Legrand Sa Unsp/Adr

Hello, everybody. Good morning. So, Franck, Romain, and I are happy to welcome you to the Legrand 2025 H1 Result Conference Call and Webcast. As you know, we have published today a press release, financial statements, and a slideshow to which we will refer. I begin on page four of the slideshow with the three key highlights of this press release. First, Legrand delivered Very solid results in the first half of 2025 with strong sales growth and high profitability. Second, we have revised our 2025 full-year targets upwards, both in terms of sales and adjusted operating margin. And third, we are actively rolling out our strategy, strengthening our confidence in reaching the upper end of our 2030 revenue target range of around 15 billion euros. So moving to page six, I will start with an overview of sales. In the first half of 2025, excluding FX, our sales grew by plus 15%. This includes an organic growth of plus 9%, driven by an outstanding performance in data centers. On Q2 alone, our organic growth was of plus 10.1%. This also includes a positive scope effect of plus 5.5%, and based on the acquisitions announced so far, the full year scope effect would be around plus 4.5%. As for FX, the effect was a negative minus 1.4% in the first half, and based on the rates of the month of June, it would be around minus 2.5% for the full year. On page seven, you will find the key takeaways per geography on a life-for-life basis. In Europe, where market conditions remain contrasted overall, sales rose by plus 1% in the first half of 2025. In North and Central America, sales were up, again, life-for-life, of course, a strong plus 20.5%, driven by an outstanding performance of data centers offering. Finally, in the rest of the world, Sales increased by plus 3.3%, with growth in Asia-Pacific, Africa, and the Middle East, partially offset by a retreat in South America. These were the main comments I wanted to share on sales. I will now hand over to Franck for more color on our financial performance.

Thank you, Benoit. Good morning to all of you. I'll start on page 8 with adjusted operating margins. In H1 2025, we recorded a solid adjusted operating margin of 21% after acquisition. This represents a 30 BPS point increase year-on-year, including 20 BPS organic improvement driven by operational leverage and a 10 BPS favorable impact from acquisitions. This high profitability level demonstrate clearly, first, the strength of our strategic model, and second, our solid ability to execute and adapt. On slide 9, a short update on the U.S. tariff topic, a topic that also demonstrates our ability to adapt and deliver. As you know well, close to 50% of our U.S. COGS is imported. The action plan we launched at the beginning of the year is fully on track, It's already delivering visible results, for example, regarding targeted sales price increases, cost saving initiative, supply set adjustment, or selective industrial footprint adaptations. Going now to page 10, the net profit stood at €628 million, representing 13.2% of our sales. This nice increase is coming from operating profit and is partially offset by the impact of financial results and the rise in corporate income tax. The free cash flow came to €502 million, growing plus 7.2% on the first half. Page 11 illustrates the robustness of our balance sheet with a net debt to EBITDA ratio of 1.5 at the end of the first half. This concludes the key financial topics I wanted to share with you this morning. I'm now handing over back to Benoit.

Thank you, Franck. So we are moving now to page 13 regarding our 2025 full-year targets. Taking into account the first six months of the year results and considering the world's current macronomic outlook as well as gradual normalization of customs policies, we have revised our targets upward for the full year 2025. First, sales growth excluding currency effect is now of between plus 10% and plus 12% versus previously of plus 6% to plus 10%. This includes an expected organic growth of plus 5% to plus 7% and a growth from acquisitions of approximately plus 5%. Second, we are now targeting an adjusted operating margin after acquisitions of 20.5% to 21% of sales. versus previously holding stable overall after acquisitions compared with 2024, i.e. around 20.5%. Last, no change regarding CSR, where we target an at least 100% achievement rate for our roadmap. Before moving to the next part, I would like to point out the fact that 2025 would be the fifth year in a row where Le Grand adjusted EBIT margins stands above 20%. Now from page 15 to 19, we show that we are fully executing our strategic ambitions to 2030. So on page 15 to 17, we have announced six acquisitions, all in segments tied to the energy and digital transition, for a total required sales of around 200 million euros. These transactions illustrate our ability and expertise in continuously strengthening our leadership in buy-in fields of activity. Second, on page 18 and 19, we are keeping a very strong innovation momentum with numerous product launches in all verticals. And finally, on page 20, we highlight the data centers offering exceptional momentum in H1. Data centers account for 24% of group sales in H1 2025, with another book of over a billion euro, giving us good visibility. To conclude this section, on page 21, we reaffirm our 2030 targets at the upper end of the sales range, building on the achievements I've just mentioned, and taking into account market trends observed over the past 12 months, particularly in data centers. where we now expect a double-digit average annual organic growth in our accessible market between 2025 and 2030, we are confident in our ability to reach the upper end of our 2030 revenue target range, i.e., around 15 billion euros, compared with 8.6 billion euros in 2024. Those were the key topics of this release. I suggest we switch now to Q&A. Thank you.

