Rexel – Third-Quarter 2023 Sales

• Further growth in a more mixed market environment: +2.6%
• Volumes up +2.3%, with solid performance in North America and Europe
• Full-Year 2023 guidance confirmed
   

→ Sales of €4,665.1m in Q3 2023, up +2.6% on a same day basis

→ Volumes up +2.3% on the back of high electrification comparable base and more mixed market environment, demonstrating the strength of Rexel’s market positioning

→ Favorable pricing environment on non-cable products, up +1.3% in the quarter

→ Full-Year 2023 guidance confirmed: Resilient growth, sustained profitability and strong cash generation thanks to Rexel’s strategic action plans

→ Well on track to achieve our 2025 ambition; an update on Rexel’s strategic roadmap will be presented at a Capital Markets Day in June 2024

→ Completion of the Wasco acquisition on September 1^st, giving Rexel exposure to the fast-growing Dutch HVAC market, driven by energy efficiency regulations

→ Successful issuance of a €400m Sustainability Linked Bond maturing in 2030, at a competitive rate of 5.25%

“Quarter after quarter, the Rexel teams demonstrate their ability to deliver consistent profitable growth. It is particularly satisfying that this growth was achieved this past quarter despite a less favorable environment and on the back of a particularly high 2022 comparable base.
2023 is unfolding according to plan and we confirm our Full-Year guidance, which we upgraded in July. The second half should provide further affirmation that the Group’s transformation is delivering results. Our relentless focus on cash generation, efficiency and margin optimization is paying off, while our initiatives on fast-growing electrification segments, advanced services and digital are building differentiation and mid-term growth potential.”
Guillaume Texier, Chief Executive Officer of Rexel

SALES REVIEW FOR THE PERIOD ENDED SEPTEMBER 30, 2023

Unless otherwise stated, all comments are on a constant and adjusted basis and, for sales, at same number of working days.

SALES 

In Q3, sales were down (3.1)% year-on-year on a reported basis, impacted by currency effect and up a resilient +2.6% on a constant and same-day basis.

In the third quarter, Rexel posted sales of €4,665.1m, down (3.1)% on a reported basis, including: 

• Constant and same-day sales growth of +2.6%
• A negative calendar effect of (0.8)%
• A negative currency effect of (4.5)%, mainly due to the depreciation of the US & Canadian dollars against the euro
• A slightly negative net scope effect of (0.3)%, resulting from the disposals of businesses including Rexel activities in Spain, Portugal and Norway and the acquisitions of Buckles Smith, Horizon and LTL in North America and Wasco in the Netherlands (consolidated as of September 1st, 2023).

In Q3 2023, sales were up +2.6% on a constant and same-day basis (or +1.8% on a constant and actual-day basis), with positive volumes and selling price increases on non-cable products. 

• Positive trends in North America, up +2.7%, and Europe, up +3.4%, offsetting Asia-Pacific, down (2.7)%.
• The four product categories related to electrification (Solar, Electric Vehicle charging infrastructure, HVAC and Industrial Automation), represented c. 22%1 of sales and were up +5.0%2 in the quarter, contributing for 108bps, on a high comparable base (H2 22 at +33% vs H1 22 at +17%). North America largely benefited from industrial reshoring while electrification categories in Europe continue to grow, albeit at a slower pace on a high comparable base.
• Volumes grew +2.3% on a high comparable base from electrification categories and in a more mixed market environment. By geography, volumes at Group level were boosted by North America (up +4.3%) and, to a lesser extent, by Europe (up +0.9%).
• A favorable pricing environment for non-cable products (+1.3% contribution in the quarter) despite a lower carryover effect. Trends were favorable for the majority of our offer and more than offset some deflation on limited categories of non-cable products (including piping & conduit in the North America, some Industrial Automation products in China and photovoltaic panels).
• A negative cable price evolution ((1.0)% contribution in Q3 2023), largely in North America, due to a high base effect.
• Further growth in digitalization in all three geographies, with a strong increase in North America. Digital sales now represent 28.4% of sales, up +341bps, with North America up +442bps (21.0% of sales), Europe up +237bps (38.1% of sales) and Asia-Pacific up +339bps (8.9% of sales).

