industrial automation. Residential (7% of sales) remains challenging
- By region: Positive momentum in Southeast region (incl. Mayer) and in Florida
- By business: Project activity driven by strong backlog execution
- US backlog is up 4% vs Q4 2023, notably driven by datacenter, retail, water/wastewater and entertainment. It is equivalent to 2.5 months of sales. It remains at a high level, combining good execution in the quarter and strong order intake.
- In Canada, sales were up +1.0% on a same-day basis, notably thanks to project activity in the non-residential segment. Utilities and mining markets contributed positively to the quarter while industrial automation was resilient in the quarter.
- Canada backlog is stable vs Q4 2023 and equivalent to 3.6 months of sales.
Asia-Pacific (6% of Group sales): (7.7)% in Q1 on a constant and same-day basis
In the first-quarter, sales in Asia-Pacific were down (13.2)% on a reported basis, including:
- Constant and same-day sales evolution of (7.7)%, including a negative volume contribution of (5.5)%, and a negative price effect of (2.2)% ((2.1)% on non-cable products and a broadly stable contribution of (0.2)% on cable products)
- A negative calendar effect of (0.8)%
- A negative currency effect of (5.1)%, mainly due to the depreciation of the Australian dollar and the Chinese Renminbi against the euro.
| Key figures (€m) | % of the region’s sales | Q1 2024 | YoY change |
| Asia-Pacific | 285.9 | (7.7) % | |
| ow Australia | 48 % | 136.2 | +1.3% |
| China | 36 % | 103.5 | (19.9) % |
- In the Pacific, sales decreased by (1.9)% on a constant and same-day basis:
- In Australia, sales were up +1.3%, driven by residential and small-and mid-size electricians, notably. Backlog remain solid, leveraging improved customer services. Electrification contributed positively.
- In New Zealand, sales dropped by (17.6)% in Q1 24 in a recessionary environment for the past four quarters.
- In Asia, sales declined by (14.1)% on a constant and same-day basis:
- In China, same-day sales declined (19.9)%, reflecting weak market demand coupled with a temporary oversupply situation in industrial automation activity since mid-2023, driving negative prices and volumes. In addition, the quarter faced a challenging base effect as Q1 2023 benefited from the re-opening of the country post-Covid lockdown in Q4 22.
- In India, sales were up 25.0% on strong industrial demand.
Rexel enters into an agreement to buy Itesa, a specialist in security solutions in France
Rexel announces it has reached an agreement to acquire Itesa, a leading B to B distributor of security solutions in France.
Itesa is well positioned with a network of 15 branches in France and generated turnover of EUR 78 million in 2023 through a strong presence in the alarm and video segments, accounting for close to 75% of its sales. Headquartered in Marseille and founded in 1978, Itesa is a family-owned business and has 158 employees.
The transaction is projected to be accretive to Rexel’s earnings per share in year 1 and value-creating in year 2, fully in line with the Group’s commitment.
The transaction remains subject to the French competition authority and is expected to close in H2.
Outlook
We confirm our full-year objectives. We anticipate for 2024, at comparable scope of consolidation and exchange rates:
- Stable to slightly positive same-day sales growth, with a high comparable base in H1
- Adjusted EBITA1 margin of between 6.3% and 6.6%
- Free cash flow conversion2 above 60%
1 Excluding (i) amortization of PPA and (ii) the non-recurring effect related to changes in copper-based cable prices.
2 FCF Before interest and tax/EBITDAaL
NB: The estimated impacts per quarter of (i) calendar effects by geography, (ii) changes in the consolidation scope and (iii) currency fluctuations (based on assumptions of average rates over the rest of the year for the Group’s main currencies) are detailed in appendix 2
CALENDAR
May 15, 2024 Detachment date of the dividend
May 17, 2024 Dividend payment
June 7, 2024 Capital Markets Day in Paris
July 30, 2024 H1 2024 results
October 30, 2024 Q3 2024 sales
FINANCIAL INFORMATION
A slideshow of the first-quarter 2024 sales is available on the Group’s website.
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