Legrand Confirms 2019 Organic Sales Growth Target

The Tip Desk · June 30, 2019 · 2 min read

The electrical and digital building infrastructure specialist reports a rise in adjusted operating income for the first half of 2019.

Legrand confirmed its 2019 objective for organic sales growth between 0% and +4%. The company also maintained its 2019 adjusted operating margin target, before acquisitions and at a 2018 perimeter, between 19.9% and 20.7% of sales.

Adjusted operating income rose 6.0% to 662.6 million euros in the first half of 2019 compared to 625.1 million euros in the first half of 2018. This growth was driven by the North and Central America sector, where adjusted operating income rose 13.1% to 230.1 million euros. The Rest of the World sector saw a 15.0% increase to 103.6 million euros. In contrast, the Europe sector experienced a 0.8% decline to 328.9 million euros.

Operating income for the group rose 5.1% to 619.6 million euros. The company attributed this increase to an 8.0% rise in sales, though this was accompanied by a 9.8% increase in the cost of sales and a 7.4% rise in administrative, commercial, and research and development expenses.

Cash flow from operating activities reached 441.0 million euros. This represents an increase of 149.1 million euros over the 291.9 million euros recorded in the first half of 2018. The company said this rise was primarily due to a decrease in the use of cash for working capital requirements, which fell to 145.9 million euros from 251.2 million euros in the prior year period.

Investment activities resulted in a net cash outflow, which included the acquisition of Universal Electric Corporation, a leader in American busways. Total gross debt rose to 4,172.2 million euros as of June 30, 2019, compared to 3,319.1 million euros on December 31, 2018. This total includes 307.7 million euros in lease financial debts resulting from the application of the IFRS 16 standard.

Net debt stood at 3,023.2 million euros on June 30, 2019, up from 2,296.6 million euros on December 31, 2018. The net debt to consolidated equity ratio rose to approximately 65% from 50% at the end of 2018.

Legrand stated it will continue its value-creating acquisition strategy.