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Revenue: EUR 19.3 billion for full year 2024, up 0.7% on a reported basis.
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Like-for-Like Growth: Minus 2.4% for 2024.
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EBITA Margin: 5.9% for 2024.
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Free Cash Flow Conversion: 76% for 2024.
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Q4 2024 Sales: EUR 4.9 billion, up 3.6% on a reported basis.
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North America Q4 Growth: 3.6% same-day sales growth.
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Europe Q4 Sales Decline: Minus 3.8% same-day sales.
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Net Debt: Close to EUR 2.5 billion.
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Dividend Proposal: EUR 1.20 per share for 2024.
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Recurring Net Income: EUR 662 million for 2024.
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CapEx-to-Sales Ratio: 0.7% for 2024.
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Adjusted EBITA Margin by Region: Europe at 5.8%, North America at 7% for 2024.
Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Rexel SA (RXEEY) achieved a 5.9% EBITA margin in 2024, demonstrating resilience despite a challenging market environment.
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The company reported a strong free cash flow conversion rate of 76%, surpassing its guidance.
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Rexel SA (RXEEY) gained market share in several key countries, indicating successful strategic investments in logistics, digital, and value-added services.
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North America showed positive sales growth, with a 3.6% increase in the last quarter, driven by non-residential and industrial markets.
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The company maintained a stable dividend of EUR 1.20 per share, reflecting confidence in its business model and mid-term ambitions.
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Rexel SA (RXEEY) experienced a like-for-like sales decline of 2.4% in 2024, marking the first negative year since 2016, excluding the COVID-19 period.
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The European market faced significant challenges, with a soft economy and political uncertainties impacting sales.
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The electrification market remained difficult, contributing negatively to same-day sales evolution.
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The company faced a 46.6% effective tax rate due to non-deductible expenses, including a fine from the French Competition Authority.
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Rexel SA (RXEEY) anticipates continued headwinds from OpEx inflation, which could impact profitability in 2025.
Q: How does Rexel view the potential impact of tariffs on its business, and what historical context can you provide? A: Guillaume Texier, CEO, explained that tariffs could be a net benefit for Rexel, as inflation typically benefits B2B distribution. Historically, tariffs have led to price increases from suppliers, which Rexel can pass on to customers, positively impacting gross margins. This was observed during previous tariff implementations, particularly in steel-related categories.
Q: Is the current environment in the US more favorable for acquisitions, and how does scale impact profitability? A: Guillaume Texier noted that while economic improvements can make more targets available, scale is not the sole determinant of profitability. Operational excellence in areas like pricing and logistics is crucial, and smaller countries can achieve high profitability without large scale. The US, with its ongoing journey towards maturity, presents significant potential even without acquisitions.
Q: Can you elaborate on the electrification trends in North America and the residential market recovery? A: Guillaume Texier highlighted that North America is seeing positive trends in industrial investment, particularly in electrical products within industrial buildings. While industrial automation shows early signs of improvement, the residential market in the Northwest is expected to benefit from decreasing interest rates, which historically lead to increased electrical activity after a few quarters.
Q: Why is the margin guidance for 2025 only slightly improved despite better pricing and cost-saving initiatives? A: The main offsetting factor is the anticipated OpEx inflation, which is expected to be slightly over 2%. While there are positive factors like cost-saving initiatives and gross margin improvements, the inflation gap remains a significant headwind, impacting the overall margin improvement.
Q: What are the expectations for pricing in 2025 across different product categories? A: Laurent Delabarre, CFO, stated that cable pricing is expected to remain stable, while traditional products may see slight inflation. Solar panels are expected to bottom out, with some deflationary pressure remaining in inverters and batteries. Overall, a slight level of inflation is anticipated for 2025.
Q: How does Rexel plan to expand its exposure to data centers, and what is the strategy for this market? A: Guillaume Texier mentioned that Rexel plans to expand its data center exposure, particularly in the US, where distribution opportunities exist. The focus will be on organic growth, with potential acquisitions if relevant opportunities arise. In Europe, the focus may be on edge data centers rather than hyperscale ones.
Q: What is the outlook for Rexel's electrification business in 2025, and which segments are expected to perform well? A: While HVAC and solar are not expected to see significant growth, industrial automation shows more positive prospects. The overall electrification business is expected to remain stable, with potential growth in data centers and other acceleration businesses.
Q: Can you provide more details on the market share gains Rexel has achieved, particularly in France? A: Guillaume Texier explained that in France, Rexel has gained market share across all customer categories and markets. These gains are attributed to added value rather than price competition, with investments in logistics, expertise, and value-added services contributing to the positive results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
