Ladies and gentlemen, welcome and good morning to today's Legrand 2021 First Quarter Results Conference Call. All participants are in listen only mode. Later, there will be a question and answer session. For your information, this conference is being recorded. At this time, I would like to hand the call over to CEO, Mr.
Benoit Gokarin and CFO, Mr. Francois Lemery. Sir, please go ahead.
Thank you. Hello, everybody. Good morning. Frank, Lemery, Renan Marc and myself are happy to welcome you to the Legrand 2021 Q1 results conference call and webcast. As you know, we have published Today are our press release, our financial statements and a slideshow to which we're going to refer.
Those documents are available on the Legrand website. Please also note that this conference call is recorded and webcasted on our website. After a few opening remarks, Frank and I will comment into more details the Q1 results of 2021. I begin on Page 4 of the deck with 2 key focuses for today's release. 1st takeaway, in the Q1, we recorded a Strong growth in sales and financial results overall.
This includes in particular an organic growth above plus 13%, I. E. Plus 5% over 2 years and adjusted operating margin close to 22% Before acquisitions and an increase in the net profit of more than 36%. These achievements clearly reflect The strengthening of Legrand position in its markets, they also demonstrate the quality of our positioning and growing segments of the building of tomorrow. 2nd takeaway on the back of the Q1 performance and despite the uncertainties linked The pandemic situation as well as the pressure in supply chains, we are raising the full year 2021 target.
Now moving to page 6, let's dive into sales trends recorded in the Q1 of the year. So total sales grew double digit at +10.5%. Our revenues showed a steep rise in all regions With at group level a strong organic growth of +13.1 percent, this was driven mostly Good demand in residential and data center markets in many countries. It is also the result of the moves we made in 2020. For example, the fact that we maintained services to our customers during the year, launched many marketing initiatives, kept an upbeat pace of innovation and also stepped up all digitalization initiatives.
When combining Q1 2021 and Q1 2020 Performance, organic sales grew plus 4.9% over 2 years, thus reflecting Clear stronger positions in our markets as I previously mentioned. Additionally, acquisitions contributed to an increase in sales of plus 3.4%, thanks to the operations we made in 2020. Based on those, the external growth for the full year would reach Plus 2.5%. Exchange rates on the other hand had a negative impact of minus 5.5% in the Q1, applying April average price rate to the rest of the year, this FX should Theoretically be about minus 3% in 2021 as a whole. Going to Page 7 to 9 of the deck, Let's now go into more details on the organic growth performance by region for this Q1.
So first in Europe, Organic sales were up plus 14% in the 1st 3 months of 2021. In Europe, major countries, sales rose Simply by plus 14.3 percent, growth was very strong in the main countries sorry, fueled in particular by many commercial successes. This was the case for example in France and in Italy. Europe's new economies were up plus 12.4% As a solid momentum continued in Eastern Europe and Turkey. Moving now to Page 8 with North and Central America.
Sales grew organically by plus 4.9 percent in the Q1 of 2021. The U. S. Loan rose plus 4.4%. This was driven by continued Bayer's business in data centers along with solid achievements in residential offerings.
Sales in non residential applications continued to decline, although less than in the Q1 than the last quarter, sorry, of 2020. Sales increased in Mexico and it fell slightly in Canada. In the rest of the world, now on Page 9, Sales grew by +29.8 percent. In Asia Pacific, sales rose steep plus 37.1 percent, they more than doubled in China with a double digit organic growth over 2 years. In India, the growth was very strong in a pandemic context, which unfortunately remains very difficult.
In South America, sales were up plus 20.4%. There was a significant rebound in Brazil And we recorded sustained increases in many other countries. In Africa and the Middle East, sales rose plus 19.1%. The growth was very significant in Africa and sales increased also in the Middle East. On this note, 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 10 now. Adjusted operating margin before acquisitions in the Q1 came to 21.9 This represents an increase of plus 3.3 points from the same period of 2020. This increase in the profitability was mainly driven by 1st, the operating leverage linked to the strong Sales growth and the still limited rising costs. And second, the sales prices increase that offset in value, A rise in raw materials and component costs rise that accelerated over the quarter.
