A long-term investor
Wendel is a hands-on investor and shareholder that assists sector-leading companies in their long-term development. Wendel's business model combines the entrepreneurial passion born of a long family tradition with a culture of performance and accountability.
Legrand
Products and systems for electrical installations
Present in more than 70 countries • Sales in almost 180 countries • 34,800 employees, including 1,850 in R&D • 5,000 active patents.
| in millions of euros | 2007 | 2008 | |
| Net sales | 4,129 | 4,202 | +1.8% |
| Recurring adjusted operations income (1) | 732 | 746 | +1.8% |
| as a % of ne sales | 17.7% | 7.7% | |
| Net income (2) | 396 | 402 | +1.5% |
| Net financial debt | 1,798 | 1,862 |
(1) Operating income restated for accounting entries related
to the 2002 acquisition of Legrand France and excluding
restructuring costs.
(2) Net income (Group share) excluding non-recurring items
related to restructuring and currency gains/losses.
How Wendel is involved
Board of Directors:
Frédéric Lemoine (Chairman)
beginning May 5, 2009
Ernest-Antoine Seillière
Arnaud Fayet (directors)
Appointments and Compensation Committee:
Frédéric Lemoine (Chairman)
beginning May 5, 2009
Audit Committee:
Arnaud Fayet
Strategic Committee:
Frédéric Lemoine
beginning May 5, 2009
Why we invested
As the world leader in electrical installations with 19% market share, Legrand offers almost 170,000 product references and a portfolio of globally known brands, such as Legrand and Bticino. Driven by its strong capacity for innovation, with 4.4% of its net sales devoted to R&D and more than 40% of its investments dedicated to new products in 2008, Legrand focuses its efforts on high-value products, such as home automation and voice-data-image products. It also benefits from its heavy exposure to the renovation market (60% of sales), which by nature is less erratic than major projects.
Legrand operates on a highly fragmented market, which means that it must offer a full range of multi-feature products and systems meeting various national electrical standards. Local standards and regulations raise the initial investment cost for any market entrant. The nature of the market also requires establishing relationships of trust with various players in the value chain, including distributors, electrical installers and end-users.
How Wendel has helped Legrand to expand
After its successful IPO in April 2006, Legrand was able to reallocate capital to accelerate its growth. Investment expenditure was optimized at 3.8% of net sales in 2008 vs. 7.5% on average from 1996 to 2002. Working capital requirement was cut to 12.1% of net sales in 2008 vs. 20.6% on average from 1996 to 2002. More efficient capital management has helped increase R&D and marketing expenditure. Legrand has also raised its profile in high-potential countries, in order to accelerate its international expansion.
An efficient model for profitable growth
The 1.8% increase in consolidated net sales in 2008, to €4.2 billion, proves Legrand’s staying power. Adjusted operating income on ordinary activities came to €746 million, or 17.7% of net sales. This is a strong margin and stable vs. 2007. Net income (group share) rose 1.5% to €402 million when excluding non-recurring costs due to restructuring and currency gains/losses. These performances resulted from wide-ranging and aggressive adjustment plans. Legrand’s financial structure features strong free cash flow equivalent to more than 10% of net sales and long-term secured financing.
Outlook
In the uncertain environment of 2009, Legrand’s responsiveness gives it a decisive edge. For 2009 it is targeting an adjusted operating margin (excluding an estimated €40 million in restructuring costs) of at least 14%.
