Good morning, ladies and gentlemen, and welcome to today's Le Grand 2021 First Half Results Conference Call. All participants are in a listen only mode. Later, there will be a question and answer session, sorry. For your information, this conference is being recorded. At this time, I would like to hand over the call to the CEO, Mr.
Bernard Caucard and CFO, Mr. Franc Le Maury. Sir, please go ahead.
Thank you. Good morning to all of you. Frank, Ronen and myself are happy to welcome you To the Legrand 2021 H1 results conference call and webcast, as you know, we have published today our press release, our financial statements And a slideshow to which we will refer those documents are available on the Laurent website. Please note that this conference is recorded and webcasted on our website. After a few opening remarks, Frank and I will comment into more details the first half results of 2021.
I begin on Page 4 with the 3 takeaways of today's release. First takeaway, In the first half, we recorded a steep rise in sales of +21.9 percent year on year or plus 7% over 2 years. This performance was driven primarily by organic growth in sales of plus 22.6 percent or plus 3.9 percent over 2 years. Adjusted operating margin came to 22% of sales. Net profit also increased by a very good plus 68% from the first half of twenty twenty.
These achievements clearly confirm the continued improvements of Legrand competitive positions on its markets As well as our capacity to take full advantage of opportunities for growth in Bayer's segments linked to the Building of Tomorrow. They also testify to the relevance of Legrand unique model for profitable and most responsible value creation. 2nd, on the back of the H1 very good showings, but also persistently uncertain health environment And strongly rising pressure on upstream supply chains, Legrand is revising its full year targets. 3rd takeaway is regarding external growth. Following 3 acquisitions announced in early 2021, we are announcing today 2 new acquisitions in our core businesses as well as in Electric Mobility.
Before entering into more details on the three takeaways, I would like To add that our group has also continued to strengthen its other fundamentals by investing in innovation, including rollout of a host of new products Beginning of the year and also confirmed its ESG commitments with the publication of our latest maturity survey results And the recent validation by SBTI of our carbon emission reduction trajectory, which is aligned on holding global warming to 1.5 Now moving to Page 6, let's dive into sales trends recorded in the first half of the year. Our revenues showed a steep rise in all regions with at group level a strong organic growth of +22.6 percent over the period With very nice trends in both metro countries at plus 19.4% and in new economies at plus 32.8 percent. Over 2 years, group organic sales grew plus 3.9%. As I previously mentioned, this reflects clear stronger positions in our markets. This performance is notably driven by good demand in residential and data center markets as well as connected products in many countries.
It is also the result of the moves we made since the beginning of the pandemic. For example, the fact that we give first priority of servicing our customers, Continue to launch many marketing initiatives, keep an upbeat pace of innovation and also step up all digitalization initiatives. Additionally, acquisitions contributed to an increase in sales of plus 4.6% since the operations we made in 2020. Based on those, the external growth for the full year would reach 2.5%. Exchange rates on the other hand Had a negative impact of minus 4.9 percent for the first half, applying June average ForEx rate for the rest of the year, These effects should theoretically be about minus 3% in 2021 as a whole.
Let's move now to Page 7 to go into more details regarding the like for like evolution of sales by geographical zone. In Europe, organic sales were up plus 30.6% in the first half of twenty twenty one. In Europe, major Countries, sorry, sales rose plus 32.1 percent with organic growth of plus 55.6 percent in the 2nd quarter alone. In the 1st 6 months of the year, many countries, in particular France and Italy, reported sales up sharply from 2020. While benefiting from favorable basis for comparison, these gains reflect many commercial successes, including user interfaces and power protection solutions in France, connected offering in Italy and more broadly data center ranges in Europe.
Sales in Europe New Economies were up plus 23% organically from the first half of twenty twenty and up Plus 36.2 percent in the 2nd quarter alone, with very good showings in Turkey and in most countries in Eastern Europe. Moving now to North and Central America. Organic sales increased plus 11.7% in the first half of twenty twenty one. In the U. S.
Alone, the organic rising sales was plus 9.9% over the first half of the year And plus 15.3% in the 2nd quarter alone. Since the beginning of the year, business has been driven by sustained demand Residential offerings and in data centers. Sales in other non residential applications were nearly unchanged over the first half from the first half of twenty Let me now move to the last zone with rest of the world where organic sales rose plus 31% in the first half of twenty twenty one. In Asia Pacific, sales rose plus 27.4%, including plus 19.1 percent in the 2nd quarter. Over the 6 months period, China saw double digit growth.
In India, sales rose sharply, but were nonetheless down over 2 years against a deteriorated pandemic background. Sales rose in Australia. In Africa and the Middle East, sales rose plus 22.5% and were up plus 26.2% For the Q2 of 2020, over the 6 months period, sales rose in the Middle East and marked steep a very steep increase in Africa. Last, in South America, sales increased plus 55.6 percent in the first half and were up +126 0.4% in the 2nd quarter with significant growth in many countries in the region. On these notes, I'm now passing the mic to Frank for an overview of our financial performance.
