Analysis of Legrand Q1 2022 Results: Revenue up +18%, Net Profit up +13%

Legrand delivered Q1 2022 global revenue of EUR 1.9B ($2B USD), up +17.8% over Q1 2021, and net profit of EUR 401M ($421M USD), up 13.3%.  The Q1 2022 17% growth in revenue was attributed among organic growth at 11%, completed acquisitions at 3%, and favorable foreign exchange (FX) at 3%.  Looking at the geographic split for Q1 2022 revenue:  Europe lead with 43% of sales, North & Central America with 38% (United States on its own had 35% of sales) and the Rest of the World brought in 20% of sales.  It was noted that the Russia-Ukraine conflict had a limited impact on sales in Q1 (both countries together contributed 2% of total Legrand group sales in 2021).

Legrand does not break out lighting brands and lighting controls separately, but the earnings release did note the US showed marked growth in the non-residential market, and sales in Mexico and Canada “on the rise”.  The North & Central America sales volume includes lighting brands Finelite, Focal Point, Indigo-Clean, Kennall, OCL, and Pinnacle, Wattstopper, Indigo-Clean, as well as lighting controls & systems brands Adorne, Radiant, Vantage and Wattstopper.  These lighting businesses are reported for the geographic summary along with Legrand’s other North & Central American businesses in A/V, data communications, critical power & infrastructure, networking, shading systems, wire & cable management and wiring devices.

In the Q1 2022 earnings webcast Q&A session with analysts, CEO Benoit Coquart provided some additional detail on the 11% organic growth for the quarter, attributing roughly 3% to volume increases and the remaining 8% to the impact of price increases implemented over the past several quarters.  When asked about his sense of the inventory levels on hand at their distributor partners, CEO Coquart said Legrand was not seeing significant inventory investment in Q1 by their distributors.

Legrand is clearly feeling the same supply chain challenges as others and their presentation noted active management of the supply chain.  CEO Coquart indicated that things are getting better in some areas, notably plastics and metals (excluding aluminum).  He pointed to the toughest two problems in supply chain as 1) electronic components and chips, and 2) China’s Zero COVID policy and the related logistics mess.

Legrand’s EVP & CFO Frank Lemery noted in his portion of the Q1 2022 presentation that Adjusted Operating Margin declined 1.3%  to 20.3% in Q1 2022 versus 21.6% in Q1 2021, attributing most of the drop to the widespread inflationary environment.  In spite of Q1 2022 cost increases of 18%(QoQ) on raw materials and components, Legrand used its “mastery” of controlling expenses and sales pricing.  When asked about Legrand’s expectations on price increase for the current quarter (Q2 2022), CEO Coquart estimated cost increases in the 12 to 14% range for raw materials and components based on the trends over the past several quarters, but added that it could be higher.

When questioned on the current climate for M&A activity, CEO Coquart was direct in stating that Legrand has an active pipeline of potential targets, with many discussions going on and noted that the entire Legrand organization is geared for M&A (country managers are incentivized on their ability to do M&A).  CEO Coquart expressed optimism on Legrand’s ability to do M&A in the next quarters, with targets being small to medium companies, highly targeted and with good management.

Looking forward, Legrand confirmed their 2022 full-Year targets:

  • Growth in Sales between +5% and +11%
  • Adjusted Operating Margin of about 20%
  • Corporate Social Responsibility achievement of 100% of year one of 2022-2024 roadmap

Go Deeper:

Legrand Q1 2022 Press Release:

Legrand Q1 2022 Earnings Slide Presentation:

Legrand Q1 2022 Webcast:!/legrand-en/20220505_1

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