Thank you. We will now begin the question and answer session. To ask a question now, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. To give more people the opportunity to ask questions, please limit yourself to one question and one follow-up at a time. We thank you for your understanding. Once again, that's star 11 for questions. We will now take our first question from the line of George Featherstone from Barclays. Please go ahead, George.

Morning, everyone. A couple of questions from me, if possible. Just on the data center business, can you help us with the book-to-bill commentary you usually give? Was it above one times in the second quarter for data centers? And then secondly, just looking at these longer-term questions, targets that you've talked about already today. If we're going for a double-digit average for data centres to the end of the decade, should we think of a different organic growth rate for the group than you've originally targeted? I think you said three to five before, but clearly with data centres growing maybe a bit stronger than you thought at the end of the decade, is there some upward scope to that three to five percent as well? Thank you.

So good question. So, of course, as far as the data center trends is concerned, a few data points. In H1, clearly all the growth of Legrand came from data centers. So you have the data center piece, which was growing very strongly, much stronger, actually, than our growth in Q4 2024, much stronger than the growth as quoted by some of our listed peers. And the rest of the business, the building business, was pretty flat. And going forward, you know that last time we talked, we told you that we were targeting the upper end of our initial guidance for the data center growth. We started the year thinking that the data center would go from 10 to 20. At the end of Q2, Q1, sorry, we told you that it would be closer to 20 than to 10. And now I can, without much depth, tell you that the data center growth is going to be somewhere between plus 20 to plus 25 percent compared to 2024 for the full year. And, of course, we are pushing for it to be closer to 25 than to 20. So clearly there is a very, very strong momentum throughout the year, and even though the H2 basis for comparison would be more demanding than H1 for data center. I mean, you know that, of course. Still, we will record a fantastic growth for the year. Now, as far as what is the sort of backup for this growth? Well, as we quoted in the PPT, we have a very large backlog that we need to deliver that gives us let's say, close to 12 months visibility. Number two, our book-to-bid in H1 remains above one. And even though you have some customers that are adjusting up and down their orders, the momentum remains extremely strong for data centers and We are super confident in our ability to keep growing significantly in H2 and to enter into 2026 with a good growth momentum. As far as the longer-term prospect is concerned, yes, indeed, we are moving from forecast for the data center market growing high single-digit, 8%, 9%, 10% per year to low teens. 11, 10, 11, 12, 13%, we'll see. Of course, it has an impact on our overall organic growth profile. And clearly, it implies that we'll get closer to the upper end of our organic growth guidance, i.e., plus five, than to the lower end of organic growth guidance, long-term, i.e., plus three. So, the reason why we are very confident in our ability to target the upper end of the sales guidance, i.e. 15 billion euros, come from two factors, basically. Number one, the underlying market, especially the data center piece, should be growing more than in our initial forecast, so we should be able to target an organic growth closer to five than to three. And number two, The plan we've been executing so far for the past 12 months demonstrates that the model works. And if you look, for example, at acquisitions, this year is going to be a plus five perimeter impact. We have already bought six companies in the first half. I can tell you that there are more to come in the next couple of months. So, you know, the underlying market is a bit more supportive. Our strategy is paying off. So yes, the 15 billion is clearly now more target than the 12. Okay, thank you very much.

Thank you. We will now take our next question from the line of Max Yates from Morgan Stanley. Please go ahead, Max. Max, your line is open. Please ask your question.

Max, you have to unmute. Maybe we can switch to somebody else and put Max back in the queue.

Certainly. Our next question comes from the line of Danila Koster from Goldman Sachs. Please go ahead.

Hi, good morning. Sorry, it's actually Meihan from Goldman Sachs. I'm just trying to clarify your math on the 22-25% growth for data center. How much growth was 2Q? Because you were up in 40% in 1Q, and our math kind of gives up first half should be up 80%, but there could be seasonality that we should take into account of?