Thank you, Benoit, and good morning to all of you. Going to Page 8 now. Adjusted operating margin before acquisitions in the first half came to 22.4%. This represents an increase of plus 4.9 points from the same period of 2020. This increase in profitability reflects in particular the leverage linked to both sales growth and the selective resumption of costs.
At the same time, the rise in raw material and component costs continued to accelerate. It was close Plus 4% in the Q1 of 2021 and over plus 9% in the 2nd quarter. Now when acquisitions are taken into account, the adjusted operating margin for the first half of twenty twenty one was a solid 22.0 percent. All in all, the adjusted operating profit was thus at EUR 761,000,000 Up plus 53% from the first half of twenty twenty. On Page 9, I'm now commenting the net profit attributable to the group.
It was up plus 68.5% compared with the first half of twenty twenty. This performance reflects primarily a strong growth in operating profit. In addition, the financial results were favorable over the period. These favorable trends were partially offset By an increase in the group's corporate income tax, while the corporate tax rate was stable at 28.5% compared with the first half of twenty twenty. Moving now to the cash generation on Page 10.
As a percentage of sales, cash flow from operations was up plus 4.5 points at 20.2 percent of sales or €698,000,000 The working capital requirement reached a historical low level. As you know, a better reading of the free cash flow generation Should be done normalizing working capital requirement variation. So on this basis, on the right hand side of the slide, Normalized free cash flow was €577,000,000 This means up Plus 22.9 percent in the first half of the year. This concludes the key topics The Legrand 2021 first has very good financial performance that I wanted to share with you today. I'm now passing the mic by to Benoit.
Thank you, Frank. Now moving to
the second part of this presentation for an update on the targets of the year. We are on Page 12 now. Given very good first half showings, but also persistently uncertain health environment And strongly rising pressure on upstream supply chains, Legrand is now aiming for the following full year targets, Organic gross in sales of at least plus 10%, scope of consolidation effect of plus 3%, An adjusted operating margin of about 20% of sales, including acquisitions consolidated in 2021. As a reminder, the dilution of acquisitions is usually between minus 10 and minus 40 basis points. The group also aims to achieve at least 100% of its CSA roadmap for 2021, testifying to its ongoing deployment of a broad and exemplary ESG approach with a particular focus on the fight against global warming and the promotion of diversity.
Let's now move to the last part of the presentation regarding external growth on Page 14. Following the 3 acquisitions announced in early 2021, Champion 1, Compose and Bory, Legrand is continuing its strategy of targeted growth with 2 new acquisitions announced today. First, Ensto Building Systems, a Finnish leader in low voltage solutions, company that offers a comprehensive range of electrical and digital infrastructure products with sales of around €120,000,000 With significant presence in Northern Europe, especially Scandinavia, end store building systems runs out Our existing strong position in Southern and Eastern Europe. The second company is Ecotap, a front running Dutch specialist Vehicle charges for homes, businesses and public charging points, its sales are expected at around €40,000,000 in 2021, Primarily made in the Netherlands and in Germany. These 2 new acquisitions strengthen group position first in core businesses And in segments driven by the rise in green mobility and the fight against climate change.
That's it for this release. Frank, Ronan and myself are now ready to open to questions. Thank you.
Thank you. We have a first question from Daniela Costa from Goldman Sachs. Madam, please go ahead.
Hi, good morning. I hope you can hear me well. If I may ask 2 things actually, but first I wanted to clarify on your second half The implied second half margin in your guidance seems much lower than you have ever had historically. Can you just argue how much of that is just a statement of you've always said you just want to go to 20% over the medium term? Or Any very specific headwinds that are particularly high in the second half, if you could quantify those?
And then just more a general question regarding price and raw materials and Sort of whether what are you seeing in terms of like the ability to pass through? Shall we still assume that you can 100% pass this through over time with a lag like You've done in the past, just those two things, which I guess are related. Thank you.
Yes. Hello, Daniela. So if I take your two points. So the first question, As far as H2 is concerned, I'll discuss both, let's say, top line and bottom line. Our guidance of at least plus 10% organic implies, as you can compute it, Sort of floor where H2 sales organically would be slightly down.
And we believe that the more likely scenario is that the sales could range from, let's say, slightly down to slightly up In H2 compared to a strong plus 22.6% in H1, The difference coming from a couple of factors. Well, number 1, of course, the basis for comparison. You remember that our sales We're down about 15% last year in H1 and they were down only minus 2.5% in H2. So we have a more demanding base for comparison, especially in 3, which was flat last year. Number 2, there are the usual uncertainty It's coming from the health situation, even though it's always difficult to predict the consequences it can have.