1 Including positive scope effect and added product categories (notably in HVAC segment) 2 At comparable scope, forex and product categories

In 9m 2023, Rexel posted sales of €14,428.1m, up +3.8% on a reported basis, including: 

• Constant and same-day sales growth of +6.3%, including a negative impact of (1.2)% from the change in copper-based cable prices (vs a positive impact of +1.9% in 9m 2022)
• A negative calendar effect of (0.3)%
• A negative currency effect of (2.0)%, mainly due to the depreciation of the US and Canadian dollars against the euro
• An overall stable net scope effect of (0.1)%, resulting from the disposals of businesses including Rexel activities in Spain, Portugal and Norway, offsetting the acquisitions of Buckles Smith, Horizon and LTL in North America as well as Trilec and Wasco in Benelux.

Europe (48% of Group sales): +3.4% in Q3 on a constant and same-day basis

In the third quarter, sales in Europe were down (1.9)% on a reported basis, including: 

• A negative currency effect of (0.6)%, mainly due to the depreciation of the Swedish Krona against the euro;
• A negative scope effect of (3.1)%, from the net effect between the disposals of Rexel Spain, Portugal and Norway and the acquisition of Wasco in the Netherlands;
• A negative calendar effect of (1.5)%.

On a constant and same-day basis, sales were up +3.4%, including a positive volume contribution of +0.9% on a high comparable base from electrification products, a positive price effect of +2.6% on non-cable products and a price effect of (0.2)% on cable products.

Overall in Europe, we posted strong growth in Germany, Austria, Switzerland & the UK, offsetting lower momentum in the Nordics and Benelux. 

• Sales in France (37% of the region’s sales) were up +3.5%, further outperforming the market in the Q3. This performance was driven by a robust progression in the industrial and commercial end-markets, offsetting lower demand in the residential market in the context of rising interest rates. We also benefited from further growth acceleration in solar, with France adopting this alternative energy later than other European countries.
• Benelux (13% of the region’s sales) decreased by (2.3)%, largely due to lower activity in the Netherlands (down (4.7)%), with good resilience at Wasco, consolidated since September 1st .
• Sales in Germany (12% of the region’s sales) posted strong +9.9% growth, supported by all 3 markets, with the commercial segment growing faster and continued market shares gains. Solar demand remains a major growth driver, supported by the focus on increasing the country’s energy independence. Press Release October 20, 2023 – Q3 2023 sales 4/12
• In the UK (9% of the region’s sales), sales increased by +6.7%, driven by residential and industrial markets. The new automated DC in the London area has been ramping up since early September.
• Sales in the Nordics (8% of the region’s sales) were down (8.4)%, reflecting a high base effect on Solar activity, the loss of two large customers in Sweden and the more difficult environment in the construction sector, especially in the residential activity. Sweden, our largest country in the Nordics, entered into recession.

North America (45% of Group sales): +2.7% in Q3 on a constant and same-day basis

In the third quarter, sales in North America decreased by (2.4)% on a reported basis including: 

• A negative currency effect of (7.6)%, due to the depreciation of the US and Canadian dollars against the euro;
• A positive scope effect of +2.7%, from the acquisition of Buckles Smith and Horizon in the US, and, to a lesser extent, LTL in Canada;
• A calendar effect of (0.1)%.

On a constant and same-day basis, sales were up +2.7%, including a positive volume contribution of +4.3% and a positive price effect of +0.5% on non-cable products offsetting a price effect of (2.0)% on cable products.

• In the US (81% of the region’s sales), sales posted +1.0% growth on a same-day basis, with double digit growth and market outperformance in Mountain Plains, Midwest & Gulf Central offsetting lower demand in the Northwest, Northeast and California. By market, growth was strong in the industrial market (notably Industrial automation businesses) and some commercial verticals (entertainment, water, logistics, government spending…) offsetting negative trends in the residential market and commercial verticals impacted by interest rates (offices, multi-use). Our portfolio diversification remains a factor of resilience.
• In Canada (19% of the region’s sales), sales grew by +10.9% on a same-day basis. It was mainly driven by the Industrial end-market, notably Oil & Gas and the utility business, as well as an additional effect in the quarter related to the servicing of our backlog.
• Backlog in North America remains at a high level with good execution. It is gradually decreasing (c. -6% versus June 2023) towards a more normalized level and is still equivalent to 3 months of sales.

