Legrand SA

Good morning, ladies and gentlemen, and welcome to today's Le Rant 2023 Full Year Results Conference Call. For your information, this conference is being recorded. All participants are in a listen-only mode. Later, there will be a question and answer session. At this time, I would like to hand the call over to CEO, Mr. Benoit Cucar, and CFO, Mr. Franck Lemery. Please go ahead, sir.

Thank you. Hello, everybody. Good morning. Thank you for connecting. So, Franck, Rona, and myself are happy to welcome you to the Le Grand 2023 full-year conference call and webcast. As you know, we have published today our press release, financial statements, and a slideshow to which we will refer. Those documents are available on the Le Grand website. After a few opening remarks, we will comment the results into more details. I begin on page 4. with the four key takeaways of this release. First, Legrand delivered outstanding 2023 results amid building markets in retreat. Second, we are actively executing a strategic roadmap. Third, we have laid out our full-year targets. And last, we will host a capital market day in September 2024. So moving to pages six and seven, I will start with an overview of sales. In 2023, our sales grew organically and through acquisitions by plus 4.7%, driven by an organic rise of plus 2.7% and a scope from acquisitions of plus 1.9%. With building markets in retreat in most geographies, these figures testify to Legrand resilience and confirm once again the relevance of our growth and value creation model, driven by faster expanding segments, pricing power, and strong commercial performance. Based on acquisitions announced till now, the full year impact in 2024 should be around plus 1.5% in 2024. Regarding the two other elements on sales, the negative scope effect from Russia was of minus 0.9% in 2023 and will be minus 0.6% in 2024 on the full year. The exchange rate effect was a negative minus 2.7% in 2023. Based on average rates of Jan, it would be close to minus 1% for the 2024 full year. On page 7, you will find the key takeaways per geographies on a like-for-like basis. Europe grew a very solid plus 6%, driven by strong growth in each faster expanding segment, and despite a residential market that retreated in most geographies. In the U.S., sales declined minus 2.8% full year amid strongly declining markets. The group resisted thanks to a double-digit sales growth in data centers. Finally, in the rest of the world area, sales marked an organic rise of plus 5.7% in 2023, with a very robust momentum in India and an increase in China. These were the main comments I wanted to make on sales. I will now hand over to Franck for more color on our record high performance.

Thank you, Benoit, and good morning to all of you. I will start on page 8, commenting the adjusted operating margin. Before acquisition and excluding Russia, we recorded a high adjusted operating margin of 21.2% in 2023, representing a remarkable plus 0.8 points increase versus last year. While investing in growth and spending significantly in restructuring, this very high profitability level demonstrates once again the quality of Legrand business model, our undiminished pricing power, our solid cost control and a high level of productivity. The impact of acquisition was of minus 0.2 points, meaning that the adjusted operating margin all in stood at 21%. Going now to page 9 and highlighting three main points. First, with the net profit of 1.1 billion euros representing 13.6% of our sales, earnings per share were up plus 15.6%, showing the group's very strong value creation. It benefited mostly from the favorable trends of operating profit and financial results. Second, the free cash flow came to a record high level of 18.8% of sales, meaning a conversion rate of 138% of net profit. Lastly, return on capital employed after tax stood at a high 14.7% for 2023. On page 10, three figures to illustrate the robustness of our balance sheet, with a net debt to EBITDA ratio of 1 at the end of the year, a high cash position, and a vastly fixed rate rose debt. This concludes the key financial topics I wanted to share with you. I'm now hanging over back to Benoit. Thank you, Franck.