When acquisitions are taken into account, The adjusted operating margin for the Q1 of 2021 was 21.6%. All in all, the adjusted operating profit was thus at €361,000,000 up Plus 27.8 percent from the Q1 of last year. On page 11, I'm now commenting the net profit attributable to the group. It was up plus 36.4% compared with the Q1 of 2020. This performance reflects primarily a strong growth in operating profit.
In addition, the financial results were favorable over the quarter. And these favorable trends were partially offset by an increase in the corporate income tax, while the corporate tax rate was stable at 28 0.5% compared with the Q1 of 2020. After the net profit, We are now focusing on cash generation on page 12. As a percentage of sales, Cash flow from operations was up plus 4.1 points at 18.8 percent of sales of €350,000,000 Also the working capital requirement remained under control over the quarter, representing 8.3% of the last 12 months' sales. As you know, the right reading of free cash flow generation should be done Normalizing working capital requirement.
So on this basis and on the right hand side of the slide, Normalized free cash flow was €276,000,000 This means up Plus 19.9 percent in the Q1 of the year. This concludes the key topics On Legrand Q1, very good financial performance that I wanted to share with you today. And I'm now passing back
Thank you, Frank. Moving now to the second part of this presentation for an update On the target for the year, so we are on page 14 now. Given its first quarter achievements and despite uncertain environment due to the pandemic situation and increasing pressure on supply chains, Legrand is raising its target for 2021 and is now aiming for an organic growth in full year sales of between plus 4% And plus 7%. The scope of consolidation effect of at least plus 3%, meaning a GOGAT of plus 0.5% And adjusted operating margin before acquisitions at 2020 scope of consolidation of between 19.6% 20.4% of sales. The basis for comparison for both sales and margin will be very favorable in the Q2 of 2021 and challenging in the second half of the year, particularly in the third quarter.
Legrand also aims to achieve at least 100% of its CSR roadmap for 2021, Testifying to the ongoing deployment of a bold and exemplary ESG approach with a particular focus on the 5 Global warming and the promotion of diversity. These annual targets are fully in line with the group's Mid term targets released in February 2021. You'll find more details on those midterm targets in Page 19, if needed. Going to Page 15, we are concluding with some additional elements about governance. 1st, on the proposed evolution of the Board of Directors on Page 16, at the proposal of the Nominating and Governance Committee and the approval by the Board of Directors, the appointment of Mr.
Jean Marc Sherry will be put to shareholders During the general meeting of shareholders to be held on May 26, as Chairman and CEO of STMicroelectronics, Mr. Sherry has solid experience in senior management in a field of strategic interest. As a result, the composition of Legrand Board of Directors would remain in line with sector's best practices with 75% of independent members, 42% of women and 5 nationalities. 2nd element on Page 17. As previously announced in February, the proposed dividend for 2020 is
€1.42 per share,
I. E. Up 6% from 1 point €34 for 2019. This will also be put to the shareholders approval on May 20 This concludes the main messages that I wanted to share for this good start of the year. This performance testifies The healthiness and soundness of Legrand value creative model and the fact that it is well positioned to take full advantage of the next economic cycle.
Before we leave the floor to questions, very important words on our financial agenda as we will be Holding a Digital Capital Market Day on September 22
this year.
Of Of course, this will be in particular an opportunity to bring more colors on Legrand development prospects and I hope that You'll be available to attend. So, Fran, Cronon and myself are now ready to answer any questions you may have. Thank you.
Thank you. We have first question from Andres Ruili from JPMorgan. Please go ahead.
Good morning Benoit, Frank and Ronald. I have a question on the outlook. Obviously, we appreciate that you don't have a lot of visibility, but I would like to better understand whether Based on the data you have in terms of what your assessment is what over the last couple of quarters what the level of Restocking is that contributed to the demand and maybe the catch up demand from the pandemic. To better put into context that Q1 is 5% above the pre pandemic level, But your guidance assumes the full year is still going to be below that level even at the higher end? That's my First question.
It's indeed an important question. So As far as the potential destocking or restocking is concerned, we haven't seen anything material in Q1. And in most of our countries, our distributors have more or less bought us what they were able to sell. So we haven't seen a significant restocking impact. There could be here and there a bit of restocking, here and there a bit of restocking.
