Legrand Raises 2023 Sales Growth Forecast on Strong First Half
The electrical and digital infrastructure specialist increased its full-year sales growth target to between 5% and 8%.
Legrand, the specialist in electrical and digital building infrastructures, raised its 2023 sales growth target to between 5% and 8%, up from a previous range of 2% and 6%. This updated guidance excludes currency effects and impacts from Russia, and includes a perimeter effect of approximately 2%. The company also increased its target for adjusted operating margin before acquisitions, excluding Russia and related impacts, to approximately 20.5% from a previous target of approximately 20%.
Revenue for the first half of 2023 rose 4.9% to 4,294.8 million euros compared to 4,092.4 million euros in the first half of 2022. This growth was driven by a 4.6% organic evolution and a 1.3% increase from perimeter expansion, which was partially offset by a 0.5% net impact from the planned withdrawal from Russia. Currency fluctuations reduced revenue by 1.0% during the period.
Profitability improved as adjusted operating result rose 14.0% to 954.7 million euros. The adjusted operating margin stood at 22.2% of sales. Excluding acquisitions and Russia, the adjusted operating margin reached 22.7% of sales, an increase of 2.2 points over the first half of 2022. The company attributed this level of profitability to gross margin reflecting control of costs and selling prices.
Net income attributable to the Group rose 18.8% to 650.9 million euros. This increase was driven by the growth in operating result, a favorable evolution in financial result, and a corporate tax rate of 26.0%. Net income per share was 2.45 euros, representing growth of 19.0% compared to the first half of 2022.
Cash flow from operations reached 892.7 million euros. Free cash flow was 813.8 million euros, or 18.9% of revenue, which the company said occurred in a context of reinforced stock coverage that is expected to normalize progressively. Normalized free cash flow rose 11.4% to 17.9% of revenue.
Financial activity included a 700 million euro fixed-rate bond issuance with a 6-year maturity, linked to the company's CSR commitments. The company also paid dividends totaling 504.0 million euros and conducted share buybacks of 175.7 million euros.
Investment in research and development represented 180.4 million euros in the first half of 2023, or 4.2% of revenue, compared to 169.4 million euros or 4.1% of revenue in the first half of 2022. During the period, the company acquired Clamper, a Brazilian leader in surge protection devices for low-voltage solutions, specifically for photovoltaic infrastructures.
Legrand aims for a CSR achievement rate of at least 100% for the second year of its 2022-2024 roadmap.