If you look at the past, let's say, 18 months, There were countries and times during which the pandemic had a strongly negative impact on the top line. Take for example, Western Europe in Q2 last year or India as an example. But there were other times during which light lockdown, if I I say, our light curfew actually led to a surprisingly sort of surge in demand For residential products, so it's a bit difficult to predict the impact the head situation can have, but it's never a good news to have this kind of uncertainty. 3rd, we know that the residential market has been booming for almost a year now and nobody predict how long it will last and with the opening of the economies, it's possible that people reallocate part of their savings to other things and Works at home. And the last piece, which explains a softer, if I may say, H2 compared to H1, It's clearly the scarcity of raw materials and components, which did have some impact on Q2, Not a big one and which is potentially can have some impact also needs to.
The fact that It is an everyday fight to get the raw materials and the right components to manufacture products. So all these Set of facts explain that we are shooting for something ranging from Small decrease to small increase in sales in H2. As far as the profitability concern, you have rightly computed that our guidance of 20% adjusted EBIT margin all in, so including the dilution from acquisition, It implies more or less 18% EBIT margin over H2. We need a 22% margin on H1. It implies an 18% margin on H2, which is indeed a decrease in margin compared to the 20% or so we achieved H2 last year.
Well, it is coming from a couple of factors. The one Input, which has a significant influence on the profitability is Obviously, the price of raw materials and components. We gave the sort of sequence in H1, plus to plus 4% In Q1, more than plus 9% in Q2, and it's highly likely that it will have a double digit negative impact on H2. And as you know, raw mats and components, it's about onethree of our sales. It's a significant part of our cost base.
In front of that, There are 2 things that we are doing. We will do a bit more pricing in H2 than in H1. In H1, our pricing was plus 1.9%. While it's always difficult to shoot a number For H2, but we have already started to implement a number of pricing actions, which should lead us to achieve pricing, let's say, between Plus 2% and plus 4% in H2. And at the same time, we are managing carefully our SG and A level To mitigate impact of the increase of raw material components in our P and L.
Now let's make it clear. We are shooting to achieve at all cost Better margin than the one we are guiding for in H2. And our objective is clearly also to prepare Year 2022, 2023, 2024 by doing a bit more pricing, but doing it carefully, Not just inflating prices without a lot care and by cutting expenses that would be useful to Togo. So we are also in H2 preparing The growth of the year 2022, 2023, 2024, that's our clear strategy. Now if we look at the year 2020 Q1 as a whole, ultimately, if we do our targets, we would achieve top line growth excluding FX Of at least 13%, the 10 plus 3%, at least 13% and adjusted EBIT margin all in Of about 20%, which would not only be above 2019 Levels, both for top line and for bottom line.
And at the same time, completely consistent with our midterm guidance. So that's sort of the mechanics for H2. From slight decrease to slight increase in Inorganic growth and about 18% adjusted EBIT margin With a sort of the mix I explained between raw mats, pricing and SG and A. Well, as far as The pricing and raw math question is concerned, so I gave the numbers, but maybe I can repeat them again. So pricing for H1 was plus 1.9 percent, And it was plus 1.9 in Q1, plus 1.9 in Q2.
Rawmat, it was Plus 6. Rawmat and Components, plus 6.7% in H1, close to plus 4% in Q1, a little bit more than plus 9 in Q2. Those are the numbers. Well, you may wonder why didn't we do more pricing in Q2. It was a deliberate strategy on our side.
We didn't need to make long story short. We delivered, as you could see, a very nice margin in Q2. And we really want to manage Our well known pricing power on a very careful manner because, again, our objective It's to fuel growth in the years to come, to keep our competitiveness, while maintaining at the same time the sort of long term guidance of 20%. We are not shooting for 21%, 22%, 23%. We are shooting for 20%, as you know, and as fast As possible, growth in top line.
Does this answer your question, Diana?
Yes. Thank you very much.
Thank you.
Thank you. Next question from Lucie Carrier from Morgan Stanley. Madam, please go ahead.
Hi, good morning, gentlemen. Thanks for taking my question. The first one, I was hoping if you could give us a little bit of color Around the situation in nonresidential in North America, I saw in your slideshow you were mentioning that business was Stable versus the first half of twenty twenty. Can you maybe comment on the recovery dynamics you are seeing there, which So far haven't really materialized.
Yes, sure. You are completely right to see it has not really materialized. And The fact that it is broadly stated in H1 is purely basis from, let's say, the easy, if I may say, basis For comparison in Q2, and you remember the sequence, it was minus 20 In Q4 2020 against last year previous year, sorry, minus 10% in Q1 this year and Plus in Q2, but if you look at the sales and sales, we can hardly say that we see A key improvement in sales sequential improvement in sales between Q1 and Q2. Now we see a number of positive signs, Not only in external indexes such as the famous architecture Architect Building Index, which is improving months after months, but also in our own nonresidential business units, we see The pipeline of projects piling up, we see the number of quotation increasing, But it is true that it is not yet materializing into sequential improvement in sales. Our teams think that it will come at some point, but It's not yet the case and our sales in non res in the U.