But overall, we haven't seen The material impact coming either from further destocking nor from restocking. The reason being that the demand has been very solid And the supply chain is under constraint. So we don't feel that those the growth we have seen in Q1 Was neither positively nor negatively impacted by any significant move from our distributors. As far as the outlook is concerned, well, you know the business Monet, you know how tough it is for us to predict what we have ahead of us. There are a couple of uncertainties.
If I list those uncertainties, we're clearly even though the pandemic seems to be A little bit more under control than it was 3 months back. There are still a number of dark spots, if I may say. Take for example India, which is for us our 4th largest country, which is facing an extremely difficult situation. Take also Latin America, where you have a number of countries which are still under lockdown. So the pandemic itself It's not over.
Number 2, it is true that for a couple of months, if not quarters, The demand has been supported by very strong residential. And probably the fact that in a number of countries, households couldn't spend much on traveling, Dining out, leisure and stuff like that, so they could reallocate part of their remuneration or part of their savings To renovating their home, it has had a good impact in number of countries to the residential segment, especially the DIY or the small How long will it last? Will it continue in the next quarters with Lockdown progressively lifted and the health situation progressively easing. I don't know. I'm myself pretty convinced That we have a long term trend of people willing to improve their homes and Remote working and connected products all that will definitely Our trend that will definitely help our residential market, but what we'll affect in the next months and with the recent growth we've been experiencing for a couple The performance continues to be question mark.
Another uncertainty is about the non residential, especially in the U. S. To give you maybe orders of magnitude, excluding residential and excluding data centers, Our sales were down about 10% in Q1 in the U. S. So it's better Then Q4 2020.
Q4 2020 was down by about 20% compared to the previous year. Q1 2021 is down by about 10%. So Of course, we could qualify that as an improvement. But even though there are a number of positive signs, The number of quarters is improving. For example, you have the billing index, which is improving.
So we believe that at some point the nonresidential market in the U. S. Will improve, but will it be in 6 months, 12 months, 18 months? It will be a big question mark. So if you add to not to mention of course the constraints on the supply chains, which is something We could deal with in Q1, but with always a sort of constraint we have to match.
So if you put together the state of the pandemic, the resi, the non resi and the supply chain, you have a number of That definitely could impact our remaining 9 months, not to mention The basis for comparison, which is a bit more technical, which is going to be very easy in sales for Q2, a lot more demanding for H2 and especially for Q3. So putting all that together, Well, letters to the guidance or to the revised guidance we are shooting today.
Thank you very much for the comprehensive answer. Just a follow-up on Price cost, which seems to have been relatively neutral in Q1. And obviously, we know that over a longer period, you always manage to pass on higher costs or higher raw material costs. Is there now a couple of quarters where it could be negative before you catch up again?
Well, the price cost and I will give you the numbers, but the Price cost balance is had a negative impact in Q1, slightly negative impact Q1 to our P and L. To give you the numbers, our selling price was up 1.9% in Q1 And inflation of raw materials and components was about plus 3.8%. So even though it was more than compensated in value, it had a negative impact a slight negative impact Oil margin. Well, you can see in your account that it was compensated by many things. It was compensated by Well, the leverage coming from the very good volume growth, which is more than 11 That which is very sustained was compensated by a good control of our cost, both production expenses and SG and A and by a number of other factors.
But assuming specifically on the difference between selling price and purchase price, it had a slight negative impact. Well, going forward, it's very difficult to see what the purchase price is going to be. It is I think to everybody that the cost of chromatin components is increasing sharply, not to mention the Sometimes difficult the difficulties we are sometimes facing to source some of them, but maybe I can remind you three numbers. Purchase price in Q3 2020 were down 1% compared to the previous year. Purchase price in Q4 2020 were up plus 1.5% and purchase price in Q1 2021 We're up excluding tariff.
The number I gave you was including tariff, excluding U. S. Tariff plus 4.1%. So there's a clear deterioration and we expect this deterioration to continue. And as we Put in the press release, we have seen an acceleration of the rise in raw material and component costs over the quarter.