Asia-Pacific (7% of Group sales): (2.7)% in Q3 on a constant and same-day basis

In the third quarter, sales in Asia-Pacific were down (14.7)% on a reported basis, including: 

• A negative currency effect of (11.4)%, due to the depreciation of the Australian dollar and the Chinese Renminbi against the euro;
• A negative calendar effect of (1.0)%.

On a constant and same-day basis, sales were down (2.7)%, including a volume contribution of (0.3)% and price effects of (2.3)% on non-cable products and (0.2)% on cable products.

• In the Pacific (54% of the region’s sales), sales were up +0.4% on a constant and same-day basis:
  • In Australia (85% of Pacific’s sales), sales increased by +3.3%, driven by robust growth in all segments, particularly industrial and commercial. The focus remains on increasing digital penetration, starting from a low base.
  • In New Zealand (15% of Pacific’s sales), sales were down (13.3)% in the quarter in a difficult macroeconomic environment.
• In Asia (46% of the region’s sales), sales decreased by (6.1)% on a constant and same-day basis:
  • In China (85% of Asia’s sales), sales were down (8.9)% on a difficult base effect (sales caught up in Q3 2022 after lockdown in Q2 2022), as well as the customer selectivity strategy implemented and price deflation, in line with the Producer Price Index (PPI)
  • In India (15% of Asia’s sales), sales were up 28.3%, boosted by the industrial segment.

FURTHER EXECUTING OUR CAPITAL ALLOCATION STRATEGY

In line with our Power Up 2025 strategy, we continue to execute our M&A strategy, with the objective to add up to €2bn of acquired sales over the 2022-2025 period. Since our CMD in June last year, we have acquired the equivalent of €1bn of sales. This quarter was marked by the completion of two acquisitions: 

• On September 1st, we closed the acquisition of Wasco, one of the leading distributors of HVAC products and services in the Netherlands, further building Rexel’s European presence to seize fastgrowing electrification opportunities.
• On September 18th, we completed the acquisition of 51% of Mavisun, a French photovoltaic solutions distribution company. This acquisition will allow Rexel France to strengthen its value proposition in photovoltaic solutions by offering kits and technical assistance to its installer customers. The company generated €40m of sales over the past 12 months at end-May 2023.

In the quarter, we further executed our share buyback program and reached an amount of €92m of shares repurchased in the first nine months of 2023 (c. 4.4 million shares). We target c. €200m on a cumulative basis for 2022-2023.

FY 2023 OUTLOOK CONFIRMED

Rexel confirms its FY 2023 guidance, leveraging the diversity of its portfolio and its sales force efficiency to navigate a mixed growth environment. The Group has become leaner and more agile and will sustain a high level of profitability thanks to continued efforts on productivity and pricing.

We anticipate for 2023, at comparable scope of consolidation and exchange rates: 

• Same-day sales growth in the upper end of the initial range of between 2% and 6%
• An adjusted EBITA1 margin of between 6.6% and 6.9%
• Free cash flow conversion2 above 60%

1 Excluding (i) amortization of PPA and (ii) the non-recurring effect related to changes in copper-based cable prices. 2 FCF Before interest and tax/EBITDAaL 

NB: The estimated impacts per quarter of (i) calendar effects by geography, (ii) changes in the consolidation scope and (iii) currency fluctuations (based on assumptions of average rates over the rest of the year for the Group’s main currencies) are detailed in appendix 2.

CALENDAR

February 15, 2024 Full-year 2023 results 

April 30, 2024 First-quarter 2024 sales 

April 30, 2024 Annual Shareholders’ Meeting 

June 2024 Capital Markets Day

APPENDIX

Appendix 1: Segment reporting – Constant and adjusted basis*

* Constant and adjusted = at comparable scope of consolidation and exchange rates, excluding the non-recurring effect related to changes in copper-based cable prices and before amortization of purchase price allocation.

Appendix 2: Calendar, scope and currency effects on sales

Based on the assumption of the following average exchange rates: 

• € 1 = USD 1.0776 
• € 1 = CAD 1.4539 
• € 1 = AUD 1.6286 
• € 1 = GBP 0.8687

and based on acquisitions/divestments to date, 2022 sales should take into account the following estimated impacts to be comparable to 2023:

Appendix 3: Analysis of change in revenues (€m)

Appendix 4: Historical copper price evolution