S. Are still very significant Down compared to 2019. So it's not yet materializing in it.
Just to let you check and have a follow-up. Are you able maybe to kind of highlight which area you see most impacted, Whether this is on the commercial, institutional side of FIGS? And also, are you seeing any update regarding state driven energy code, which historically have been quite a big of a drive for your business.
Well, it's difficult to provide you with More clarity on the split between verticals because most of the time the products are the same, whether they are sold Office buildings, education, hospitals, government buildings and so on. So we don't have A lot of clarity on whether what product is going to these or to that type of buildings. What I can tell you is that It's across our product families. So we don't see a huge difference between product families, but the product family is Gail, at the non resi building, it has been under pressure for a year and a half now. So it's about Commercial AV, commercial wiring devices, floor boxes, lighting features and a few others.
But I don't have more color to give you. Maybe just one comment. We are not very exposed to logistic centers. And it has been a piece of the non resi, which has been doing pretty well since Couple of months. When you look at the Logistics Center, you don't have a lot of Legrand products that fit into We are more exposed to office buildings and to a lesser extent schools, governmental buildings and health buildings.
And we are also quite exposed to big metros, a little bit less exposed to The countryside, so we have a sort of specific exposure in NREZI, but unfortunately, I cannot give you more color than that. Just a word to say that I'm not pessimistic for the non resi in the U. S. I think that In the quarters to come, some improvements will materialize. What I cannot tell you, Lucie, is how long it would take It's not fully in my hands and the timeline between the good statistics in the architecture, Architect Building Index and actual sales It can be 6, 12 or 18 months depending on the type of building.
So it's not such a mechanical No, the effect whereby it would be 3.5%, for example. So it will materialize at some point, a question mark on when. Well, as far as building energy codes is concerned in the U. S, Well, it is a never ending game. So you have one could replacing the other and being progressively implemented starting from a few states, which are usually Leaders in terms of greenfield thinking and it typically is Westcott in the U.
S, It is indeed having a long term impact and it's sustaining our business. And if you look at Businesses such as lighting controls or shade controls, for example, in the U. S, it's not doing bad. Well, now the effect is not Strong enough per se to compensate for depressed or difficult Nonresidential markets. Now beyond codes, there are a number of topics which make us positive On the nonresidential market long term in the U.
S, especially at the green side, number 1, of course, the fact that the U. S. Joined back the which is indeed a new positive side. Number 2, the fact that the value's plant And especially the last one, which was voted by the Congress. So you have a couple of positive things about In building and the fact that overall local states, metros are increasingly pushing The files again are roaming.
So all that is set a sort of positive spirit beyond codes for energy saving solutions in the U. S. Now again, the improvement in non resins in the U. S. Will at some point materialize, it hasn't so far.
Thank you. And maybe a last one, if I may. I said that the working capital requirements were very, very low Despite the strong growth that you have seen and possibly higher demand also in the second half, is that because basically everything You cannot manufacture just goes out right away because of high demand or how we should think about that in terms of the cash flow development for the second half?
You are completely right. So then you should take the last 12 months, the working capital ratio As a percentage of last 12 months sales is at 7.9%, Which is indeed low. If you look at the past 3 years, 2018, 2019, 2020, it was slightly above 10%. So it's pretty low. We believe that it's coming from mainly two factors.
Number 1, our inventory level Our inventory turn, if you want, is quite low compared to the last 2 or 4 months' level of sales. Well, it's coming from the fact that It's difficult to get the raw mats and components. It's difficult to cope with fast growing demand. So we don't really have the ability to build our inventory up the way we should. Number 2, Our accounts receivables increased a bit in H1 last year as a result of the crisis.
And as a result, we have quite a favorable basis for comparison for accounts receivable. So those two factors are leading to this A quite low level of working capital ratio, which will somehow normalize in H2. We believe that the level of inventory And we believe that last year, we tightened a bit the contract levels in H2. So we don't believe that this level of working capital is sustainable. So let's say, H1 non normalized free cash flow is a bit inflated, if I may say, by just two factors.
Very clear. Thank you.
Thank you.
Thank you. Next question from Gael De Brea from Deutsche Bank Equities. Sir, please go ahead.
Thanks very much. Can you hear me?
Yes. Yes, we can.
Okay. Perfect. Thanks a lot. Good morning, everybody. I have three questions, please.
The first one is, looking forward, based on your discussions with installers, architects, Distributors and so on, do you feel more optimistic about the residential or about the non residential demand going into the second half? The second question is on the expected margin deterioration in the second half. Could you help us understand perhaps a bit better, maybe give us a range on How much you're ready to invest in SG and A in the second half of the year, in your Willingness to fuel future demand. And the final question I have is on The growth side of things, I mean, if I look at the performance in Q2 on a 2 year basis, growth was up 3%, right. And the full year guidance of if I take the low end of it 10%, it does imply that the organic sales would only be flat Compared to 2 years ago.