Yeah. Well, those are you members, actually, not the hours. What we are just telling you is that we are growing a lot more than 30% in H1. Now, what you have to take into account, we're not seeing any slowdown in H2, to make things clear, and we believe that H2 is going to grow again significantly. But there's one key factor that you have to take into account, which is the basis for comparison, right? We didn't grow in Q1 2024. And then it was plus 10 in Q2, plus 20 in Q3, plus 30 in Q4. So clearly, we have a basis for comparison, which is more demanding in H2 than in H1, specifically for the data center market. But again, let's be clear. It's not about any market slowing down. And we have the backlog supporting the fact that the business is going to to be extremely, extremely positive for the next couple of quarters.

Got it very clear. Thank you. Thank you. Next question comes from the line of James Moore from Rothschild & Co. Please go ahead, James. Yeah, good morning, everyone.

I'm Benoit Franck. Benoit, could I ask, I'm a bit greedy really, and ask for a little bit more color on growth speed. And the second quarter, year on year compared to the first, but by the different segments. I mean, just from the data center side of things, you obviously had an extremely strong first quarter. And I understand the comparatives. But just the pace of growth in the second quarter, was it the same or above or below that of the first? And if you could give any color on the other three segments, that would also help. And if you could... also talk about U.S. growth speed in the quarter between data center non-resi and resi. That would be really, really cool.

Okay. Well, I'll start with the second question. The second question is specifically in the U.S., right?

The first one was global for the four segments, and the second one for the U.S. by the three end markets. Okay.

Yeah. Well, clearly, if you – so let's start with the first question. If you take the COMPs into account, we haven't seen a significant difference in trend for the data center worldwide, globally, between Q1 and Q2. So no acceleration, nor any deceleration in ourselves. And it's mostly about the basis for comparison. And it gives us confidence in the fact that it should continue for Q3 and Q4. So no significant change in trend. Now, to be extremely honest and candid, you know, it's not always easy to identify and qualify a trend in the data center segment on a quarterly basis because it is made of so many projects, so many customers, that it's not the sort of stock and full business where you can easily and accurately understand what's going on. But in our cell, at least, If you take the comp out, no change in trend between Q1 and Q2. As far as the U.S. are concerned, well, the entirety of the growth in the U.S. in H1 came from data centers, and the rest of the business remained pretty platish. We haven't seen a lot of change in trend when it comes to the underlying market. The residential business is still quite... well, not in a very good shape. Now, you know, if you look at the H1 numbers, residential in the U.S., for us, it's just slightly more than 10% of ourselves. So it's not a big driver behind our performance, but the underlying regime market remains quite depressed. As far as the office market is concerned, which is a larger exposure for Legrand, we haven't seen a sign of recovery yet. The key numbers are, let's say, pretty... are not moving down anymore. So if you take, for example, the vacancy rate of offices, it has been pretty flat at the high level for a couple of quarters. So not yet declining, but not increasing anymore. If you look at the number of square feet being built, it is also flat quarter to quarter at quite a low level. So it has been stabilizing, but we have not yet seen a sign of recovery. which is, by the way, not a surprise because we did not expect any recovery before at best the very end of 25 and most likely in 26. Last word maybe. What have we included in our 2025 guidance? So the 5% to 7% organic growth. Well, we have included, and it's not a comment specific to the U.S., but for the group, we have included a continuation of good growth in data centers. which of course is for comparison topic, and no recovery neither in the building in Europe nor in the building in the U.S. So we haven't included in the guidance any recovery in the building market, which we believe is going to be more probably a 26 topic than a 25 topic.

Very helpful. Thank you.

Thank you. Our next question comes from Matt. Yates from Morgan Stanley, please go ahead, Max.

Hi, hopefully you can hear me now. Yes, we can. Yeah, excellent. So I just wanted to ask about firstly, kind of a conceptual sort of question about margins. Obviously you're gonna do that kind of 25, 20.5 to 21%. Obviously margins typically you've talked about around that sort of 20% level. So I guess I'm just wondering to what extent will you use this sort of better year of margin expansion and growth to reinvest in the business and sort of we should expect kind of that margin to normalize in the next couple of years back down to that sort of 20% or are you kind of comfortable kind of now running at these high levels and the level of investment in the business is around where you want it to be in terms of rebates, R&D, new product developments, et cetera? Thank you.

