(Boursier.com) — Great fell by 1.6% to 79.15 euros on Tuesday, while in the first half, the group’s turnover increased by 18.5% compared to the same period of 2021, and reached 4,092 ME. Organic sales growth was +10.9% over the period, with +10% in mature countries and +13.6% in new economies. This development reflects numerous commercial successes, Legrand’s “pricing power”, as well as the still very active management of the “supply chain”, whose tensions remained high in the second quarter, in particular for electronic components.
The scope effect related to acquisitions is +2.4%. Based on the acquisitions made and their probable dates of consolidation, this effect would be around +3% over a full year. The impact of the exchange rate effect in the first half of 2022 is +4.4%. Based on the average exchange rates for the month of June 2022 alone, the annual exchange rate effect on revenue would be nearly +4.5% in 2022.
Adjusted operating profit and margin
In the first half of 2022, adjusted operating income was €838 million, up +10% compared to the first half of 2021. The adjusted operating margin thus stood at 20.5% of sales for the period.
Before acquisitions (at 2021 scope), the adjusted operating margin reached 20.8% of revenue for the first half of 2022, down -1.2 points compared to the first half of 2021.
In an environment that remains highly inflationary (including an increase of approximately +17% for raw materials and components in the first half), the maintenance of a high level of profitability reflects solid control of costs and selling prices. Net income, Group share was up 13.9% compared to the same period in 2021, at €548 million. The +67 ME increase is mainly due to:
the increase in operating profit (+73 ME);
the favorable evolution (+5 ME) of the financial and foreign exchange result; and the increase in the amount of corporation tax (-11 ME).
Cash generation and balance sheet structure
Cash flow stood at 787 ME, or 19.2% of sales in the first half of 2022, down -1 point compared to the first half of 2021.
At 16.8% of sales for the first six months, i.e. €688 million, normalized free cash flow increased by +19.2% compared to the first half of 2021.
Free cash flow represents 7.8% of sales for the period, with in particular the maintenance of reinforced inventory coverage, aimed at providing the best possible service to the Group’s customers.
The net debt to EBITDA ratio stood at 1.6 as of June 30, 2022.
Among the latest advice from brokers, Deutsche Bank has adjusted its target from 95 to 97 euros while remaining on the buy’. Oddo BHF had previously adjusted its price target from 100 to 94 euros with a notice to ‘outperform’.