Strong growth in sales and financial results
in first half
Organic rise in sales: +22.6%
Adjusted operating margin: 22.0% of
sales
Rise in net profit: +68%
Full-year 2021 targets revised
2 new acquisitions announced1
Regulatory News:
Benoît Coquart, Legrand’s (Paris:LR) Chief Executive Officer,
commented:
“Legrand reported first-half 2021 revenues of €3.5 billion,
rising a steep +21.9% year on year and +7.0% over two years. This
performance was driven primarily by organic growth in sales of
+22.6% from the first half of 2020, or +3.9% over two years, and it
confirmed:
- continued improvements in Legrand’s
competitive positions in its markets; and - our capacity to take
full advantage of opportunities for growth in buoyant segments
linked to the buildings of tomorrow.
Adjusted operating margin came to 22.0% of sales. Net profit
also increased by a very good +68% from the first half of 2020.
These high-quality results and the success of initiatives
deployed since the beginning of the health crisis testify to the
relevance of Legrand’s unique model for profitable and responsible
value creation.
Our Group has continued to strengthen its fundamentals by
investing in innovation – including roll-out of a host of new
products since the beginning of the year, among them the Classe 300
EOS with Netatmo connected door entry system and the wireless and
battery-less connected switch – and announcing two new acquisitions
in our core businesses as well as in electric mobility. We have
also confirmed our ESG commitments with the publication of our
latest materiality survey results and the SBTi2’s recent validation
of our carbon emissions reduction trajectory, which is aligned on
holding global warming to 1.5°C3.”
Full-year 2021 targets revised4
Given very good first-half showings, but also a persistently
uncertain health environment and strong and rising pressure on
upstream supply chains, Legrand is now aiming for the following
full-year targets:
- organic growth in sales of at least +10%; - a scope of
consolidation effect of +3%; - an adjusted operating margin of
about 20% of sales (including acquisitions consolidated in
2021).
The Group also aims to achieve at least 100% of its CSR roadmap
for 2021, testifying to its ongoing deployment of a bold and
exemplary ESG approach, with a particular focus on the fight
against global warming and the promotion of diversity.
Financial performance at June 30, 2021
Key figures
Consolidated data
(€ millions)(1)
1st half 2020
1st half 2021
Change
Sales
2,832.6
3,453.4
+21.9%
Adjusted operating profit
496.9
761.4
+53.2%
As % of sales
17.5%
22.0%
22.4% before acquisitions(2)
Operating profit
449.8
716.2
+59.2%
As % of sales
15.9%
20.7%
Net profit attributable to the Group
285.7
481.3
+68.5%
As % of sales
10.1%
13.9%
Normalized free cash flow
469.7
577.4
+22.9%
As % of sales
16.6%
16.7%
Free cash flow
258.9
571.3
+120.7%
As % of sales
9.1%
16.5%
Net financial debt at June 30
3,109.1
2,545.3
-18.1%
- See appendices to this press release for definitions and
indicator reconciliation tables.
- At 2020 scope of consolidation.
Consolidated sales
In the first half of 2021, sales rose +21.9% from the first half
of 2020 to total €3,453.4 million.
Organic growth was +22.6% over the period, including +19.4% in
mature countries and +32.8% in new economies.
The impact of the broader scope of consolidation was +4.6%.
Based on acquisitions completed in 2020 and their dates of
consolidation, this effect is expected to reach +2.5% full
year.
The exchange-rate effect on sales in the first half of 2021 was
-4.9%. Based on average exchange rates in June 2021, the full-year
exchange-rate effect on sales should be about -3% in 2021.
Changes in sales by destination at constant scope of
consolidation and exchange rates broke down as follows by
region:
1st half 2021 / 1st half
2020
2nd quarter 2021 / 2nd quarter
2020
Europe
+30.6%
+52.4%
North and Central America
+11.7%
+18.7%
Rest of the world
+31.0%
+32.3%
Total
+22.6%
+33.3%
These changes are analyzed below by geographical region:
- Europe (42.5% of Group revenue): organic growth was
+30.6% in the first half of 2021.
In Europe’s mature countries (36.7% of Group revenue), sales
rose +32.1%, with organic growth of +55.6% in the second quarter
alone. In the first six months of the year, many countries – in
particular France and Italy – reported sales up sharply from 2020.
While benefiting from favorable bases for comparison, these gains
reflect many commercial successes; including user interfaces and
power protection solutions in France, connected offerings in Italy,
and, more broadly, datacenter ranges in Europe.
Sales in Europe’s new economies were up +23.0% organically from
the first half of 2020, and up +36.2% in the second quarter alone,
with very good showings in Turkey and in most countries in Eastern
Europe.
- North and Central America (37.7% of Group revenue):
sales increased +11.7% in the first half of 2021 at constant scope
of consolidation and exchange rates.
In the United States alone (34.5% of Group revenue), the organic
rise in sales was +9.9% over the first half of the year and +15.3%
in the second quarter alone. Since the beginning of the year,
business has been driven by sustained demand in residential
offerings and in datacenters. Sales in other non-residential
applications were nearly unchanged over the first half from the
first half of 2020.