Well, clearly in 2020, so two answers. In 2025, the 20.5 to 21% doesn't imply that we are freezing gross investment. It's important to have that in mind. We're not delivering or we do not intend to deliver this level of margin by cutting R&D expenses, stopping launching new products. No, this level of margin is just a consequence of two factors. Number one, the fact that we intend to compensate the UF tariff mainly through pricing, and you know that we have the ability to do that. And number two, since we are growing more than we initially thought, we're going to have normal, let's say, leverage on SG&A. So it's not about cutting costs or cutting gross investments. It's about benefiting from the leverage coming from the top-line growth. Now, longer term, We haven't changed our mid-term guidance, which is to have a 20% margin throughout the cycle. But of course, as noted in our preliminary speech, it would be the fifth year in a row with margins above 30%. So it's not because we have a long-term guidance of 20% that we cannot, on specific years, target more, of course. Now, of course, you know that 2025, to some extent, is also a bit specific. We expect for the full year acquisitions to have zero dilution and possibly even a couple of bips accretion on our margin, which is not the typical case. Midterm, you know that we expect to have a 30 to 50 bips dilution per year coming from acquisitions. So also you have to take that into account going forward. So to make a long story short, we haven't changed our midterm guidance of 20%, but of course, if we can, we always try to deliver more than that, and that's what we intend to do for 2025.

Very helpful. And maybe just a quick follow-up. I mean, you obviously mentioned, and we can all see it, that your data center business is certainly, even if your growth target isn't faster than some peers, but it's growing certainly in the first half faster. So maybe just from your perspective, what do you really put that down to? I guess one interpretation is this is spending on the white space that's accelerated and that favors your product mix. Another interpretation is you have certain products like RID or cooling that are being adopted very quickly. Another would be that you're pushing some of these smaller businesses into kind of new regions. I mean, if there was one sort of single thing that you would really kind of zero in on for why this business is growing so fast versus peers, what would it be? Thank you.

Well, I'm a bit challenging the fact that we are not gaining as high as our competitors. If I read properly, the Vertical Press release, they are getting for plus 24% organic growth this year. We are getting for 22, 25, and I clearly said that, of course, we are targeting the upper end of this range rather than the lower end.

25 versus 24, right?

Well, it's the same. Ah, yeah. You're right. No, you're accurate. No cheating in that. But, you know, At the end, it's above 20%, which is a very significant growth. No, there's not one product in our portfolio, in H1, which is growing far better, far faster than the others. Of course, cooling is growing a bit faster, but it's not the majority of ourselves. But then if you look at the rest of our product offering, especially for white space, racks, PDUs, and so on and so forth, they're all growing at a nice pace. So I think it's about the underlying market which is booming. And one more thing that gives us confidence on the fact that this is going to continue is the fact that you know that we are probably the biggest white space player, right, in terms of sales. We are bigger than anybody else in the white space. And you know that the sales in white space tend to – lag behind the sense of gray space, let's say one or two quarters later. So when I see the announcement made by the , the ABB of the world, the Schneider and so on, and the fact that their gray space business and their orders for gray space are going nicely, it's a positive sign for us because it means that at some point it should come into the white space. I cannot tell you that there's one customer growing more than the others or one application growing more than the others or even one geography growing more than the others. The three zones are growing nicely, North America, Europe, and the rest of the world. I think it's the underlying market for white space solutions, which is nice.

Okay, I think you'll grow 35 this year, so I think you will be the fastest growing date by the end of the year.

We'll look at the numbers in Feb, Max. Okay, great, thank you. We'll do the league table in February. Thank you.

Thank you. We will now take our next question from the line of Gail Debray from Deutsche Bank. Please go ahead, Gail.

Yes, good morning, everybody. Can I ask about the mixed dynamics? I mean, specifically, whether there is any margin differential between the data center business and the rest of the portfolio now, and whether you see some potential eventually for margins in North America to fully catch up with those in Europe, maybe in the medium term? Thank you.

Well, there's not big difference in margins between data center and building because, of course, you have leverage when you are growing 40, 50, 60% that you don't have when you are flat. But this leverage is partially compensated by the fact that you have a lot of inefficiencies also. And when you have to add capacity in order to serve your customers, it's not the sort of typical leverage you would experience on a on a more, let's say, stable building site. So no significant difference in margins. And as for the building business, we have areas where we are leaders in data centers and areas where we are not leaders. So you have business segments, if I may say, where you have a 10% EBIT margin and you have business segments where you have a 25% or 30% EBIT margin. the EBIT margin. So as for the building side, it depends on the mix of leadership we have, but as a category, let's say, no significant difference in margin, even though the margin could be, I mean, the component of the margin could be slightly different, a little bit less SG&A, a little bit less gross margin, and so on. But at the EBIT level, no significant differences. As far as the North American margins are concerned, there's no structural reason why they would be lower than European ones. It's just a matter of how fast we're going to grow the leadership positions. So the more we acquire leaderships, the more we grow organically. You can see in H1 that we have a strong leverage in our North American margin, the closer we'll get to the European one. Does it change our long-term vision and margin? Well, I'm referring then to the answer on the previous question and the fact that we are still shooting for 20% of it. So, in other words, no structural reasons why the U.S. margins or North American margins should be lower than Europe's. It's just a matter of growing as fast as we can organically and buying companies with little dilutions.

