Legrand SA

Good morning, ladies and gentlemen, and welcome to today's Lee-Grant 2023 First Semester Results Conference Call. All participants are in listen-only mode. Later, there will be a question-and-answer session, and for your information, this conference is being recorded. At this time, I would like to hand the call over to CAO, Mr. Benoit Chukar, and the CFO, Mr. Frank Lemery. Please go ahead, sir.

Thank you. Good morning, everybody. Thank you for connecting to this webcast. So, Franck, Renaud, and myself are happy to welcome you to the Legrand 2023 first half result conference call and webcast. Please note, as usual, that this call is recorded. We have published today our press release, financial statements, and a slideshow to which we will refer. Those documents are available on the Legrand website. After a few opening remarks, we will comment the results into more details. I begin on page 4 with the two key takeaways of this release. First, Legrand recorded very solid results in the contracting building market, and we continue to deploy a strategic roadmap to a range of growth and development initiatives. Second, we have revised our full-year target upward. So moving to page 6 to 7, I will start with an overview of sales. In the first half of 2023, our sales grew in total by plus 4.9%, driven by an organic rise of plus 4.6%. In a contracting building market, these figures point to our resilience. It is driven by faster expanding segments, energy efficiency, connected products, and data centers. by pricing power and by the group's robust commercial performance. On top of organic growth, the scope effect was plus 1.3%, including plus 1.8% linked to acquisitions, and minus 0.5% to the net impact of Russia. Based on acquisitions made and the likely date of consolidation, the overall impact should be close to plus 2% full year, excluding the impact from Russia. The ethics effect is negative at minus 1% and should be close to minus 2.5% for the full year 2023, based on the average rates of June 2023 alone. You will read on page 7 the key takeaways per geographies on a like-for-like basis. In the first half of 2023, the group achieved overall a solid level of growth. Europe grew a very solid plus 6.8%. driven by a strong growth in energy efficiency solutions and despite residential market down in most geographies. In the U.S., we recorded a slight decline of minus 0.3%. This reflected a double-digit fall in residential and a slight retreat in non-residential, partially offset by a double-digit growth in data centers. Finally, the rest of the world area grew a solid plus 8.2%, driven by a very sustained growth in India, Africa and the Middle East. These were the main comments I wanted to make on sales. I will now hand over to Franck for more color on a robust financial performance.

Thank you, Benoit. Good morning to all of you. I will start on page 9, commenting the adjusted operating margin. Before acquisition and exceeding Russia, we recorded a high adjusted operating margin of 22.7% for H1, representing a remarkable plus 2.2 points increase versus H1 2022. The high profitability of the period is driven by gross margin, and it is reflecting our firm control of expenses and sales prices. The impact of acquisitions and of Russia were respectively of minus 0.3 and minus 0.2 points, meaning the adjusted operating margin all in for the first half of the year stood at 22.2%. Going now to page 10 and highlighting two main points. First, net income of 651 million represents 15.2% of our sales. Earnings per share are up plus 19%, standing at 2.45 euro. It shows the group very strong value creation. Second, the cash generated during the first half of the year is remarkable, with cash flow from operation up plus 9.7% at 863 million, Despite a continued strengthened coverage of inventory, the free cash flow stood at 18.9% of sales. These strong financial indicators demonstrate Legrand's continued best-in-class profitability and cash flow generation. Moving now to page 11, regarding the balance sheet structure, we have a very sound balance sheet, testified by two indicators. First, the debt. Net debt at the end of June amounts to 2.4 billion euros with a ratio to EBITDA standing at 1.2. Gross debt has a maturity of 4.6 years and more than 90% is at fixed rate. Second, we have 2.9 billion euros of available cash. This concludes the key financial topic I wanted to share with you. I'm now handing over back to Benoit.