February 15, 2024
Legrand Reports Solid Results Amidst Challenging Markets
Targets set for slight sales growth in 2024 with strategic focus
Today, Legrand, the France-based global specialist in electrical and digital building infrastructures, announced its financial results for the full year 2023, highlighting solid performance despite challenging market conditions.
In the United States and Canada, Legrand generates most of its revenues from non-lighting business segments, yet it has evolved to become a very important name in lighting and lighting controls throughout North America. Legrand lighting and controls brands operate mostly autonomously and include the following:
- Focal Point
- Pinnacle Architectural Lighting
- Kenall
- OCL
- Finelite
- Wattstopper & Encelium
The task at Inside Lighting often involves sifting through the vast array of information provided by diversified, worldwide companies like Legrand, where sales from lighting-related segments are merely a small portion of their global revenue and not explicitly reported in detail. This creates a challenge in keeping our content aligned with the specialized interests of North American Lighting People.
To streamline our coverage, we will categorize the information from Legrand’s annual results into three main sections: (1) overall results, (2) insights specific to lighting and lighting controls, and (3) general observations pertinent to the North American market.
Overall Results: Fiscal year 2023
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Legrand reported a solid financial performance in 2023 amidst retreating building markets, achieving a 0.9% increase in sales to €8.416.9 billion, which represents a 4.7% rise excluding exchange rates and the company's exit from Russian operations.
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The company's adjusted operating margin reached 21.0% of sales, with a significant 53.0% increase in free cash flow to €1.6 billion, constituting 18.8% of sales.
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Noteworthy achievements include a 118% Corporate Social Responsibility roadmap achievement rate, the execution of five acquisitions contributing to growth (including Encelium), and the setting of 2024 targets for slight sales growth and an adjusted operating margin of 20.0% to 20.8% of sales.
Lighting & Controls Insights
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The mention of specific product launches, such as Focal Point’s Natural Collection architectural and acoustic lighting and Encelium Touchscreen Panel KX4 LCD lighting panels and controls, showcases Legrand's commitment to highlighting its lighting and controls offerings.
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Legrand's significant advancements in segments including datacenters, energy efficiency solutions, and connected products highlight a strategic focus on innovative and high-growth areas. These areas are pertinent to lighting professionals, given the increasing integration of lighting systems within smart and energy-efficient infrastructures, but it is unclear how much of the success in this sector is connected to lighting and controls.
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Legrand's acquisition strategy, including companies like Encelium in the United States, known for its lighting control systems, indicates a reinforcement of their capabilities in the lighting and controls sectors, potentially broadening their product portfolio and market reach in these areas.
North America Insights:
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North and Central America represents 38.6% of Legrand’s total global revenue or approximately $3.5 billion USD.
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Legrand recently announced the acquisition of California-based ZPE Systems, Inc., a provider of data center, branch and edge management infrastructure.
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The performance in North and Central America shows a -2.0% decrease in sales at constant scope of consolidation and exchange rates over the year, with a notable -2.8% full-year decline in the United States. This might reflect challenges in the US market, particularly in sectors like residential, offices, and commercial buildings, which could impact lighting and controls businesses operating in these areas.
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However, double-digit growth in sales to datacenters in the United States offers a silver lining, highlighting sectors within the North American market that remain robust.
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Legrand's operational adjustments, including the consolidation of distribution centers and closure of production sites in the United States, alongside the opening of a new plant in Mexico, signal strategic shifts in their North American operations that could influence supply chain dynamics and product availability for lighting and controls professionals in the region.
For 2024, Legrand has set its overall targets for slight sales growth in the low single digits, organically and through acquisitions.
Full report: Legrand 2023 results »
