THE LEGRAND GROUP
PRESS INFORMATION KIT
2007
Legrand Corporate contact Legrand Edith Dumas Tel: + 33 (0)5.55.06.89.24 Tel:+ 33 (0)5.55.06.75.65
[email protected] Corporate and financial communication contact Publicis Consultants Axel Bavière Tel: + 33 (0)1.44.43.73.11 axel.baviè
[email protected]
Legrand… the Group in brief
…………………………………………
p1
Legrand in a few words
One Business… on a world scale
………………….……..………
p2
One core business Players in the economic chain A single business area Value-added products and systems Flagship projects
Performances and ambitions… the Legrand signature ……………… p 8 A dual ambition A unique strategic position Leaderships A powerful hold on the market Innovation Key figures for 2006 An organisation… focused on efficiency Group organisation The management team History Sustainable Development
………………….……… p 14
1
Legrand … the Group in brief
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings. With a presence in more than 60 countries and a workforce of over 33 000 people, Legrand in 2006 made sales totalling over €3.7 billion, up by 15% in comparison with 2005. Its positioning on a single core business enables it to pursue a dual ambition, namely to become the leader in products and systems for electrical installations and information networks on all markets, and to become the benchmark player in smart electricity by providing innovative solutions and services. As a major player in its field, Legrand is developing and reinforcing its technological leadership on its markets by constantly increasing the added value of its offer by incorporating new technologies.
In 2006, 5% of sales revenue was invested in R&D, and sales made by products less than 5 years old accounted for 37% of 2006 overall sales. Its product offer is particularly extensive since the Legrand Group's catalogues include over 130 000 items, subdivided into 80 product families. The Group offers complete solutions through to home and building automation, which integrate in particular the distribution of electrical energy and information, controls and connections, security systems for people and property, solutions for industrial buildings and processes. Legrand‘s market, which represents around €60 billion, is very fragmented. The Group holds leadership positions in at least one of its major business areas in a number of countries among which France, Italy, Portugal, the Netherlands, Spain, Greece, Poland,the United-Kingdom, Belgium, the UnitedStates, China, South Korea, India, Australia, Brazil, Mexico, Chile, Peru and Venezuela.
Geographical distribution of sales
Italy 18%
France 25%
Rest of world 18%
USA & Canada 17%
Rest of Europe 22%
19% 15%
World leader in switches and socket outlets
of the world market
of the world market
World leader in cable management products
2
One business on a world scale With a presence in more than 60 countries and a workforce of over 33 000 people, Legrand in 2006 made sales totalling in excess of €3.7 billion, up by 15% in comparison with 2005. Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings. The Group offers complete solutions through to home and building automation, incorporating in particular: - panels and cabinets, circuit-breakers, VDI panels and patching racks, - trunking and mini-trunking, floor boxes and technical flooring, power columns, - switches and sockets, control of comfort, communication and safety, installation control;
Legrand System
- fire and intruder alarms, emergency lighting, access control.
CONTROLLING INSTALLATIONS AND CONNECTION
CABLE MANAGEMENT
ENERGY DISTRIBUTION
VOICE-DATE-IMAGE DISTRIBUTION
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
3
A close partnership with all the players in the economic chain The quality and professionalism of the relationships built up between the Group and its customers explain why the Legrand offer is so closely in line with individual market demands. The product life cycle involves users, installers, specifiers and distributors who are all offered specific services. The main services include: - commercial support to customers to assist them with product selection and offer optimisation, - high performance logistics centres meeting the specific individual needs of each market, - training facilities including customer reception and training centres such as: Innoval in Limoges, the Customer Centre in Dubaï, etc., software applications such as XL Pro, "Je chiffre et je vends" or Ti system, - extranet sites designed for the specific needs of each target, - powerful resources for end-user information to support the promotion of sophisticated functions. TRAINING More than 1100 training courses given at Innoval in 2006
SHOW-ROOMS 13 new show-rooms opened in 2006
4
A single business area Specialising in one core business area allows the Group to provide the most relevant answers to the diverse and changing needs of both end users and professional electricians, and to play a key role in driving the emergence of competitive value-added solutions for each player in the economic chain: - consumers' expectations of their electrical installation and information networks are greater comfort, interactivity and safety, for an improved quality of life in the home; - installers base their purchase decision on the quality, reliability and absolute safety of solutions, and on their facility and speed of installation; - specifiers look for solutions that are complete and reliable, to allow them to explore their ideas to the full right across the world; - distributors seek quality products that match customer expectations, solutions that combine easy storage, fast and flexible delivery, reliable deadlines and secure transport conditions, and sales and marketing action in support of their commercial efforts.