So it basically implies a 5% sequential deterioration in activity In H2 versus H1. So what's exactly the message here? I mean, do you really think that You were already running on peak demand in Q2. Thank you very much.
Okay. So on the first question between resi and non resi, while it's difficult to sort of You're a clear winner and on top of that, it clearly depends on the geographies. My assumption is that at some point, The resi market, which has been booming for a year, especially in Western Europe and in the U. S, We'll cool down a little bit. And this assumption is based on the fact that specialists believe that The surge in demand for residential products is coming from a number of factors, basically the stay at home Requirement, the fact that people had little possibility to spend their savings because many activities were closed and with a sort of The opening of the economies and again with the vaccination speeding up, people might be willing to spend part of their savings to travel, Go out, dining and blah, blah, blah.
So all that should at some point lead to a sort of Concluding that a bit of the residential market, which will remain very well oriented midterm. The question mark is the impact it will have on the next couple of quarters. But mid term, we believe that The COVID-nineteen has accelerated a number of trends, which are set to last, stay From home, cocooning and a number of other factors. But at some point, we cannot expense forever a growth of 30% compared to previous year. As far as the nonresidential market is concerned, you would probably have to make a difference between the consumer subsidiaries.
It's not in such a bad shape in Europe, in a number of emerging countries. It is true that It has been quite depressed in the U. S, as I was saying earlier, and I believe that the trend could possibly be the other way. So It could progressively improve. It will progressively improve.
I cannot set sort of midterm target for that, but Pretty optimistic on the fact that in the coming quarters, the U. S. And the Nordea will catch up with the people returning to the office. And by the way, As we were saying a year ago, you can see that most of the people will attend to the office, but full time it will. It will progressively Lead a number of commercial offices to perform some renovation work, put some AV systems, Renovation Lighting, features, do the buildings more energy efficient and so on and so forth.
So now in 2022, if this is okay, in H2 and in 2022, what will precisely be the growth rate of Fresier and Resier, well, I have no clue. It depends on geography. Well, last, one shouldn't forget data centers, Which is, as you know, about 10% of our sales and about 20% of our sales in North America, which has been booming Since the beginning of the year, well, on a given quarter, it can always be either positive or negatively impacted by a big project, a But midterm, it is a fantastic opportunity for Legrand to further accelerate the growth. And I believe that the data center This will keep growing in the quarters to come because it is answering to structural needs For bandwidth capacity, network of the virus in other countries. 2nd question, Expected margin for H2, well, I gave you the answer, about 18%.
Your spreadsheet are bigger than mine, so I will let you do the math. But Take double digit increase in raw material components, pricing in H2, take 2% to 4% pricing, Take a little bit less restructuring than last year because we are back to the sort of run rate of €30,000,000 a year in restructuring. Take 10 to minus 10 to minus 40 bps in dilution coming from acquisition. Take depending on your scenario, a slight increase to a slight increase in top line, and you will mechanically derive the evolution In the SG and A, in H2. And you will see that it is not a huge boost.
We are not investing back into the business 10ths and 10ths of €1,000,000 this is not my point. My point is that rather than further putting SG and A, I prefer to maintain SG and A at the current level and to possibly increase a little bit here in there In order to show growth, so what are those investments which are not extraordinary one off investments, which are In the ordinary course of business investment, if I may say, well, it's sustaining The R and D efforts, it's investing into additional salespeople and And advertising expenses, it is doing powerful new product launches and so on and so forth. So I'm not talking of One off huge reinvestment into businesses, but the fact that I'm not I do not intend to further Significantly cut in H2 because I believe it would be detrimental to the business in 2020 2, 3 and 4. Last, if I may say, doesn't part of those SG and A Additions, if I may say, will also be financed by the structural savings we made last year. Don't forget that last year, we had restructuring expenses, which were close to 80,000,000 Euros against again a run rate of about €30,000,000 so almost 3 times a normal year.
So it has generated a number of savings And our objective is also to reinvest part of the savings into the business. So I think you have also sort of moving parts, Gael, To make your calculation, as far as growth is concerned, I'm not I could come back on what I told Daniela, but So a slight decrease to slight increase in sales is coming from all those factors based on comparison, which indeed doesn't Coming to play, if you are comparing over 2 years, but also pandemic, residential with a question mark and And scarcity of raw material and components. Well, now we'll see. At the end, I want to inform that guys that even at the sort of floor of our guidance, I. E, Plus 10%.
It would imply that we would have come back to 2019 level in just a year, Which is pretty different from what we did in the last financial crisis. It took a lot of years to come back to 2007 level of organic sales. So I think it would be a Pretty healthy performance.
Okay. Thanks very much.
Thank you.
Thank you. Next question from Andre Gokhmeen from Credit Suisse. Sir, please go ahead.