Okay, thank you, Benoit. Can I have a second one on the pricing side? What's the pricing contribution in Q2 and how you see that going into the third quarter? Because I suspect then you will get the full benefit from the pricing actions you have been implementing. Also, on the tariff side, I mean, now we have some maybe additional tariffs against Europe on the copper side as well. So any update on you know, the extra cost you see there. Thanks very much.

So starting with the first question, on H1, we have a price increase of plus 0.6%. And if you split between Q1 and Q2, Q1 was at plus 0.2%, and Q2 at plus 1.1%. And within Q2, June is better than May, which was better than April. So clearly, the phasing in of pricing is executed exactly as planned in order to compensate the tariff. As far as the full year perspective on pricing is concerned, when we entered into the year, we told you that we were shooting for plus 1% maximum. In Q1, looking at the discussions, we told you that we are now shooting for plus two to plus three. And now that the tariff, that the number of tariff discussions have been settled, we can maybe be a bit more precise and tell you that we are now shooting for around plus two. So we believe that, at a good level of course, with this plus two percent for the full year on pricing, the level of pricing which is enough to compensate for the, together with the other action items we have, of course, like the supply chain management, a bit of cost cutting, the USMCA, the work around USMCA, and so on and so forth. We believe that's enough to compensate for the time. As far as the tariff itself is concerned, last quarter, we tell you that based on our own scenario, which implied a number of normalizations, for example, we didn't take China at 145%. but we knew it would normalize. We told you that the total cost would be 150 to 200 million U.S. dollars. We now, based on the latest discussions, as well as on the timing impact, we believe that it's going to be between 140 million to 180 million U.S. dollars. So you see that not a lot of changes compared to last quarter because our cost scenario, assume a landing in the discussions with China, with Europe, which actually happened. So our scenario was pretty accurate. Out of the 140 to 180 million, you already have 40 to 50 million in H1, and the rest in H2. So, you know, it's always a sensitive topic. We have to remain extremely agile. But we are very confident in our ability to execute our compensation strategy as planned.

That's great. Thanks very much. Thank you.

Thank you. Our next question comes from the line of Martin Wilkie from Citi. Please go ahead, Martin.

Yes, good morning. It's Martin from Citi. I just wanted to come back to the office market in the U.S., and it sounds like there's some signs there of improvement but not yet seen in numbers. In past cycles, how long has it taken for leasing activity to improve before you see it in your business? We have seen some companies talk about tenants fit out following leasing and so forth, having picks up in Q2. But ordinarily, when you've looked at that market, how long has it taken for leasing to sort of flow through into your business? Thank you.

Well, I don't believe that any past experience is relevant as far as the office market is concerned because the fact is that COVID was a game changer. So it's no longer about, let's say, a classical cycle. It's about how long it will take for the COVID impact to be terminated. And the changes COVID implied in terms of flex office, remodeling of spaces, remote working, home office, blah, blah, blah. So unfortunately, I would love to have the answer. It's not like for REGI. REGI, being in the US or in Europe, classical cycle depending very much on interest rates. You can more or less know how long it will take for the cycle to change. You can identify quite precisely the time lag between permits, starts, and the time it flows into your PNL. All that is very much documented. When it comes to the office market, I think there was this COVID revolution, and we are in unknown territories. You know, when I look at the numbers, 21% of offices being empty and vacant. The number of square feet being built is, when you look at the curve, it's five or six times what it used to be. I mean, one-fifth or one-sixth of what it used to be before the COVID. So the numbers are amazing. It cannot go... More than that, I mean, at some point you need to have spaces where people meet, work, and discuss. So midterm, I'm very confident in the fact that it's going to rebound at some point, probably not by 10% per year, but by 2%, 3%, 4% per year. But it's not yet happening, and unfortunately the past cycles do not help to do these analyses.

Thank you. That's helpful. And I've got a follow-up just on your 2030 targets. I mean, you mentioned very clearly that the organic side looks like it's going to be top end of that range. Do you have additional comments on the M&A side? I mean, obviously, you have issued a convertible bond recently. You've done some deals. Should we expect also that the M&A contribution will be the upper end of that range as well?