Distributors
Installers Electricians and installation contractors, panel-builders, maintenance
Specifiers Professional investors, architects, decorators, design consultants
Professional and Private end users New, renovation, DIY
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
5
Value-added products and systems From a product approach to a system approach
One product = several functions
One product = one function
Trading up Adding innovative functions and aesthetic value
Home Cinema connection
Soft-touch switch
Scenario switch
Comfort thermostat
Innovative design, precious materials
Leather
Glass
Metal
Corian®
6
Fast-growing businesses Home automation, voice-data-image and energy distribution are growth drivers for the Group. These fast-growing businesses represented 11% in 2006.
Home automation
Lighting controls, sound distribution, access control…
VDI
Wifi outlet, data networks…
Energy distribution
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
7
Flagship projects Example : 3 projects in Dubaï
Dubai Mercantile Exchange (Ortronics data center) – This joint venture between Dubai Holding and the New York Mercantile Exchange is intended to be the first energy futures market in the Middle East. Service continuity and network performance are a critical factor for the DataCenter and the 5 000 ports to be installed. Saba Tower (network, door entry system and wiring devices by Legrand) – 36-storey residential tower comprising some 15 000 Category 6 access points for distribution of broadband services. Moderately critical, but with lots of cabling space. Thuraya Tower (Ortronics network and Legrand power products) – The head office of the No. 1 private telecom operator in the Emirates, with its 30 floors and over 10 000 network points, needs an infrastructure that can provide the essential services required by such a company.
8
Performances and ambitions The Legrand signature
A dual ambition Its specialisation combined with a powerful market hold enables the Group to display clearly its ambitions: Stand as the overall market leader in products and systems for electrical installations and information networks; Become the benchmark player in smart electricity with innovating solutions and services.
A unique strategic position Legrand's specialisation on one single market together with its ambitious growth strategy have enabled it to build up an outstanding coverage of this market. The Legrand Group has over 60 units worldwide and sells in more than 160 countries. Legrand thus makes 75% of its sales outside France, notably over 22% in emerging countries. The products and systems offer is particularly wide-ranging since Legrand offers over 130,000 catalogue items distributed over 80 product families.
The Americas Brazil . Canada . Chile Colombia . Costa Rica Mexico . Peru . United States . Venezuela
Europe and Africa Algeria . Austria . Belarus . Belgium Bulgaria . Croatia . Czech Republic Egypt . Estonia . France . Germany Greece . Hungary . Ireland . Italy . Latvia Lithuania . Morocco . Netherlands Poland . Portugal . Romania . Russia Serbia and Montenegro . Slovakia Slovenia . South Africa . Spain . Sweden Switzerland . Tunisia . Turkey . Ukraine United Kingdom
Asia, the Gulf and the Pacific Australia . China . Hong Kong India . Indonesia . Iran Kazakhstan . Malaysia . New Zealand . Philippines . Saudi Arabia . Singapore . South Korea Syria . Taiwan . Thailand . United Arab Emirates . Vietnam
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
9
Strong leaderships on key markets Internationally, Legrand is in a leading position on the following markets: - switches and socket outlets with 19% of the global market – in this business area, Legrand is the only company offering solutions that comply with all major world standards (United States, United Kingdom, Germany, France, Italy, China), supplemented by numerous ranges that meet specific standards (Brazil, Switzerland, Australia, South Korea, etc.); - cable management products with 15% of the global market: plastic, metal and aluminium trunking and mini-trunking – plastic, metal and wire cable trays – floor distribution (underfloor trunking and floor boxes) – rigid and flexible conduits – office outlet extensions are the products that compose the offer. The Legrand Group holds 6% of the global market, with leadership positions in at least one business area on a number of key markets: France, Italy, Spain, Poland, United Kingdom, United States, Mexico, Brazil, India, South Korea, and Australia, among others.