Good morning. Thank you very much for taking my questions. Can I start with 1 on your data centers exposure? Could you give us some idea of what growth rates you've achieved there in 1st half and then second quarter. And also somewhat related to that, but more broader question, And I'm talking about your sort of related to your pricing strategy for Q2.
Could you let us know how you feel your market shares have evolved During first half by region?
Well, so on the data center exposure, it's So it's about 10% of our sales. It's growing significantly faster than the average of the group all across the regions. So we did a very good performance In the U. S, in Europe and the rest of the world. And if you want to have a bit more color on What type of products, what type of spaces in the data center, what is our strategy and so on.
I can invite you to join our Capital Days in September, where we have a bit more time to discuss. So things, but I can confirm that in H1, It grew significantly significantly faster than the rest of the group. Well, as far as Pricing in H2, I gave a sort of order of magnitude, which is 2% to 4%, again, well, you know, Legrand, we will have the ability to do more than that, but we believe that It would be at the expense of our competitive position and pricing is not mechanical. It's not you don't wake up in the morning and hit prices by 2%. So it is a very professional and very tactical approach where you're looking product family by product family, country by country, Customer by customer, and you are playing on all the leverage.
It can be a price list, It can be a discount to customers. It can be rebates to distributors. So it has many components, pricing, and you are playing on all those leverage With in mind the best compromise between profitability and competitiveness. And we believe I believe that the best compromise for Legrand between competitive And profitability for H2 is this sort of tactical 2% to 4% price increase in H2, Which as you can compute will not be enough to offset increase in probably not enough to Offset the increased raw material and compares, but again, this is a deliberate decision in order to prepare on 2021. And again, it does not prevent us from reaching a 20% adjusted EBIT margin, which is again our midterm guidance.
As far as the competitive position is concerned on H1, well, it's always a difficult question. I could, if I wish, compared Legrand with its what you may call it's listed peers and looking at the various regions, Well, we did probably better than everybody in Europe With the 30.36 percent and I see that if I look at the people like ABB, Schneider, XL, Signify, given that it's a bit less than us. And for Americas, We are pretty well positioned even though we are not the fastest growing Company, but if I compare to again Schneider ABB, Habel, I guess, like, we are doing pretty well. But again, I'm insisting as always on the fact that comparing Le Grand with its listed peers might not be the best Measure for market share because also very reputable and nice company do not have the same scope of activity That's Legrand. I can give you the same example as last time.
I noticed a lot to compare us with Schneider, for example, where in the U. S, Only 25% of our sales are developing with Schneider, which is a data center piece typically. So it's always difficult to look at the company position just the numbers between Le Grand and its so called listed peers, we did a much more interesting exercise. Every quarter, we are doing what we call a quarterly performance review, which is the review of our countries representing, I don't know how much 90% or 95% Of our sales, and we are looking not only the financial performance, of course, but we are also looking at all leverage of the performance, Commercial, marketing, industrial and so on and so forth. And Following these 2 weeks review, which happened last week and the week before, I'm very positive on the evolution of our market share In H1, obviously, not in all countries and not in all product families.
Market share is always a result of losses and gains, but the net of that In H1, it's very good, very good in Europe, very good especially in Western Europe, including in core countries For Legrand such as France, such as Italy, such as even Germany, which is a smaller country for us, such as Russia, Good in the U. S. And increasing in non resi actually. So the fact that non resi is down about 2 years is not coming from market share issue, but 3 d market perspective, but when you are looking at products such as warning devices, for example, in the U. S, our audio video was doing well In terms of competitive position.
In the Rest of the World, it very deeply depends on the countries. There are 2 zones which or sub zones which Taken name as being very good in terms of market shares. 1 in China, in China, we are Very significantly in China, even over 2 years because we are up 17% over in China. So we are not a big player in China, but on the few verticals in which we operate, namely wiring devices, Hotel Business and Data Centers, we are doing very well. And second, Sub Zone, where we are growing fast, it's Africa.
It's Africa where we are growing over 2 years almost, almost 10%. So to answer your question, and I understand that from an analyst standpoint, it's a bit Difficult to really value that because you don't have the clarity we have as far as markets are concerned, but it has been a pretty good Middle H1 in terms of market share.
That's really helpful and detailed answer. Thank you. May I just ask the last One related to your acquisitions that you announced that clearly EV charging focused. Could you maybe talk about how the multiples on these deals compare to your Those on these deals compare to your normal acquired growth multiples?
Well, I knew you would ask this question because just For the anecdote, but I was with a banker yesterday who told me that an EV charging station company was sold for, I think it was 6 times 2025 sales. Well, be reassured, this is not multiples we've been paying. So a couple of words on Ecotab, which is a very interesting company indeed. Together with the rest of our EV charging businesses, Namely the Legrand 1, which is small but has been very, very growing very nicely. But also the end store building system piece, which has a €500,000,000 in EV charging and Ecotap, altogether, this would represent Pro form a, about 1% of Legrand Group sales.