Thank you. Yes, indeed. Until now, for the past year, we have seen more activity than ever in M&A. So not all deals are big, but last year we did 10 deals, H1-6. I cannot really tell you that there's going to be more coming in H2. So we are on a pace which is clearly at the upper end of forgetfulness rather than at the low end, which doesn't... By the way, say that we will not have a weak year. You can always have a weak year, a year at 3% and not at 5%. It depends on the opportunities, and it wouldn't be a drama if we had a year at even 2% or 3% perimeter instead of 4% to 5%. But from the number of discussions we have, from the number of LOI – going on active dialogues and so on. Indeed, I'm confident in the fact that at least 24 and 26 is going to be a good year in terms of M&A.

Great. Thank you very much.

Thank you. Our next question comes from Ben Ogle from OpsCap Analytics. Please go ahead, Ben.

Good morning, everyone. Thanks for taking the question. I had a couple. The first was really about Europe. I take on board the fact that Europe doesn't form part of the raised growth guidance, but one or two of your competitors have sort of hinted at some green shoots. If we look at non-res, res, renovation, new build, is there anything out there in the kind of different categories that you see as positive and encouraging. How would you characterize as we move into 2026? Thank you.

Well, hello, Ben. Hello. Nice to hear you. Well, yes, indeed, our guidance doesn't include recovery in the building site in Europe. Now, to make things clear, we start to see many signs that things are going to improve. in many geographies. And for example, if you look at the permits all across Europe, it was down in 23, 21%. It was down in 24, 4%. And now it is expected to be slightly up in 25, plus 2%. When you look at the non-residential construction, it was supposed to be down in 24, slightly up in 25. When you look at the mortgage construction, and from the banks, it has been growing significantly, quarter and quarter. So we start to see light at the end of the tunnel, and all those are positive signs. Now, you know Legrand. You know that we are late cycle, right? So you need to have a building erected, isolation, blah, blah, blah, until energy efficiency related products or switches or circuit breakers are installed. So all those nice indicators will flow into our, hopefully, will flow into our P&L more in 26 than in 25. A good example being France. And France, it's your own. The number of transactions should be slightly up this year. The housing starts, 12 months trading is positive. You should take comments from a number of real estate guys that are getting more optimistic. So, yes, there is a sort of mood which is slightly changing in Europe. especially in the resi side, but again, not hitting yet our top line, and we haven't taken any of that in our guidance for 2025.

Understood. Thank you. And just going back to the inevitable questions on data centers, one or two of your peers have hinted or suggested that they're seeing, I guess I'd characterize as greater breadth of customers and more co-location, etc. In terms of your growth in the first half, was there any significant change at all in your customer mix, i.e. the people buying from you, or I guess in sort of simplistic terms, effectively selling to the same people, and or was there any significant kind of large one-off contracts that really contributed to that? Any color on that would help. Well, I'm not aware of any...

significant change in the type of customers who move from, for example, from hyperscalers to codos or the other way in H1. Now, we spend more time analyzing this kind of trend on a yearly basis than on a half-year basis, but I'm not aware of any of those trends. Is there a big, big, you always have big contracts in data centers, right? Is there something that would explain why we are now shooting for 20 to 25 instead of 10 to 20. Now, it's a set of, it's a mix of many more projects than expected, not a single one. That's great. Thank you very much.

Thank you. We will now take our next question from Alistair Leslie from Bernstein. Please go ahead, Alistair.

Oh yeah, thank you. Good morning. So maybe just a couple of questions. First one on the, maybe a clarification on the full year guide. I think the components of your organic sales guide, I think previously they were maybe driven exclusively by data centres. I'm just wondering now it seems like there's maybe a contribution from maybe the rest of the portfolio or pricing, I guess maybe pricing, but before, from what I understood, that was offset by a negative indirect impact on volume. So Are you effectively – has there kind of been an upgrade on the underlying volumes, X data centers here? I appreciate maybe you're not expecting a strong rebound, but perhaps less bad than previously feared.

No, actually, if you take into account the fact that the data center should grow 20% to 25% on a full year, you will easily see that the rest, should be flat or maybe slightly positive, but not more than that. So almost the entirety of the 2025 growth should come from data center. Now, as far as the rest of the business is concerned, the main change compared to the initial guidance is pricing. Clearly, we expected pricing to be between zero and plus one, and now we expect it to be plus two. But otherwise, broadly speaking, and in a nutshell, all the growth, almost all the growth should come from data centers.

