LIMOGES, France — Legrand NA today announced results for the first nine months of 2021.
Benoît Coquart, Legrand’s Chief Executive Officer, commented: “Sales for the first nine months of the year were up +15.0% year on year, i.e. +5.7% over two years. This performance included a strong +16.0% organic rise year on year, with a +4.4% increase over two years, confirming Legrand’s continued capacity to improve its competitive positions on its markets as pressures built on supply chains.
“In the first nine months of 2021, adjusted operating margin came to 21.4% and net profit rose by +42%, or +12% over two years.
“These very good results testify once again to the soundness and relevance of our unique model for value creation, where our mid-term ambitions – particularly in faster expanding segments such as datacenters, connected products in the Eliot program, and energy efficiency programs – were presented in detail to investors at our Capital Markets Day on September 22.”
Full-year 2021 targets specified
Given solid showings in the first nine months of the year, but also significant pressure on supply chains with a volatile pandemic environment, Legrand is now aiming for the following full-year targets:
— organic growth in sales of between +11% and +13%, compared to at least +10% previously;
— a scope of consolidation effect of nearly +3%;
— an adjusted operating margin of between 20.0% and 20.5% of sales (including acquisitions consolidated in 2021), compared to about 20% previously.
The Group also aims to achieve at least 100% of its CSR roadmap for 2021, testifying to its ongoing deployment of a bold, exemplary approach to ESG, with a particular focus on the fight against global warming and the promotion of diversity.
Consolidated sales
In the first nine months of 2021, sales rose +15.0% from the same period of 2020 to total €5,169 million.
Organic growth was +16.0% over the period, including +13.2% in mature countries and +24.7% in new economies.
The impact of the broader scope of consolidation was +2.7%.
The exchange-rate effect on sales in the first nine months of 2021 was -3.4%. Based on average exchange rates in September 2021, the full-year exchange-rate effect on sales should be about -2.5% in 2021.
Pressure on supply chains intensified in the third quarter of the year.
These changes are analyzed below by geographical region:
— Europe (40.9% of Group revenue): organic growth was +21.8% compared with the first nine months of 2020.
In Europe’s mature countries (35.0% of Group revenue), sales rose +22.3% in the first nine months of the year, including +4.3% in the third quarter alone. Over the nine-month period, drivers of this steep rise included strong showings in France and Italy, with many commercial successes, notably in faster expanding segments (connected products; solutions for datacenters and energy efficiency).
Sales in Europe’s new economies rose +19.2% organically compared with the first nine months of 2020, including +11.9% in the third quarter alone, with very good showings in Turkey and in Eastern Europe over the nine-month period.
— North and Central America (38.8% of Group revenue): sales increased +7.9% at constant scope of consolidation and exchange rates in the first nine months of 2021.
In the United States alone (35.5% of Group revenue), sales rose +6.0% in the first nine months of 2021 and were slightly down (-0.9%) in the third quarter alone. Over the first nine months of the year, these trends reflect in particular marked sales increase in solutions for datacenters and for residential spaces, while demand from other non-residential spaces grew slightly.
Sales showed a substantial rise over the nine-month period in both Mexico and Canada.
— Rest of the world (20.3% of Group revenue): Sales marked an organic rise of +22.4% from the first nine months of 2020.
In Asia-Pacific (12.9% of Group revenue), sales rose +18.9% in the first nine months of 2021 and +5.4% in the third quarter alone. Compared with the first nine months of 2020, sales showed double-digit growth in China and India and were steady in Australia.
In Africa and the Middle East (3.7% of Group revenue), sales rose +16.6% from the first nine months of 2020 and gained +5.7% in the third quarter alone. Over nine months, the region’s performance was buoyed by strong gains in Africa.
In South America (3.7% of Group revenue), sales increased +43.1% in the first nine months of 2021 and +22.8% in the third quarter, with continued significant growth in main countries in the region.
Adjusted operating profit and margin
In the first nine months of 2021, adjusted operating profit came to €1,107 million, up +31.5%, setting adjusted operating margin at 21.4% of sales over the period.
The adjusted operating margin before acquisitions (at 2020 scope of consolidation), was 21.6% in the first nine months of 2021, up +2.9 points from the first nine months of 2020.
Despite raw materials and components inflation reaching nearly +10% over the nine-month period (including nearly +15% in the third quarter alone), this increase in profitability reflected in particular strong leverage on expenses together with Group pricing initiatives.
Net profit attributable to the Group
At September 30, 2021, net profit attributable to the Group increased +41.7%, to €699 million. The €206 million rise from the first nine months of 2020 came primarily from:
— strong growth in operating profit (€271 million);
— favorable trends (€9 million) in financial results; and
— an increase (€76 million) in the Group’s corporate income tax mainly linked to the rise in profit before tax (the corporate tax rate at 28.5% for the first nine months of 2021 slightly decreased from the first nine months of 2020).
Cash generation and balance sheet structure
Cash flow from operations (€1,016 million) came to 19.7% of sales over the first nine months of 2021, a rise of +2.3 points from the same period of 2020.
Normalized free cash flow stood at €859 million, or 16.6% of sales, up +11.1%.
Free cash flow came to 15.0% of sales in the first nine months of 2021.
The Group successfully launched its first Sustainability-Linked 10-year bond for an amount of €600 million, indexed on its carbon neutrality trajectory and the Group’s 2030 targets for reducing greenhouse gas emissions as validated by SBTi.
Ambition reaffirmed at last Capital Markets Day: accelerate value creation
On September 22, 2021, the Group’s Executive Committee hosted a virtual Capital Markets Day that was broadcast live from its head office in Limoges, France.
Legrand confirmed mid-term targets announced on February 111 and presented its strategic roadmap, which is based on:
— the strong pillars underpinning the Group’s unique business model (leadership positions, innovation, bolt-on acquisition strategy, management processes, entrepreneurial spirit and more) delivering a solid financial and ESG performance;
— the acceleration of growth initiatives, including a rise in the contribution to sales of faster expanding segments (datacenters, connected products in the Eliot program, and energy efficiency programs) from 31% at the end of 2020 to 50% in the mid-term, and ongoing value-creating acquisitions;
— a continued focus on operational excellence, talent promotion, and employee engagement (80% engagement in 2021, a steep rise from 2017);
— the deployment of a bold, exemplary approach to ESG, with a particular focus on fighting global warming and promoting diversity. This is driven by demanding CSR roadmaps, with the fifth starting in 2022.
The full event presentation and replay webcast can be found on Legrand’s website with the following link: https://www.legrandgroup.com/en/investors-and-shareholders/investor-day/capitalmarkets-day-2021.
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