Legrand: Results for the First Nine Months of 2009 Full and continuing adaptation to market conditions Upward revision of 2009 margin target LIMOGES, France--(BUSINESS WIRE)--Regulatory News: In the first nine months of 2009, Legrand (Paris: LR - News) achieved a maintainable adjusted operating margin of 17.9% despite a 15.7% decline in sales at constant scope of consolidation and exchange rates, and generated a high level of free cash flow. Over the first nine months of the year, production costs plus administrative and sales expense fell by a combined 17.5% at constant scope of consolidation and exchange rates. Gilles Schnepp, Chairman and Chief Executive Officer of Legrand, comments: “These results illustrate the responsiveness of our group, which has continuously adapted spending to changes in sales since mid-2008. The performances achieved in this way have been associated with the in-depth efforts of our teams to improve group practice and structure. In spite of the absence of signs of improvement in market conditions, and considering the impact of the group’s achievements as well as the seasonality affecting the fourth quarter, Legrand now targets a maintainable adjusted operating margin of close to 17% for 2009 as a whole. With free cash flow for the months to September 30 reaching €465 million, while investments for new products increased by 23% over the same period, Legrand is in a position to finance the profitable growth of the future. In particular, the group intends to seize targeted acquisitions opportunities and to reinforce positions in emerging economies, where needs remain immense, as well as in the fastest growing product segments." Key figures
Results to September 30, 2009 Sales Legrand reported sales of €2,673.9 million for the period, down 16.1% from the first nine months of 2008 and representing a decline of 15.7% at constant scope of consolidation and exchange rates. Consolidation of acquisitions added 0.5% to sales, while variations in exchange rates reduced the total by 0.9%. Variations in sales at constant scope of consolidation and exchange rates broke down as follows by geographical region:
- France: Sales fell 9.8% over the first nine months of 2009, reflecting a general drop in demand. Voice-data-image ranges continue to show favorable momentum and this, combined with the resilience of wiring device ranges, notably Céliane, partly offset deterioration in non-residential market. - Italy: Third-quarter sales reflect attenuation of the modification in seasonal trends in distributors’ inventory building. The decline in the third quarter was only 12.6% compared with 22.2% for the nine-month period and was in line with that in downstream sell-out by distributors, signaling persistently tough business conditions. - Rest of Europe: Total demand continued to decline in both Eastern and Western Europe. For countries where the economic downturn took hold early, e.g. Spain, year-on-year comparisons now look more favorable, but this is offset by later deterioration in others. All told, sales in the region fell 23.0% in the first nine months of 2009. - USA / Canada: Sales remained in sharp decline at -17.4% in the first nine months of 2009, due to worsening condition in commercial market. Main leading indicators for residential construction have continued to improve gradually over the past few months. - Rest of the World: The encouraging signs we noted in the second quarter of 2009 have taken more definite shape, including in particular third-quarter sales on the rise in both India and China. While market conditions remain depressed, the improving trend could continue in quarters to come, notably in Latin America. Sales in the first nine months of 2009 were down 8.3%. Maintainable adjusted operating margin holds up well at 17.9% Maintainable adjusted operating income came in at €478 million or 17.9% of sales, benefiting from the adaptation measures that showed their full effect in 2009. The cost base, defined as the sum of production costs plus sales and administrative expense, was cut 17.5% at constant scope of consolidation and exchange rates in the first nine months of 2009, while R&D spending showed a slight increase as a percentage of sales. Excluding non-recurring items relating to restructuring charges, exchange-rate gains/losses and impairment of goodwill, net income for the nine months came in at €250 million or 9.4% of sales. Robust cash generation and decline in net debt Free cash flow amounted to €465 million in the first nine months of 2009, showing a rise from the same period of 2008 that reflected the adoption of very active management of working capital requirement. At the same time, investments for new products rose 23% to account for over 60% of total investment outlays. Compared with September 30, 2008, Legrand reduced net debt by €530 million. Our consolidated financial statements, a presentation of nine-month results and the related teleconference (live and replay) are available at (www.legrandelectric.com). Key dates
ABOUT LEGRAND Legrand is the global specialist in products and systems for electrical installations and information networks where people live and work. Its comprehensive offering of solutions for use in commercial, industrial and residential markets makes it a benchmark for suppliers worldwide. Innovation for a steady flow of new products with high added value is a prime vector for growth. Legrand reported sales of €4.2 billion in 2008. The company is listed on Euronext and is a component stock of indexes including the SBF120. FTSE4Good, MSCI World and ASPI (ISIN code FR0010307819). Contact: Investor Relations: Legrand Frank Maccary, +33 (0)1-4972-5353 Fax : +33 (0)1-4360-5492 frank.maccary@legrand.fr or Press Relations: Publicis Consultants Vilizara Lazarova, +33 (0)1-5732-8646 Fax : +33 (0)1-5732-8584 vilizara.lazarova@consultants.publicis.fr Source: Legrand
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