Gilles Schnepp, Chairman and CEO of Legrand, made the following comments:
Sales
Legrand sales in the first nine months of 2015 came to nearly €3.6 bn, up +7.1% in total, with the United States/Canada region in particular reporting a +32.1% total rise in sales. Consolidated sales benefited from a favorable exchange-rate effect of +5.7% and a broader scope of consolidation resulting from acquisitions that contributed +0.9%.
The organic change in consolidated sales in the first nine months remained quasi-stable at +0.4%, reflecting:
- Continued good showings in the United States/Canada region, where teams continue to develop Legrand’s positions in a market that is doing well
- Rising sales in several mature countries in Europe, including Spain, the United Kingdom and Germany; confirmed stabilization of business in Italy; and persistently less upbeat market conditions in some other mature economies, in particular France
- Varied situations in new economies, with growth in particular in India, Poland, Turkey, Saudi Arabia, Mexico and Colombia that did not completely offset the decline observed since the beginning of the year in some other countries, notably Brazil, China and Russia—all affected by current economic conditions.
Results
Adjusted operating income came to €700.9 million in the first nine months of 2015, up +6.1% from the same period of 2014. This reflects the group’s value creation, driven in particular by strong growth in results in the United States/Canada region. Adjusted operating margin before acquisitions came to 19.8% of sales (19.7% after acquisitions). Facing business environments that remain highly differentiated from one country to the next, Legrand is continuing its initiatives to improve productivity and adapt where necessary.
Net income excluding minorities rose +4.9% to €416.2 million in the first nine months of 2015, or 11.7% of sales.
Over the same period, generation of normalized free cash flow stood at 13.5% of sales, in keeping with the group’s ambition of recording normalized free cash flow at between 12% and 13% of sales on an annual basis. This solid performance illustrates once again the group’s capacity to generate free cash flow over the long term.
2015 Targets Confirmed and Specified
- Legrand confirms its 2015 target for organic change in sales and is now aiming for “between -1% and +1%”.
- Legrand also confirms its 2015 target for adjusted operating margin before acquisitions and is now aiming for “at least 19.0%”.
- Legrand will also pursue its strategy of value-creating acquisitions.
Ongoing Development Initiatives
Since the beginning of the year, Legrand has pursued initiatives aimed at developing its market positions over the long term. In the first nine months of 2015, the company thus announced three acquisitions—together representing over €130 million in annual sales—in digital infrastructure and energy efficiency, both new business segments offering strong growth potential. The group has also continued its innovation efforts, launching many new products, particularly in Italy and India.
In July 2015, Legrand launched its Eliot program aimed at speeding up deployment of the Internet of Things in its offering and thus making Legrand an active player in the emergence of the promising market of connected buildings. As part of this program, Legrand has launched new offerings with connected functions such as Valena Life and Driver Manager, and announced it is working with other Internet of Things players including Nest Inc. and La Poste.
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