So it's not huge business, but it's a good platform to start with. And with Le Grand Pucenceau Plus Ecotab, we are covering now the full scope of products Starting from light power residential reinforced sockets coming from Le Grand to DC charging for public spaces with Ecotab. So we have quite a broad range of products now, Broad range of customers. So not only we are selling to the traditional distributors, contractors, but also we have a lot of relationship With CPOs, for example, charging point operators, with the number of municipalities and Public bodies and so on. So I believe that even though it's not big, Ecotab, Pluses Legrand, it is a very interesting platform to grow.
Now to zoom on your question, Ecotab, number 1, is a profitable company. And in this space, you have a lot of usually loss making companies, but Tier 1 is a profitable company Like in store, not as profitable as Legrand, of course, but reasonably profitable, if I may say. And we are paying a Which is slightly above Legrand traditional multiples of multiple that Legrand is traditionally paying for companies, But extremely reasonable. And I can confirm that Equitab as our other acquisitions would be Value attractive, so we will have If we make EVA positive, within 3 to 5 years of consolidation. So slightly above Le Grand traditional multiples, but nothing crazy.
And clearly not the highest multiples we would we had ever paid for the company. Well, last point on Ecotab, funny enough, because you May wonder whether it's a company that we could easily dock. I think we can For many good reasons, we have a strong cultural proximity with this company and while it is a bit, Let's say, an anecdote, but one of the 2 founders of Equitab, the CTO, is actually a former Legrand employee. So he worked for Le Grand Netherlands a couple of years. And about 10 years ago, he wanted to be on top corner.
He wanted to have his own business. So he left Le Grand, he created his own company with a friend, developed it and 10 years later So it is a sort of evidence that we can cut to our feet because he's somebody Who knows us well. He knows us as well. And by the way, the company is headquartered in Poxtel, Netherlands, which is the same In which we are headquartered in Netherlands. So those increase in terms of multiples.
Very helpful. Thank you very much for your time.
Thank you. Next question from Martin Wilkie from Citi. Sir, please go ahead.
Yes, good morning. It's Martin from Citi. Just a couple
of questions. The first one is
going back to the growth outlook and how we can think about it relative to 20 2019 level, because obviously Europe is a lot higher now than it was in 2019. I know your guidance for the year is at the group level, not By region, but is there a reason to believe that the European business should see a big deceleration in the second half given The strength that you've seen in the first half. So that was the first question. And the second question was, you've also been investing in growth areas at EV chargers this morning. We've seen it In the past on data centers and so forth, you've made the comment now a couple of times that logistics and warehousing seems to be a hotspot for you.
Is that something that you need to move into given that presumably electrification and infrastructure rollout for warehousing is here to stay? Is that something There's an obvious area that you could then grow into. Thank you.
Yes. Well, There's nothing specific in Europe compared to what I said a little bit earlier in this call. Yes, indeed, Europe has been Booming in H1, a lot higher than 2019. It's coming from First, resi, let's say, connected and data center, whilst non resi is a bit more supportive than the U. S.
There's nothing specific in Europe except that The basis for comparison will somehow be pretty demanding, especially On Q4, and then the other factors that I was mentioning would also come into play. The fact that you can see that all across Europe, The opening of the economy and the society, if I may say, is pushing again people out of their home. They've been staying home for almost a year. So it's possible that the residential market will not be as supportive in H2 like they've been in H2. So the same factors that we play It's where we also play in Europe.
Now mid term, again, I remain extremely confident on the fact that Europe will support our sales, number 1, because, structurally, Europe will be positively impacted by a number of megatrends, Including actually the stimuli plans that will come into play progressively. And number 2, We have a very strong position in Europe, which we are currently rounding out with the system. And we've done a number of moves in The past years, which some of them might not be very valuable, which position us very well in terms of new product, Positioning on the faster growth segments such as assisted living, data centers, greens and the pure Connected Smart Home with NetATMO, which is mostly European play, sales of other connected products, The number of reorganization, commercial reorganization, investment into digital and so on and so forth. So mid term, I'm very confident that now European position It will be a strong support for our top line growth. Well, H2, you have all those factors that will come into play, basically for comparison, pardon me, I mean, health situation, Residential question mark.
And again, the scarcity of components, which is also always something we'll have to manage in Europe and elsewhere. As far as warehousing is concerned, well, it is not that we don't think it's an interesting vertical. It is just that In terms of product family, if I may say, it is probably closer to an industrial building That's to residential or traditional nonresidential building. So you don't have A lot of circuit prices, you don't have a lot of connected products, you don't have a lot of foreign devices, you don't have a you have a bit of cable trade. So it is just that the density, if you may say, the density of our products or the euro or dollar per square foot It's smaller in warehousing than it is in other type of The residential buildings.
Now if we see the possibility to acquire an interesting product family, which is a must in warehouse And which would interestingly be a good addition to our catalog, we will. But frankly speaking, it is just that warehousing does not have a huge Again, data center, green, assisted living, connected, work from home, audio video everywhere. I think We are backed up by enough mega trends to support our strategy in the next 3 to 5 years.
