In this Research Note, we examine Legrand Group, from the perspective of its latest financial results reported on 15th February 2024, strategic roadmap and acquisitions, based on investor presentations and their 2023 Universal Registration Document.

Legrand positions itself as the only global specialist in electrical and digital building infrastructure, with the largest product offering on the market.  Legrand offers a range of more than 300,000 products and solutions in over 100 product families. As a giant in profitable niches, Legrand leads as the number 1 or number 2 player in product areas such as wiring devices, emergency lighting, architectural lighting and door entry systems.

2023 Legrand Financial Highlights

With sales of €8.4 billion, growing organically and through acquisitions by almost +5%, Legrand published record profitability indicators, with an adjusted operating margin of 21.0% of sales, free cash flow of €1.6 billion (or nearly 19% of sales) and net earnings per share up nearly +16% over the year.

This performance was also driven by growth in their faster-expanding segments (data centers, energy efficiency solutions, and connected solutions), at constant structure and exchange rates, of more than +11%, bringing the share of these segments to 36% of the Group's sales in 2023. 

Mapping Legrand Strategy in Smart Buildings

This chart reviews Legrand’s business relationships in the smart buildings space over the last five years, through investments, partnerships, and acquisitions.

Recent notable business moves reinforce the group’s focus on faster-expanding segments.

Connected Buildings

In May 2024, Legrand announced a minority stake acquisition in UIOT, one of the leading Chinese players in wireless IoT smart-home solutions with strong innovation capabilities, which will allow Legrand to strengthen its position in the connected building segment.

In April 2024, Legrand announced the acquisition of Enovation, a Dutch specialist in healthcare software in the market for connected health and assisted living. Enovation's offerings include software for remote monitoring of elderly and dependent persons using connected objects, sharing health information and data, and coordinating care between facilities, providers, and professionals.

Enovation is based in Rotterdam, employs over 350 people and has annual sales of over €60 million. With a largely recurring revenue stream, the company also has a significantly higher adjusted operating margin than Legrand.

In March 2024, Jooxter a French occupancy analytics startup addressing office buildings and Legrand France concluded a strategic partnership to deploy their new people counting technology, through a next-generation activity sensor in the Legrand Light-Up range.

The Eliot program, launched in July 2015, aims to speed up deployment of the Internet of Things within the Group’s offering and thereby enable Legrand to be a major player in democratizing the use of connected products in buildings. The number of connected product families has doubled since the program’s launch to more than 40. They accounted for around 15% of 2023 sales, up from 6% in 2015.

Data Centers

In April 2024, Legrand announced the acquisition of Netrack, an Indian specialist in server and network rack manufacturing. As a long-standing player in this market, Netrack is known for its high-quality products, which are a popular choice in many datacenter projects. Based in Bangalore and employing over 250 people, Netrack reports annual revenue of around €10 million.

In 2023, 2 acquisitions in the datacenter sector were completed: Teknika, a Chilean specialist in UPS used in datacenters and zpe, an American specialist in serial console servers.

Legrand datacenter sales went up from around 4% in 2015 to around 15% in 2023, following 17 acquisitions in this area since 2010, 7 of them in the United States. Legrand generates over 90% of its sales in the white-space segment – the part of the building devoted to servers.

Energy Efficiency

Legrand announced the acquisition of Encelium on 6th December 2022. A US manufacturer of highly energy-efficient lighting for commercial buildings with annual sales of over $20 million, the firm is based in Boston (Massachusetts). The acquisition comes as part of Legrand’s ongoing global strategy to further strengthen its position in the commercial lighting control sector.

Encelium is part of Legrand’s Building Control Systems division, which operates in North and Central America. With its in-fixture control options, site lighting, and DALI controls, Encelium will enhance Legrand’s offering with an expanded portfolio of solutions, alongside brands including Wattstopper, Legrand Shading, and Vantage.

Sales from energy efficiency products reached around 24% of Legrand’s total 2023 sales (versus 11% in 2015) and broke down as follows: around 45% in commercial facilities, 35% in datacenters and 20% in residential buildings.

As part of its strategic roadmap, the Group has set itself the target of generating around 50% of its sales from its faster-expanding segments in the medium term.

This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.