Rexel’s new boss sees organic growth running above global GDP upticks

Posted by tED magazine on Wednesday, February 22, 2012

By Joe Salimando

Executives of Rexel SA spoke with stock analysts on 2/10 on Q4/2011 results and the future. A transcript, a 17-page PDF, is priced at $106. The transcript I have runs 9,553 words. Listen free to the presentation & conversation, get an 87-page doc on 2011 results, see slides that went with what the execs said, and/or read the company release – see this webpage.

For tedmag’s Q4 Rexel report, see this.

Speakers: Jean-Charles Pauze, chairman/CEO, spoke, as did  Michael Favre, CFO, and Rudy Provoost, “designated chairman” and CEO. Provoost, formerly of Philips, was about to take J-C’s place. See this.

U.S. market: Pauze said U.S. Q4 sales were “driven by industrial end-market, mainly in the energy and mining-equipment” areas. “Residential and commercial end-markets continued to show signs of improvement, but are still significantly below . . . pre-crisis levels.”

Favre said Rexel’s gross margin in North America (U.S. + Canada) rose 20 basis points in Q4 but fell 20 bps for 2011 “due to a combination of an increased share of large projects (that carry lower margins) and an unfavorable product mix, due as well to the higher share of cable sales in the first three quarters.”

Global sales & copper: According to Favre, “our same-day sales grew by 5.3%,” which means Q4 sales over Q4/10 equals that, with the two quarters equalized for sales days. Copper’s positive impact was just 0.1%.

Acquisitions: Provoost noted that Rexel had 10 acquisitions in 2011, representing $260M in annual sales. That excludes recent (2012) buys in Brazil, Canada, and France.

Growth strategy from here: Provoost is in charge now. His take: “We believe Rexel has a structural ability to generate organic growth that outpaces GDP growth…we are focusing…on developing more aggressively in fast-growing markets and…we are further expanding our offer of value-added services, notably related to energy efficiency and projects with international customers.”

Above: Slide #31 from Rexel’s Q4 presentation.

Lighting retrofits: 57% growth in 2011 “and 68% on average over the last two years.” I don’t know compared to what 2009 number(s) the 2011 lighting refit number(s) equaled 168%...but who can complain about 68%?

2011 lighting retrofit sales were $2.75B (using current euro-dollar rates). Energy-efficient lighting was put at 20% of that. PERSPECTIVE: That $2.75B comes out of roughly $16.8B in worldwide sales last year – or 16%.

Wind: 56% growth in 2011, 12% on average over years 2010-11.

January 2012 sales: From Provoost: “1.7%. If you correct that for the negative copper impact…3.7%, two thirds would be volume, one-third would be volume

Outlook: Rexel execs talked about 5.7%, but I think that was about ’12 EBITDA (earnings before interest, taxes, depreciation & amortization). There was a hint in there, from Favre, that 2012 would be OK – but the company will be going gangbusters by 2013. I couldn’t discern (from his words) whether that was about the global economy or the company itself…perhaps both?