Sales rose sharply in both Mexico and Canada in the first
half.
- Rest of the world (19.8% of Group revenue): first-half
sales marked an organic rise of +31.0% from the first half of
2020.
In Asia-Pacific (12.4% of Group revenue), 2021 first-half sales
rose +27.4%, including +19.1% in the second quarter. Over the
six-month period, China saw double-digit growth. In India, sales
rose sharply but were nonetheless down over 2 years against a
deteriorated pandemic background. Sales rose in Australia.
In Africa and the Middle East (3.7% of Group revenue), sales
rose +22.5% from the first half of 2020, and were up +26.2% from
the second quarter of 2020. Over the six-month period, sales rose
in the Middle East and marked a very steep increase in Africa.
In South America (3.6% of Group revenue), sales increased +55.6%
in the first half and were up +126.4% in the second quarter, with
significant growth in main countries in the region.
Adjusted operating profit and margin
In the first half of 2021, adjusted operating profit came to
€761.4 million, up +53.2%, setting adjusted operating margin at
22.0% of sales over the period.
Before acquisitions (at 2020 scope of consolidation), adjusted
operating margin reached 22.4% in the first half of 2021, a +4.9
points rise from the first half of 2020.
This increase in profitability reflected in particular leverage
linked to the combined impact of strong sales growth and a
selective resumption of costs. At the same time, the rise in raw
material and component costs continued to accelerate. It was close
to +4% in the first quarter of 2021 and over +9% in the second
quarter of 2021.
Net profit attributable to the Group
In the first half of 2021, net profit attributable to the Group
increased +68.5% and stood at €481.3 million. This €195.6 million
increase from the first half of 2020 came mainly from:
- strong growth in operating profit (+€266 million);
- favorable trends (+€6 million) in financial results; and
- the increase (-€77 million) in the Group’s corporate income
tax linked to the rise in profit before tax (the corporate tax rate
was stable at 28.5% in the first half of 2021).
Cash generation and balance sheet structure
Cash flow from operations – €697.8 million – came to 20.2% of
2021 first-half sales, a rise of +4.5 points from the same period
of 2020.
Normalized free cash flow stood at €577.4 million or 16.7% of
sales, up +22.9%.
Rising steeply from 2020, free cash flow stood at 16.5% of sales
in the first half of 2021.
The balance sheet remained solid with the ratio of net debt to
EBITDA5 at 1.5 at the end of June 2021.
2 New acquisitions announced
Following three acquisitions announced in early 20216 (Champion
One, Compose and Borri), Legrand is continuing its strategy of
targeted external growth with two new acquisitions announced
today:
- Ensto Building Systems7, the Finnish leader
in low-voltage solutions, offers a comprehensive range of
electrical and digital infrastructure products – from enclosures
and boxes to user interfaces, heating controls, lighting, cable
trays, charging stations for electric vehicles and more. This
acquisition significantly strengthens Legrand’s presence in
Northern Europe, specifically Scandinavia, and rounds out the
Group’s existing strong positions in Southern and Eastern Europe.
Based in Porvoo (Finland), Ensto Building Systems has some 500
employees and annual revenues of around €120 million; and
- Ecotap, a front-running Dutch specialist in
alternating and direct-current electric vehicle chargers for homes,
businesses and public charging points. Based in Boxtel
(Netherlands), Ecotap has a workforce of around 60 and expects to
report 2021 revenues of around €40 million, generated primarily in
the Netherlands and in Germany.
These two new acquisitions strengthen Group positions both in
core businesses and in segments driven by the rise in green
mobility and the fight against climate change.
-----------------
The consolidated financial statements for the first half of 2021
that were subject of a limited review by the Group’s auditors were
adopted by the Board of Directors at its meeting on July 29, 2021.
These consolidated financial statements, a presentation of 2021
first-half results and the related teleconference (live and replay)
are available at www.legrandgroup.com.
Key financial dates:
- Capital Markets Day: September 22, 2021
- 2021 nine-month results: November 4, 2021 “Quiet
period8” starts October 5, 2021
- 2021 annual results: February 10, 2022 “Quiet period1”
starts January 11, 2022
- General Meeting of Shareholders:May 25, 2022
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
sustainable growth driven by acquisitions and innovation, with a
steady flow of new offerings—including Eliot* connected products
with enhanced value in use. Legrand reported sales of €6.1 billion
in 2020. The company is listed on Euronext Paris and is notably a
component stock of the CAC 40 and CAC 40 ESG indexes. (code ISIN
FR0010307819).
https://www.legrandgroup.com
*Eliot is a program launched in 2015 by Legrand to speed up
deployment of the Internet of Things in its offering. A result of
the group’s innovation strategy, Eliot aims to develop connected
and interoperable solutions that deliver lasting benefits to
private individual users and professionals.
