(AOF) – The Board of Directors of Rexel has unanimously decided, on the recommendation of the Appointments, Governance and CSR Committee, to propose to the General Meeting of April 30, 2024 the appointment of Eric Labaye and Catherine Vandenborre as new independent members of the Board of Directors for a period of 4 years, as well as the renewal of the directorship of Brigitte Cantaloube. Furthermore, François Henrot informed the Board of his resignation from his mandate as director with effect from the end of the General Meeting of April 30, 2024.
Eric Labaye is the co-founder and President of IDEL Partners since 2023, a consulting company for executives on business transformation topics.
Since September 2023, Catherine Vandenborre has been interim general manager of the Elia group, manager of the electricity transmission network in Belgium and Germany and developer of electrical infrastructure in the United States.
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Key points
– World number 2 in professional distribution of electrical equipment, with more than 6% market share, created in 1967;
– Distribution of sales of €18.7 billion between Europe for 51%, North America for 42%, ahead of Asia-Pacific (7%);
– Eight major product groups: electrical installation equipment (44% of sales), conduits or cables (22%), lighting (15%), climate engineering (6%), tools, renewable energy, software, security and communication;
– Business model based on 3 pillars: local anchoring and global coverage (60% of revenues in countries where the group holds 15% market share), power and agility of logistics, generalization of artificial intelligence in logistics and commercial processes;
– Split capital (20.2% for the Cevian fund and 1% for employees), Ian Meakin chairing the board of directors of 12 members and Guillaume Texier being general manager;
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Solid balance sheet with, compared to €5.3 billion in equity, net debt giving a leverage of 1.26 at the end of June and free self-financing of €242 million.
Challenges
– “Power Up 2025” growth strategy:
– 2 pillars: “Excel fundamentals” (talent, suppliers, supply chain, digital and productivity) and “a differentiated leader” (data & AI, advanced services, energy transition solutions, ESG and mergers and acquisitions) ,
– external growth generating €2 billion in additional sales,
– annual growth of 4 to 7% in sales (including 40% in digital) and operating margin of 6.5 to 7% of sales;
– Innovation strategy financed at €80 million, 2/3 of investments going into digital:
– multichannel offer with platform dedicated to fluidity, Esker deployment of the Email to EDI solution and artificial intelligence for sales alerts, pricing modules and assortment optimization, leading to 25% of digital sales,
– expansion of services to suppliers (data analysis, prediction, etc.),
– open innovation via the global Digital factory, clouds open to customers and Hi! Paris, center specializing in AI and data analysis;
– Environmental strategy included from product design with 48% green turnover and objectives validated by the SBTi:
– by 2030 (vs 2016), reduction of 35% in CO2 emissions from operations and 45% in those resulting from the use of products sold,
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green borrowing and indexing of bond lines on the achievement of CO2 objectives;
– Continued portfolio rotation, beneficial to profitability, with the acquisition, for €485 million, of the Dutch Wasco;
– Success of the new purpose of “providing electrification solutions”, at 22% of total revenues and growth 5 times higher than that of other divisions.
Challenges
– Three major impacts – material inflation 1
time
notably copper needed for cables (17% of sales), shortage of electronic components and tensions in the availability of labor – offset by operational agility, the increase in selling prices;
– Strong disparity in margins (3.4% in Asia, 16.1% in North America and 13.6% in Europe)
– Continued rise in digital sales (25% of revenues) in the face of increased competition with Amazon Business in distribution to professionals;
– Uncertainties about activity in China (around 4% of sales), handicapped by the recovery from Covid;
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After sales up 8% at the end of June, 2023 targets set for growth close to 6% in turnover and 6.6 to 6.9% operating margin;
– Continued share buybacks until 2025.
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Concerns remain
According to the Federation of Specialized Trade, Procos, in October 2022, activity fell by 1.5% year-on-year. However, the activity of beauty and health (+ 5.2%) and specialized food (+ 3.5%) are dynamic compared to October 2021. Attendance at points of sale was very impacted by the problems fuel and unfavorable weather. Compared to October 2019, a pre-covid year, the drop in attendance is very sharp (-20.9% in October). Shopping centers and the outskirts are more impacted than city centers with a gap of four to five points.
There are several reasons for concern for the future. The players are experiencing a very significant jaws effect given the increase in their operating costs while the evolution of demand is very uncertain. Very few brands can pass on the increase in their costs in sales prices. The federation therefore asks, among other things, to limit the indexation of the Commercial Rent Index to + 3.5% for the rents of all companies in 2023. It also invokes an absolute emergency: to cap the price of energy for 2023 and retroact on contracts already signed to prevent the rate of failures from accelerating.