Thank you. We have no more questions for the moment. Thank you. Next question from Eric Lemarie from Bryan Garnier. Sir, please go ahead.
Yes. Good morning. Thank you very much. Just a follow-up one on data centers. You mentioned it's a very dynamic market, obviously.
Do you start to see some new competition here, some new players wanting to grab a share of market and what about competition pressure currently? And not only on the pricing side, you mentioned this possibility you got to increase Pricing is between 2% and 4% in H2. Is it the case for data centers product as well?
Well, so we have hundreds of competitors in data centers, Which are different from one product to another. So of course, you have the big guys That are active competitors such as Midtown, Schneider, Vestiv and a few others. And you also have and they are usually the toughest competitor, if I may say, super specialist of a given application. So you have specialist In continuous busbar, in PDUs, in In fiber, in cabinet, in racks and other places. So it is a competition intense Business as are the businesses.
I haven't seen in the past couple of years a newcomer that would disrupt The business, so that would make very significant inroads into this business, which it's you have a lot of barriers to entry to the data center, Which we are sometimes fighting against because we are not a contender in all field of activities. It is an area where bond reputation matter a lot because that asset operator cannot take the risk of dealing with somebody Which is not reliable. The depth of the product offering is extremely important. After sales service is important. The many factors come into play.
For example, price is not such an important factor in data centers. Again, because when you are a data center operator, you cannot take the co location or whatever. You You cannot take the risk of having your data center down even for 2 hours because you would have bought Cheap product alternatives. So you are more looking for reliability, technology, service, after sale and before sales than on price. I don't see material difference in pricing between Data Center and Other Businesses nor do I see different patterns in terms of profitability.
So there are countries and product families in which it is easier to increase prices than others In data center as elsewhere and in data centers as elsewhere, you have product families in which you can have a 25% or 30% EBIT margin Well, we have 25% to 30% EBIT margin, and there are product families in which we have 10% EBIT margin. So no structural differences, neither in terms of pricing nor in terms of Neither in terms of pricing nor in terms of margin between data center and the rest of our product offering. Very clear. Thank you.
Thank you. Next question from Shane McKenna from Barclays. Sir, please go ahead.
Good morning, gentlemen. Can you hear me? Yes. Thank you very much for the update on your own inventory Situation, are you able to give us a feel for what you're seeing at the distributor level? I think if we go back to Q1, you were saying neither over or undersupplied.
How that's looking currently? And if we come back into sort of Rest of the World, how are you viewing your China growth as you look into the second half following the double digit growth in Q2 as sort of comps get a little bit more difficult, are you expecting Slow down there and if you can give us a feel for the different segments and how you're seeing that within China as well. Yes. Well, as far as distributors are concerned, if you look at H1, we are not seeing Any material restocking at the distributor level, I'm sure that they would like to, But given the sort of supply constraints we have been dealing with, it has been pretty difficult for distributors to build some inventory back. So So we're not seeing any significant inventory buildup.
Now this being said, since they destocked a lot in H1 2020, mechanically, The difference between a strong destocking in H1 2020 and no stocking nor destocking in H1 2021 Has of course a positive impact on Top Line Mechanical, but we're not seeing any significant inventory building back. And we're of course, our Distributors are we are working closely with them in order to anticipate as much as possible the level of demand and servicing correctly Our common customers, the contractors has been a joint challenge between our distributors and ourselves. As far as the Chinese growth is concerned, well, we'll have, of course, in H2 a more demanding basis for comparison Then in H1, you remember that Q1 2020, our sales in China were down 50%, And they were up more than 10% over the remaining 9 months of 2020. So we have a challenging basis for comparison More demanding, basically, for comparison for China in H2. We are still, of course, shooting for growth.
Well, the level of this growth will depend on many factors that we We don't control. So I have no reason to give no possibility to give you a lot more clarity on The level of growth we experienced in China and whether the growth will come mostly from resin and resi, retail project or data centers That's for the other part of the words. What I can tell you is that the business which has been booming for Legrand in China and doing very well is mostly the project business. The retail business, to the contrary of Europe, for example, It's not as booming as the project business because of the many restrictions that remain in China For people to gather, for shopping outside and so on and so forth. So the project business has been Moving more than the retail business, will it still be the case in H2?
And number 2, the data center business has also been booming in China And with Chinese contracting company outside of China, Will it still be the case in H2? We'll see. Perfect. Thank you very much.
Thank you. No more questions by phone. Sir, back to you for the conclusion.
Well, It's a very nice little Scandinavian du Grand, so very nice acquisition. I wish you a good day And hopefully, you're happy and relaxing the summer break. Thank you very much. Bye.
Thank you, ladies and gentlemen. This concludes the conference call. Thank you all for your participation. You may now disconnect.