https://www.legrandgroup.com/en/group/eliot-legrands-connected-objects-program
Appendices
Glossary
Adjusted operating profit: Adjusted operating profit is
defined as operating profit adjusted for amortization and
depreciation of revaluation of assets at the time of acquisitions
and for other P&L impacts relating to acquisitions and, 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
H1 2020
H1 2021
Trade receivables
731.1
789.2
Inventories
879.7
987.6
Other current assets
224.9
230.2
Income tax receivables
60.5
63.6
Short-term deferred taxes
assets/(liabilities)
90.8
106.7
Trade payables
(549.1)
(763.8)
Other current liabilities
(612.9)
(695.7)
Income tax payables
(41.5)
(43.4)
Short-term provisions
(119.7)
(140.9)
Working capital requirement
663.8
533.5
Calculation of net financial debt
In € millions
H1 2020
H1 2021
Short-term borrowings
1,625.6
1,641.9
Long-term borrowings
4,154.7
3,869.2
Cash and cash equivalents
(2,671.2)
(2,965.8)
Net financial debt
3,109.1
2,545.3
Reconciliation of adjusted operating profit with profit for
the period
In € millions
H1 2020
H1 2021
Profit for the period
285.8
481.2
Share of profits (losses) of
equity-accounted entities
0.9
0.0
Income tax expense
114.3
191.7
Exchange (gains) / losses
6.5
0.9
Financial income
(3.6)
(3.3)
Financial expense
45.9
45.7
Operating profit
449.8
716.2
Amortization & depreciation of
revaluation of assets at the time of acquisitions and other P&L
impacts relating to acquisitions
47.1
45.2
Impairment of goodwill
0.0
0.0
Adjusted operating profit
496.9
761.4
Reconciliation of EBITDA with profit for the period
In € millions
H1 2020
H1 2021
Profit for the period
285.8
481.2
Share of profits (losses) of
equity-accounted entities
0.9
0.0
Income tax expense
114.3
191.7
Exchange (gains) / losses
6.5
0.9
Financial income
(3.6)
(3.3)
Financial expense
45.9
45.7
Operating profit
449.8
716.2
Depreciation and impairment of tangible
assets (including right-of-use assets)
92.4
88.9
Amortization and impairment of intangible
assets (including capitalized development costs)
65.1
61.6
Impairment of goodwill
0.0
0.0
EBITDA
607.3
866.7
Reconciliation of cash flow from operations, free cash flow
and normalized free cash flow with profit for the period
In € millions
H1 2020
H1 2021
Profit for the period
285.8
481.2
Adjustments for non-cash movements in
assets and liabilities:
Depreciation, amortization and
impairment
159.1
152.3
Changes in other non-current assets and
liabilities and long-term deferred
taxes
34.0
64.3
Unrealized exchange (gains)/losses
(15.7)
3.6
(Gains)/losses on sales of assets, net
(15.9)
(3.4)
Other adjustments
(1.6)
(0.2)
Cash flow from operations
445.7
697.8
Decrease (Increase) in working capital
requirement
(161.6)
(76.1)
Net cash provided from operating
activities
284.1
621.7
Capital expenditure (including capitalized
development costs)
(46.0)
(58.7)
Net proceeds from sales of fixed and
financial assets
20.8
8.3
Free cash flow
258.9
571.3
Increase (Decrease) in working capital
requirement
161.6
76.1
(Increase) Decrease in normalized working
capital requirement
49.2
(70.0)
Normalized free cash flow
469.7
577.4
Scope of consolidation
2020
Q1
H1
9M
Full year
Full consolidation method
Jobo Smartech
Balance sheet only
6 months
9 months
12 months
Focal Point
Balance sheet only
Balance sheet only
7 months
10 months
Borri9
Balance sheet only
Champion One
Balance sheet only
Compose
Balance sheet only
2021
Q1
H1
9M
Full year
Full consolidation method
Jobo Smartech
3 months
6 months
9 months
12 months
Focal Point
3 months
6 months
9 months
12 months
Borri1
3 months
6 months
9 months
12 months
Champion One
Balance sheet only
6 months
9 months
12 months
Compose
Balance sheet only
6 months
9 months
12 months
Ensto Building Systems10
To be determined
To be determined
Ecotap
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 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).
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 shares in any
jurisdiction.
1 Subject to standard conditions precedent for the acquisition
of Ensto Building Systems. 2 The Science-Based Targets initiative
(SBTi) creates a clearly-defined path and ambitious targets for
private-sector businesses to limit global warming. For more
information, visit https://sciencebasedtargets.org 3 For more
information, readers are referred to the press release dated July
2, 2020. 4 For more information, readers are referred to the press
releases dated May 6, 2021 and February 11, 2021. 5 Based on EBITDA
for the last 12 months. 6 For more information, readers are
referred to the press release dated February 11, 2021. 7 Subject to
standard conditions precedent. 8 Period of time when all
communication is suspended in the run-up to publication of results.
9 Borri, an Italian UPS specialist, which was until 2020
consolidated on the equity method. 10 Subject to standard
conditions precedent.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729006129/en/
Investor relations Legrand Ronan Marc Tel: +33 (0)1 49 72
53 53 ronan.marc@legrand.fr
Press relations Publicis Consultants Laurence Bault Mob:
+33 (0)7 85 90 63 36 laurence.bault@publicisconsultants.com
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