Great. Maybe just a second question, just a follow-up on one of the topics from earlier, on weird or easy exchanges. You know, are you successfully scaling that up? And And cooling does seem to be moving closer to the rack, which is kind of around your focus area, should be good synergies for you. So, I suppose, what are the limits of your ambitions around sort of cooling? Could you obviously explore entering direct to chip as well?

Well, the limit of our cooling ambition is our capacity to make things clear. So, yes, the rear door business is growing very nicely. Well, it's not as big as we would like it to be because we have to scale it up and it always takes a bit of time, but... is going very very very nicely now um if i zoom out i think we really are on the right spot if you look at investments that will flow into the data center business going forward of course you will have a lot of gray space related investments because you need to build a new data center and to power the data center so you need transformers you need switchgear You need all of that. And as you know, we are actively working to increase the share of sales made in gray space. But it is a fact that our current positioning is 80% white space, and that's where the investment is going to be made. It's around the high-density data center and racks. So, you know, again, it makes us very confident, and that's one of the reasons why we have increased our forecast for the market growth from the high single digit to the low teams because we believe that especially the white space piece should grow faster than the rest. But it's not only about cooling. It's about everything around the rack. It's about the products to connect the GPUs. It's about the products to power the rack and so on and so forth.

Any interest in direct chip at all?

Well, yes, of course. We are not in the D2C business yet. Of course, if there is an opportunity to enter, why not? But we have to make sure that it is the best use of our capital. By the way, with the rear-door cooling system of Legrand, you can cool a rack up to 200 kilowatts per rack. So it's 99% of the racks, including those for high density. And by the way, even when you have a DTC, you usually also have a rear door cooling. So DTC would be nice to have, but we are well positioned enough with our current cooling offer, which, by the way, does not only include rear door cooling, but also everything relating to airflow management, containment, and which, again, is quite complementary to direct-to-chip.

Thank you. Thank you, Bhanu.

Thank you. We will now take our next question from the line of Kovinder Rajpal from Alpha Value. Please go ahead, Kovinder.

Yeah, good morning, everyone. So just a medium to long-term question on data centers. When I look at pre-leasing and under-construction capacities also with tightening vacancy rates, And then if we couple this with power investments that are needed to actually operate those data centers, do you think this could be a limitation for data center growth when we look down the line, maybe let's say in 2027, 2028, or does that not, or does your mid-teen growth guidance actually include that limitation?

Well, we see that at Le Grand more as an opportunity than as a limitation. One number to start with, most people expect the electricity consumption worldwide coming from data center to move from 2% to 4%. So, of course, it's a big jump. But, you know, it's not from 2% to 20%. And I believe that we should have the ability to absorb these two to four. Number two, why is it more an opportunity than a threat? it pushes a lot of countries to increase their electricity generation capabilities. And I looked this morning at the latest numbers, and the electricity consumption is increasing more than expected. On a worldwide basis, it was expected to increase 2%, and that's true. It increased 3.16%. And every time you are switching from or adding electricity capabilities, well, potentially, you are adding more. circuit breaker, switch gear, transformers, bus bar, product to control electricity, and so on and so forth. First opportunity. Second opportunity, it means that there will be a push to make data centers more energy efficient. And this is the so-called power usage effectiveness, power you need to feed the IT equipment, On a worldwide basis, the average PUE, it's a number I love, it's 1.6. So in order to power 1 megawatt of IT equipment, you need to have 1.6 megawatt of power. Every time you can cut this 1.6 or lower this 1.6, 1.5, 1.3, possibly 1.1, even less, of course, you are saving a lot of energy. And it happens that we have a lot of solutions that help cutting the PUE. from let's say the so-called rear-door cooling, for example, to high-efficiency transformers, high-efficiency UPS, and so on and so forth. We estimate that more than half of our sales in data centers are made with products that help reducing the energy bill. So it's a fact that data center implies a lot of additional power capacity in the city. It can lead to a number of public debates, which are healthy debates to have. but it's more an opportunity because it should, you know, increase the demand for Le Grand type of products, either on the electrification side or in the data center side.

Thank you for the details, and just as a follow-up, so when we look at the current portfolio within the data center space, so do you think you need to invest more in the coming years to cater to that PUE opportunity that you talked about?

I think we have a good portfolio of products, frankly speaking, and for the wide space, we probably have the largest portfolio of products in the industry, so I think we have a good portfolio of products. Now, of course, we will keep looking at opportunities, both to add additional product families or to add service capabilities. or to add the geographical reach. And you could see that in the six acquisitions announced so far, since the beginning of the year, three acquisitions are data center related. So yes, definitely, we'll keep looking at opportunities, both organically and on the M&A front, to capture more opportunities. But we don't need to. We don't have to. We have a product portfolio which is broad enough, deep enough, to make the most of the opportunities.

