Legrand SA

Good morning, ladies and gentlemen, and welcome to today's Le Grand 2024 First Half Results Conference Call. For your information, this conference is being recorded. All participants are in a listen-only mode. Later, there'll be a question and answer session. At this time, I would like to hand the call over to CEO, Mr. Benoit Kekua, and CFO, Mr. Frank Lemery. Please go ahead, sirs.

Thanks a lot. Good morning, everybody. Franck, Roland, and me are happy to welcome you to the Legrand 2024 first half results conference call and webcast. As you know, this call is recorded. So we have published today our press release, financial statements, and a slideshow to which we will refer. Those documents are, as usual, available on the Legrand website. Few opening remarks, we will comment the results into more details. I begin on page four with the three key takeaways of this release. First, in a building market that remains depressed in many geographies, Legrand reports good resilience in the first half, including safe growth in the second quarter and very firm margins. Second, we are actively holding out of strategy through acquisitions and innovation. Last, we confirm our full year targets. As a reminder, we will host a capital market day in September 2024 in London. So moving now to page 6 and to page 7, I will start with another view of sales. In the first half of 2024, excluding exchange rates in Russia, our sales decreased by minus 0.7%. with an organic trend of minus 2.0% and a positive scope from acquisitions of plus 1.3%. In the second quarter alone, sales were up plus 1.5% organically, driven notably by the data center's momentum. Considering the current building market environment, which remains depressed in many geographies, this limited decline in revenue highlights the relevance of Legrand business models. Looking forward, based on acquisitions made and their likely dates of consolidation, the impact from acquisitions should be of nearly plus 2.5% full year. Regarding the two other elements on sales, the negative scope effect from Russia was of minus 0.9% for the first half and will be minus 0.6% on the full year 2024. The exchange rate effect was a negative minus 0.4% for the first half, and based on average rates of June, it would be close to minus 0.5% for the full year. You will read on page seven the key takeaways per geographies on the like-for-like basis. On the first half of 2024, despite market conditions, the group's revenue recorded a limited decline. European sales fell minus 3.2% in the first half of 2024, in a persistently tough building market in most countries. In the US, sales were up plus 1% over the period. We achieved a solid performance in the second quarter, with a steep plus 7.9% rise driven by market growth in the data center segment, as well as an increase in non-residential applications. Finally, in the rest of the world, we recorded a decline of minus 3.1% in H1, with a mixed picture depending on regions and countries. Sales grew notably in India, the Middle East, and South America, but these failed to offset declines in China and Africa. These were the main comments I wanted to make on sales. I will now hand over to Franck for more color on our financial performance.

Thank you, Benoit, and good morning to all of you. I will start on page 8, commenting the adjusted operating margin. Before acquisitions, we recorded a solid adjusted operating margin of 20.8% in H1. This level of profitability confirmed, once again, the ability of Legrand to hold margin high despite a decrease in sales. the impact of acquisition was minus 10 bps, meaning that H1 adjusted operating margin all-in stood at 20.7%. Going now to page 9 and 11 and highlighting two main points. First, the net profit stood at 578 million euros, representing 13.7% of our sales. And second, the free cash flow came to 468 million euros at 11.1% of sales for the first semester. On page 11, we can see the robustness of our balance sheet with a net debt to EBITDA ratio of 1.8 at the end of the period, which is fully consistent with the group credit rating. And this level reflects both a solid free cash flow generation and the strong pace of acquisitions that Benoit will comment shortly. This concludes the financial key topic. I'm now handing over back to Benoit.