Geographical leaderships No.1 positions in at least one product family in more than 20 countries
10
A powerful hold on the markets This powerful hold on its markets provides Legrand with major competitive advantages, such as: the ability to market products that are in line with the requirements of most national markets among which installers' working habits and consumers' tastes may vary significantly and where specific standards often govern the product itself, its operation and its installation; the ability to offer customers – especially in the form of integrated systems – virtually all the products required for an electrical installation, from the circuit protection panel to the connection of the extra low voltage outlets and thus to prevent costs, risks and delays associated with products purchased from different suppliers; the ability to take advantage of consumers', installers' and distributors' familiarity with and faith in the products for which Legrand holds leading positions to further develop Legrand‘s positions on products for which the Group is only a challenger and thereby drive its growth.
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
11
Innovation serving the market Legrand devotes significant efforts to product innovation: 4.7% of sales and almost 1 800 employees are dedicated to Research and Development in 20 countries. The Group has more than 4 600 active patents in 69 countries. The Group's objective is to have new products account for 50% of sales. In 2006, over €250 M were invested in developing and producing new solutions. This dynamic approach to driving its growth based on solutions with stronger technical added-value involves launching innovative ranges on a regular basis. To support this process, the Group has production subsidiaries in some thirty countries on every continent. This organisation enables Legrand to keep in close touch with the specific needs of each market, while optimising the three customer service cornerstones: quality, price and lead-time. These production subsidiaries are in charge of one or several product families and use the latest technologies to share their respective experiences. The R&D offices are networked and an in-house knowledge management database has been set up to support the sharing of skills within the Group, with the assistance of the teams operating in Limoges and Varese, historical birthplaces of Legrand and BTicino, which are the Group's two most important industrial centres in terms of both size and product variety.
12
Key figures for 2006 Regularly optimising its offer of products and functions, its manufacturing and distribution facilities and its geographical coverage enables Legrand lastingly to strengthen its competitive position and thereby generate the added financial resources needed for its future development.
Consolidated data
% variation 2006/2005
2006
2005
3 737
3 248
+ 15%
616
509
+ 21%
16.5%
15.7%
530
406
14.2%
12.5%
252
101
6.7%
3.1%
456
328
12.2 %
10.1%
1 676
2 017
(€ million, IFRS) Sales Adjusted operating income as % of sales Operating income as % of sales Net profit as % of sales Free Cash flow as % of sales Net financial debt on
31st December
+ 31%
+ 149%
+ 39%
-17%
For 2007, Legrand is confident in its ability to increase its total sales, excluding exchange rate variations, by between 7 and 10%, of which 4 to 5% from organic growth, and to maintain, after the consolidation of recent acquisitions, a high level of adjusted operating margin, comparable to that of 2006. Rest of world 18%
Geographical distribution of sales in 2006
USA & Canada 17%
Rest of Europe 22% Italy 18%
France 25%
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
13
2006: Strong performance overall
Steep increase in sales (€M)
Net income (Group share) more than doubled (€M)
(1) (2)
Strong increase in adjusted EBIT (1) (€M)
Vigorous rise in free cash flow (2) (€M)
Figures restated for accounting entries with no cash impact relating to the acquisition of Legrand France in 2002 Free cash flow: cash flow from operations – change in working capital – capex + net proceeds from sale of fixed assets
Executive Committee
14
An organisation
Gilles SCHNEPP Chairman and Chief Executive Officer
focused on efficiency Olivier BAZIL Vice-Chairman and Chief Operating Officer
An organisation that supports growth and profitability While retaining a country-based organisation relying on strong and well-established general or specialised brands that are valued by the customer such as, for example, Legrand, BTicino, Wiremold, Ortronics or The Watt Stopper, the Legrand Group has enhanced its organisation: 5 industrial divisions were created to further develop optimisations between industrial and R&D sites; Centralisation and globalisation of Purchasing, with deployment by way of mixed buyer/user teams. Transversal teams were set up (sales and marketing strategy for dealing with key accounts) especially to facilitate the implementation of global projects.
