French electrical equipment maker Legrand on Thursday maintained its cautious annual targets after a 9% rise in sales and 28% increase in net profit in the first quarter.
On sales of 2.2 billion euros, the group based in Limoges (central France) generated 331 million euros in net profit, demonstrating, according to CEO Benoît Coquart, quoted in a press release, “the group’s strong resilience in an uncertain and changing environment, marked in particular by the weakness of the residential markets.
Activity was up on Legrand’s flagship products, including those related to energy efficiency, IT data centers or connected products, while Mr. Coquart considers the redisplay market hole “cyclical rather than structural,” he said on a conference call.
Excluding the effects of acquisitions, the withdrawal from Russia and exchange rates, revenues rose by 7.4% year-on-year, with increases in all geographies: +10.7% in Europe (44% of Group revenues), +3.5% in North and Central America (38%) and +7.9% elsewhere. In the United States in particular, the “double-digit decline” in the residential market was “offset by a marked growth in sales” of products for data centers, according to Legrand. For the quarter, “the high level of profitability of the group” reflects “a solid control of costs and sales prices in a still inflationary context” with an increase of nearly 2% in costs related to component purchases.
Regarding the supply chains “everything is back in order except for some electronic components including microcontrollers,” noted Coquart. For the year, the company is targeting sales growth (excluding currency effects) of between +2% and +6%, which includes acquisitions representing “around +3%” — an unchanged target even though Legrand “has taken a bit of a lead in terms of sales as well as margins,” according to the CEO. The turnover had reached 8.3 billion euros (+19%), for a net profit of nearly one billion euros.
In a context of crisis and soaring energy prices, sales of energy efficiency equipment are particularly dynamic, especially in Europe: thermostats, equipment to reduce consumption, etc. Legrand also benefited last year from several acquisitions. “We have a lot of discussions underway and we will be announcing additional acquisitions in the coming quarters,” said the CEO, predicting “a good pace of acquisitions” and this “regardless of the interest rate environment.
