Legrand SA (LGRDY) (H1 2024) Earnings Call Highlights: Navigating Challenges with Strategic ...

GuruFocus News
4 min read

In This Article:

  • Sales Decrease: -0.7% excluding exchange rate in Russia for H1 2024.

  • Organic Sales Trend: -2.0% for H1 2024.

  • Acquisitions Impact on Sales: +1.3% for H1 2024; expected nearly +2.5% for full year.

  • Second Quarter Organic Sales Growth: +1.5%, driven by datacenters.

  • European Sales Decline: -3.2% for H1 2024.

  • US Sales Growth: +1% for H1 2024; +7.9% in Q2.

  • Rest of World Sales Decline: -3.1% for H1 2024.

  • Adjusted Operating Margin: 20.8% before acquisitions; 20.7% all-in for H1 2024.

  • Net Profit: EUR578 million, 13.7% of sales for H1 2024.

  • Free Cash Flow: EUR468 million, 11.1% of sales for H1 2024.

  • Net Debt-to-EBITDA Ratio: 1.8 at the end of H1 2024.

  • Acquisitions: Five acquisitions announced, totaling over EUR200 million in annual sales.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Legrand SA (LGRDY) reported a solid adjusted operating margin of 20.8% in the first half of 2024, demonstrating resilience despite a decrease in sales.

  • The company achieved a strong performance in the US market, with a 7.9% rise in sales in the second quarter, driven by growth in the datacenter segment and non-residential applications.

  • Legrand SA (LGRDY) is actively pursuing its acquisition strategy, with five acquisitions announced this year, totaling more than EUR200 million in annual sales, particularly in the datacenter segment.

  • The company's balance sheet remains robust with a net debt-to-EBITDA ratio of 1.8, reflecting solid free cash flow generation and a strong pace of acquisitions.

  • Legrand SA (LGRDY) confirmed its full-year targets, expecting low single-digit growth for sales, both organically and through acquisitions, and maintaining a high adjusted operating margin.

Negative Points

  • Sales in the first half of 2024 decreased by 0.7% excluding exchange rate effects in Russia, with an organic decline of 2.0%, highlighting challenges in the building market.

  • European sales fell by 3.2% in the first half of 2024 due to a persistently tough building market in most countries.

  • The company's free cash flow margin was lower than in recent years, at 11.1% of sales, attributed to higher working capital requirements, particularly in inventory to support the datacenter business.

  • Legrand SA (LGRDY) faced a negative scope effect from Russia, impacting sales by 0.9% in the first half and expected to be 0.6% for the full year 2024.

  • The renovation market in Europe remains challenging, with no significant improvement expected in the near term, impacting sales growth potential.

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