Guy DURAND Vice-President Industry Division
François FRUGIER Group Vice-President Human Resources
Pierre MAZABRAUD Vice-President Wiring Devices Division
Gérard PELLETIER Group Vice-President Sales France
Paolo PERINO CEO of BTicino
John SELLDORFF Chairman and CEO of Legrand North America
Eric SEURIN Group Vice-President Purchasing and Logistics
Philippe WEBER Vice-President Protection Division
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
15
Legrand management team
Gilles SCHNEPP, Chairman and Chief Executive Officer Gilles Schnepp, born on October 16th 1958 in Lyon, has been Chairman and Chief Executive Officer of the Legrand Group since March 22nd 2006. He joined Legrand in 1989 as Deputy CFO and later became Company Secretary and then the Group's Chief Financial Officer. In 2000, he was appointed Chief Operating Officer, and since 2001 has been a member of the Executive Committee and of the Board of Directors. On January 1st 2004, he was appointed Vice-Chairman and Chief Executive Officer of the Legrand Group. Before joining Legrand, Gilles Schnepp was Senior Vice-President of Merrill Lynch France. Gilles Schnepp is a graduate of the Ecole des Hautes Etudes Commerciales.
Olivier BAZIL, Vice-Chairman and Chief Operating Officer Olivier Bazil, born on September 22nd 1946 in Bordeaux, has been Vice-Chairman and Chief Operating Officer of Legrand since 2000. He joined Legrand in 1973 as Deputy Company Secretary, and successively held responsibilities as Chief Financial Officer (1979), Director (1989) and Deputy Chief Operating Officer (1994). He is a member of the Executive Committee and of the Board of Directors. Olivier Bazil is a graduate of the Ecole des Hautes Etudes Commerciales and holds an MBA (Master of Business Administration) from Harvard.
16
Milestones in the Group’s history The company was founded in 1860 with the setting up of a porcelain workshop on the "route de Lyon" in Limoges. In 1904, this workshop was taken over by Mr. Legrand, from whom the company took its name. He subsequently directed the company towards the production of switches. In 1944, two industrial entrepreneurs from the North of France – Jean Verspieren and Edouard Decoster – took over the management of Legrand which then employed some 400 people, and gave Legrand the decisive momentum and the business directions that were to make its success. In 1949, the decision was made to focus exclusively on the production of electrical installation wiring devices.
1966: First subsidiary outside France: in Belgium. 1970: Legrand is listed on the Paris Stock Exchange. 1974: First plant outside Europe: in Brazil. 1984: Pass and Seymour, first subsidiary in North America. 1989: Acquisition of BTicino, the Italian No.1. Foreign sales account for 57 % of the total. 1992: Acquisition of Baco (France) and Tenby (United Kingdom). 1995: RTGamma (Italy) joins the Group. 1996: Acquisition of The Watt Stopper (United States), FAEL (Poland), Luminex (Colombia) and MDS (India) - Launch of LEXIC, range of protection devices aimed at the European market. 1997: Acquisition of Saft's Emergency Lighting and Alarm Systems Division (France, Spain, Australia). 1998: Acquisition of Ortronics (United States), specialist in structured cabling for data, telephone and video networks. 1999: Ceb (Italy) and Anam (South Korea) join the Group; European launch of new ranges of wiring devices meeting German standards in Spain, Turkey, Greece, Portugal, Hungary and Austria.
2000: In Spain, acquisition of Quintela and Tegui; in the US, acquisition of The Wiremold Company and of Horton Controls; in Brazil, acquisition of Lorenzetti. 2001: Launch of a friendly exchange offer by Schneider Electric aimed at the entire share capital of Legrand, which is rejected by the Brussels Commission in October 2001. 2002: Finalisation of the "demerger" process: the agreement between Schneider Electric and the consortium (comprising mainly Wendel Investissement and KKR) comes into effect on 10 December 2002 and Legrand's capital is acquired by the consortium. Within its new share-ownership framework Legrand retains its full scope and benefits from excellent development perspectives, with the prospect of returning to the stock exchange within three to five years. 2004: Acquisition of Van Geel (Netherlands) . 2005: Acquisition of the Zucchini Group (Italy), acquisition of OnQ (United States) and of ICM Group (France). Acquisition of the divisions TCL international Electrical and TCL Building Technology. 2006: Acquisition of Shidean (China). Return of Legrand to the Stock Exchange on Euronext. Acquisition of Cemar (Brazil), of RM Kabelbaner (Denmark) and of Vantage (United States). 2007: Acquisition of HPM in Australia and of UStec in the United States.
