Legrand (LGRDY) reported results for Q4 and full year fiscal 2022, with an increase in sales for the year of 19.2% to $8.9B (EUR 8.34B) – with the sales increase breaking down roughly into 10% organic growth, 3% from acquisitions, and 6% foreign exchange effect(FX). Adjusted operating profit came in at 20.4% of sales despite inflation of around +12% on raw materials and components in FY2022 . Succeeding despite a “very unsettled environment” Legrand met its fiscal year targets for sales, profitability, free cash flow and corporate social responsibility (CSR).
The Full Year FY2022 results noted Legrand’s 7 acquisitions over the year, 2 of which were announced with this Q4 FY2022 release. Here are the two latest acquisitions by Legrand:
- Encelium, a North American-focused Advanced Lighting Controls Solution provider with annual revenue over $20M (and at one time, part of OSRAM)
- Clamper, a Brazil-based company specializing in surge protection devices, with annual revenue around $43M (EUR 40M)
Legrand does not break out lighting brands separately. The lighting businesses are reported within the geographical summary – in the North & Central American region that also includes A/V, data communications, critical power & infrastructure, networking, shading systems, wire & cable management and wiring devices. Legrand’s North & Central American lighting and controls brands include Finelite, Focal Point, Indigo-Clean, Kennall, OCL, and Pinnacle, as well as lighting controls & systems brands Adorne, Radiant, Vantage, Wattstopper – and going forward, Encelium.
| FY2022
by Geographic Region |
Europe | North & Central America | Rest of the World | Total
FY2022 |
| Total Net Sales | $3.57B
(EUR 3.34B) |
$3.62B
(EUR 3.38B) |
$1.73B
(EUR 1.62B) |
$8.9B
(EUR 8.9B) |
| % Legrand Group Consolidated |
40.1% |
40.5% |
19.4% |
100% |
| Organic Sales Growth FY22 vs FY21 |
+9.8% |
+11.1% |
+6.6% |
9.7% |
| Notes from Earnings Release Presentation | Since Q2, negative impact of conflict between Russia & Ukraine. Decision made to exit Russia | US at 37.2% of group sales with 11.3% growth led by non-res + data centers. MX- sharp rise, Canada-increase
|
India-very robust momentum. Marked retreat in China. South America-unsettled political, economic environment, particularly Brazil |
During the earnings call Q&A, CEO Benoit Coquart commented on Legrand’s inventory position, noting that while the historical levels had been 13% to 14% of sales, levels had reached a peak of 19% ratio of inventory to sales in Q3 2022, as shortages of components and raw material created the need for higher inventory to maintain a good level of service to customers. Legrand’s inventory to sales ratio is now down below 17%, excluding impairments on the Russian inventory. It is Legrand’s intention to progressively and cautiously work back toward the historical levels over the next year to two years, while maintaining the good level of service.
CEO Coquart noted that the data center segment and green products had the highest growth in FY2022, with lower growth on connected products. He sees data centers continuing to grow in FY2023, commenting that while Big Tech has been doing layoffs and cutting some investments, there are still huge investments planned to increase data center capabilities: “every time there is an innovation, call it Metaverse, call it ChatGPT, it requires additional capacity and international bandwidth.”
Looking ahead to FY2023, Legrand is calling for sales growth between +2% and +6%, with another +3% from consolidations (of acquisitions). Guidance on adjusted operating margin before acquisitions remains at “around” 20% of sales. The guidance excludes impacts linked to Legrand’s disengagement from Russia (see link below to the press release on plans to divest its Russian operations.) CEO Coquart noted that even with a more demanding economy and some macroeconomists being a bit more pessimistic in Europe than in the US, he sees “a number of interesting trends that should support business going forward in Europe and elsewhere…the green products, data center, connected products…I wouldn’t talk of a strong deceleration and we are cautious, but not overly pessimistic going into 2023.”
Go Deeper
Legrand Q4 + Full Year FY2022 Press Release: https://www.legrandgroup.com/sites/default/files/Documents_PDF_Legrand/Finance/2022/1Y/Legrand_Press_Release_Results_FY2022_1675864745.pdf
Legrand Q4 + Full Year FY2022 Earnings Slide Presentation: https://www.legrandgroup.com/sites/default/files/Documents_PDF_Legrand/Finance/2022/1Y/Legrand_Slideshow_FY2022_EN_1675864746.pdf
Legrand Russia Announcement Press Release: https://www.legrandgroup.com/en/news/legrand-announces-its-intention-disengage-russia
Legrand Acquires Encelium Press Release: https://www.legrand.us/about-us/newsroom/press/legrand-acquires-encelium