In this Research Note, we examine Legrand Group, from the perspective of its latest financial results, strategic roadmap, acquisitions, and connected buildings strategy, based on investor presentations, 2021 Capital Markets Day and their 2021 Universal Registration Document.
Legrand positions itself as the only global pure player in the electrical and digital building infrastructure industry, with the largest product offering on the market. Nearly 100% of sales are in buildings, serving residential spaces (40%), data centers (over 10%), other non-residential spaces including offices, hotels, and healthcare facilities (40%), and industrial buildings and infrastructure (less than 10%). Legrand offers a wide 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.
Present in nearly 90 countries with a total workforce of over 38,200 employees, Legrand generated sales of nearly €7 billion in 2021. Full-year 2021 sales rose +14.7% from 2020 to a total of €6,994 million. Adjusted operating profit for 2021 stood at €1,434 million, up +24.0% from 2020, setting the adjusted operating margin for the period at 20.5% of sales.
The group acquired four companies in 2021 amounting to €250 million of acquired sales.
- In November 2021, Legrand expanded its presence in Northern Europe with the completion of the acquisition of Ensto Building Systems, a Finnish leader in low voltage solutions. With annual sales of around €120 million, Ensto has tripled the proportion of the Group’s sales generated in Scandinavia on a proforma basis.
- Ecotap, a Dutch specialist in AC and DC charging stations for electric vehicles at home, businesses and public charging points. Ecotap business represents annual sales of roughly €40 million.
- Geiger, a German specialist in structured cabling for data centers. With annual sales of around €5 million.
- In February 2022, the Group announced the acquisition of Emos, a Central and East European leader in electrical installation components, with strong ties to DIY distributors and local e-commerce players. Based in the Czech Republic, Emos has annual sales of around €85 million.
In addition to its traditional growth levers, Legrand has taken a targeted approach to three faster-expanding segments which provide above market growth – Datacenters, Energy Efficiency and Connected Products. Underpinned by this strategy, sales in these faster expanding segments rose from around 18% in 2015 and 31% in 2020 to 33% in 2021 (excluding overlaps).
As part of its strategic roadmap, the Group has set itself the target of generating around 50% of its sales from these three areas in the medium term.
The Eliot program was launched in July 2015, to speed up deployment of the Internet of Things within the Group’s offering and thereby enable Legrand to be a major player in connected products in buildings. The program accounted for around 15% of sales in 2021. The number of connected product families has doubled since launch to more than 40.
Legrand believes that the electrical and digital building infrastructure market broadly breaks down into three product categories:
- Non-connected, single-function products.
- Highly integrated systems such as Building Automation and Building Management System, which feature both software and hardware.
- “Autonomous” connected products that are easy to install and use due to current developments in software (cloud and apps).
The first two categories are established: the first one accounts for most volume, while the second addresses the mature niche market of very large non-residential buildings. In Legrand’s view, growth in its addressable market will be driven mainly by the third category, which is likely to partially replace the other two, thus making connected products more accessible to consumers.
In 2021, Legrand sales from connected products went beyond the €1 billion milestone, and broke down into a balanced split by vertical, with offerings for:
- Residential spaces, for example consisting of user interfaces, power protection panels, door-entry systems, smart thermostats, etc.
- Non-residential (commercial buildings), for example consisting of Digital Lighting Management solutions, smart emergency lighting, energy consumption metering systems, etc.
- Datacenters, for example smart Power Distribution Units, busways with metering, Uninterruptible Power Supplies, etc.
The Group’s strategy aims to democratize connected buildings (i.e., bring them to the mainstream) through products known for their ease of installation and configuration as well as their modularity. They are particularly well suited to small and medium-sized buildings.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.