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
17
Sustainable Development At the heart of its mission, the Legrand Group offers innovative solutions to reduce energy consumption (lighting and heating management, shutter control), but also to protect against and prevent electrical risks, thus quite naturally involving the environmental dimension of Sustainable Development. The same is true of its other two components (social and economic) since, for many years now, the Group has harnessed the expert know-how of its teams to implement a wide range of good practices and thereby ensure responsible, sustainable and profitable growth in its business. This approach led to the setting-up of a Sustainable Development unit to unify the three aspects of the concept and consolidate the various actions concerned in the annual report.
Social dimension The Group's Charter of fundamental principles is issued to each employee of the Group; it expresses the values and principles that give the Group its distinct personality and that serve as a benchmark for its practices both inside and outside the company. Respect for the people who carry it forward and for the community in a wider sense, is at the heart of its strategy and gives a more ambitious dimension to its development. The Legrand Group has drawn up a worldwide Prevention Charter to cover issues involving the respect for persons. This Charter applies to all Group establishments and subsidiaries and states the guiding lines of Legrand policy in matters of health and safety. All of the Group's entities have committed to a Safety Management System reflecting the guidelines of the International Labour Organisation, and based on the ILO-OSH 2001 standard. Moreover, by encouraging internal mobility, training and skills development, the Group is committed to promoting and respecting diversity, considering that skills diversity is an opportunity and a key growth factor. In France, Legrand has just signed an agreement for male/female professional equality and another covering measures to integrate disabled workers. The latter agreement enables to go beyond legal requirements and the national average. By supporting social and cultural projects, the Group involves itself into the local life of the countries in which it is established.
18
Signing up to the Global Compact Its 10 principles concern the respect of Human rights, the elimination of discriminatory practices from employment, environmental protection and the fight against corruption. This commitment demonstrates Legrand's will to deploy social, societal and environmental values which are an integral part of its development model both at Group level and for its stakeholders across the world.
THE 10 PRINCIPLES OF THE GLOBAL COMPACT Human rights 1. Businesses should support and respect the protection of internationally proclaimed human rights within their own sphere of influence; and 2. make sure that their own establishments or subsidiaries are not complicit in human rights abuses. Labour standards 3. Businesses should uphold the right of association and the effective recognition of the right of collective bargaining, 4. The elimination of all forms of forced or compulsory labour, 5. The effective abolition of child labour and 6. The elimination of discrimination in terms of employment and occupation. Environment 7. Businesses should support a precautionary approach to environmental challenges, 8. undertake initiatives to promote greater environmental responsibility; and 9. encourage the development and diffusion of environmentally friendly technologies. Anti-corruption 10. Businesses should work against all forms of corruption, including extortion and bribery.
Environmental dimension In its concern to preserve the environment, the Legrand Group has for several years been resolutely committed to a continuous improvement process which translates into three lines of action: - Quickly integrating environment management into industrial plants: to date, 72% of industrial plants in the world and 90% in Europe are certified ISO 14001. - Acknowledging the environment in product design: on the one hand, by reducing the environmental impact of products throughout their life cycle and, on the other hand, by providing customers with all the relevant information: 20 eco-design projects are underway, and environmental declarations are available on the internet site www.legrand.fr or supplied to customers at their request. - Offering customers solutions enabling to design more environment-friendly installations: the Group offers solutions to help users reduce their power consumption. In One by Legrand programmed scenarios, The Watt Stopper's occupancy sensors and the Mosaic Programme light-sensitive switches can reduce by up to 35% the lighting expenses in residential and commercial buildings. By controlling its environmental impact, the Group contributes to protecting the environment and containing climate change.
Economic dimension The Legrand Group seeks to ensure responsible, sustainable and profitable growth in its business and to best meet stakeholders' expectations in terms of economic options.
Legrand is the world specialist in products and systems for electrical installations and information networks in residential, commercial and industrial buildings.
For Group news, financial and economic information: www.legrandelectric.com
128 avenue de Lattre de Tassigny 87045 Limoges cedex – France Phone 33(0)5 55 06 87 87 Fax 33 (0)5 55 06 88 88
