In the midst of economic turbulence, electrical equipment manufacturer Legrand has distinguished itself with a remarkable financial rise. Financial results for the first nine months of 2023 show a substantial 15.5% increase in net income. This increase, albeit moderate, bears witness to a notable resilience in a building sector that is not enjoying the same dynamism.
Resilience in a slowing building sector
These results are all the more significant for the company’s ability to weather the headwinds of a complex market. With sales of 6.907 billion euros, the Group posted growth of 2.5%, driven mainly by organic growth of 3.7% and a positive scope effect of 1.3%. Nevertheless, performance could have been even better had it not been for the negative repercussions of exchange rate fluctuations and the strategic withdrawal from Russia, representing shortfalls of 2.4% and 0.7% respectively. Excluding these items, sales growth would be 5.8%, according to Legrand executives.
Successful strategies and smart investments
The European panorama, which accounts for 42% of Group sales, saw a 7.1% organic increase in sales, contrasting with a slight decline of 1.6% in the US market. These figures reveal a double-sided commercial reality, where performance in Europe compensates for slowdowns on the other side of the Atlantic.
Legrand’s momentum is also due to its investment in high value-added segments such as energy efficiency, connected products and the datacenter sector. This strategic choice, combined with a fine-tuned pricing policy and a series of judicious acquisitions – most recently ZPE Systems, a US player specializing in datacenter equipment – consolidates its market position.
Prudent but optimistic forecasts for 2023
Legrand CEO Benoît Coquart expressed marked satisfaction with these “very solid results”, which contrast with the less favorable overall situation in the building sector. Legrand’s adjusted operating income improved by 1.4 points to 21.6%. This figure gains in importance if we exclude monetary impacts and Russia’s disengagement, revealing an increase of 1.7 points.
In the light of these factors, Legrand’s projections for the full year 2023 have been clarified. The company now anticipates a sales increase of around 5%, cautiously positioned at the lower end of July’s forecasts but higher than those of February. Adjusted operating margin is expected to be between 20.5% and 21%, underlining a positive trend compared with previous estimates.