Okay, thank you.

Thank you. Our next question comes from William Mackey from Kepler Sugar. Please go ahead, William.

Hi, good morning. It's Will from Kepler. Good morning, Benoit, Frank, Raoul. A couple of more clarification or calibration questions, really. I'll start. Firstly, with data centers, you've made a number of deals. You're enjoying exceptional growth. Could you just give us a sense of your pro forma revenues now and more perhaps specifically how that's broken down by region and perhaps some of the regional growth trend outside North America? And then the – Again, staying with data centers, with regard to the go-to-market approach, I think, well, we mentioned Vertiv here this morning, but some of your other competitors are perhaps emphasizing more of a systems approach and integrated white and gray space offer and deeper relationships with the designers, developers, and builders. Do you have the right go-to-market approach across your portfolio to take you out of a product and into a systems solution basis? And then maybe the other follow-up is on pricing, encouraging a price realization with regard to tariffs. Could you talk a little bit, when you think about your product categories or strategic business units and regions, where you're achieving that price increase as we go into the second half and next year outside North America, what the sort of price realization is in other key regions? Thanks so much. Thanks.

Well, I'm afraid I was not able to give you as much granularity as you wish on all of those topics. On the first front, so pro forma, it's about 24%, I mean, it's about 24% of our sales in H1. It's growing approximately at the same pace or going very fast in the three zones. So I don't believe it has changed a lot in terms of geographical mix. But then to give you more color and more, you know, or on the split between gray and white and type of customers and so on and so forth. Let's do it on a yearly basis and not on a half-year basis. But what I can tell you is that it was 24% pro forma, and it was 20% pro forma last year. So it's going nicely. As far as the go-to-market is concerned, well, most of our data centers are made direct. Not, of course, because we don't like working with our distributors. And we believe that even in data centers, our distributors have a lot of added value when it comes to service, when it comes to credit, when it comes to many topics. But it is a way today the market is organized. And as a result, we are following the market and we are doing a lot of ourselves direct to the hyperscalers and the collocation guys. We also have, of course, a lot of direct discussions with our customers, and for example, our teams are working closely with their design teams in order to co-design some of the solutions they will use tomorrow, especially in the white space. So we are doing this work, and we've been doing it for quite a while, and you may wonder how Being a building player, we have such an intimacy with the data center guys. But don't forget that we have bought more than 30 companies. And each time you buy a company in this trade, you onboard people that have knowledge, expertise, relationship that we didn't have before. So we are doing this job, of course. When it comes to the system topic, I don't believe that the customers are willing to buy one full solution, gray and white, from one single maker. The reason being that you don't have one single company that has everything at the same level. And even Legrand, who has both white space and gray space, is not legitimate on all this package everywhere. There are some countries where we don't have the right product or where we don't have the right service setup. So this is not the way our customers are organized. Our customers are willing to have the best of breed. They want to have the best rack. They want to have the best cooling solution. They want to have the best switch here. They want to have the best data center information management, and so on and so forth, fitting as much as possible their design. They don't want to rely on on one vendor only that would provide everything. So it's not happening. We don't see it happening, and we don't see that as a limitation. If it was to come, we would be amongst the players benefiting from that, since we have the broadest white space offering in this industry, and we have, except in the U.S., a large gray space offering. But we don't see that happening. As far as pricing is concerned, well, We don't give the pricing per geography. Obviously, the plus 2% we were shooting for in 2025, it will be a lot in the U.S. to compensate for the tariff. But we are still shooting, of course, to have positive pricing elsewhere. So up to you to make your computation. But the plus 2 is an average of higher pricing than that in the U.S. and lower pricing than that elsewhere.

Thank you very much.

Thank you. Next question comes from Claire Liu from Morgan Stanley. Please go ahead, Claire. Sorry, I pressed the wrong button. Sorry. I'll drop out of the play.

Okay.

Thank you. We have now reached the end of the question and answer session. Thank you all very much for your questions. I'd now like to turn the conference back to Mr. Kolkhoff for his closing comments.

Well, thank you very much for your time. I know it's a busy day for all of you. So thanks for taking the time to discuss with Le Grand. And for those of you who are lucky enough to take a summer break, I wish you a peaceful and relaxing break. Thanks a lot.