So it's going to continue. It's going to waste on our P and L. Now as far as the pricing strategy is concerned, we intend to do as usual In a context where raw material price of raw material components is going up sharply, we intend on a yearly basis So compensation value. So not necessarily margin, but it is a very typical model. Not necessarily every single quarter, but on a yearly basis, we intend to do whatever it takes in terms of pricing so that it compensate At least in value, the negative impact of the raw materials and price incurrence.
But this should clearly be factored It has been factored of course into the revised guidance that we are showing today.
Thank you very much.
Thank you. Next question from Gael De Vries from Deutsche Bank. Please go ahead. Thanks
very much for taking my questions. So good well, first of all, good morning, everybody. Congratulations on this very strong quarter. But can I follow-up on Andreas' question regarding the guidance on the revenue side, because one of your peers delivered a similarly strong organic growth this quarter and is now guiding to an annual organic growth between 8% 11% for the full year? So I'd really like to understand why your guidance is 4 points below theirs.
I mean, if I take it and look at the comps for Q2, it looks like you basically expect growth to turn negative in the second half of So again a little bit more clarification on this would be probably helpful. Is it just conservatism as usual? The second question I have is about your pricing strategy. In the past in those in some of those years with high inflation Legrand was Typically able to raise prices by 2%, 2.5%. Do you think that the current environment would raising prices clearly much more than this 2% to 2% or 2.5% level.
And do you think there could actually be some kind of a cap to what you can do in terms of price rises in any given year or not really?
Hello, Gael. Well, I would obviously not comment The guidance of other companies and I think that each business model is different. The visibility we do have going forward might be different from others. The market positionings are a little different. The geographical mix is different.
So I'll not enter into this game of comparing the guidances. I'm focusing on my performance and what you can see going forward. And I have not much to add to whatever Answer to Andreas, we guided in February to 1.1 to 6. We are doing a very solid Q1. It's not Irrelevant or questionable to add 2 points of growth to the initial guidance Given the good Q1 that we did and to narrow a bit the range because now we have 9 months to go and not 12%.
So I think this 4% to 7% is very consistent with the guidance we issued in February As well as with the other performance we delivered in Q1 compared to what you would have expected typically. So again, I'll not comment on my peers' guidance or the company's guidance. I don't believe that we are over cautious or over conservative. I'm just cautious of the uncertainty That we have ahead of us and that's it. So not sure that we can make a lot more comments than that.
Well, and then we'll see what the next month is going to be. As far as the pricing strategy is concerned, yes, of course, the 2% to 2.5% price effect It's not out of reach. We are already at plus 1.9% in Q1. Yes, of course, there is a limit to the sort of pricing we can do. Pricing is not automatic.
It's not something it's not like a task that you can input to your customers. It's something that you have to do very wisely, very carefully If you don't want to lose your competitiveness and if you still want to secure Cost competitive projects and so on. So I don't believe that it would be reasonable to think that Legrand could do a 4%, 5%, six Pricing, this is not what we are aiming for and I think it would deposition Legrand in terms of competitiveness. So We'll see. The total price we will do will definitely depend on many factors including What the raw materials and components will do, which is a bit uncertain for H2.
And If we are not able to compensate in margin the rise in price raw material and component through pricing, we have other ways to do it. We have of course the leverage coming from volume and you know that we are an industrial company and we have a strong leverage in our cost. We can increase cost less than our top line. So there are many other factors that we can do Beyond pricing in order to mitigate the impact of raw materials in our accounts and this is the reason why we are shooting This guidance, which is showing a significant improvement in margin compared to last year Despite this raw material context.
Okay. Thanks very much for this. Can I just Try to follow-up on the first question? Maybe you could help us understand what was the what were the dynamics throughout Q1 January versus Feb versus March.
You mean it's just top line or Robusteo?
Organic growth, Sorry.
No, I'm not I cannot comment that because I've been consistently telling you that the monthly number doesn't mean anything in our business. It might be meaningful for distributor business Because you have many things that could happen, but for industrial companies such as Legrand, it depends on The mix from the different countries, it depends from the number of open days, it depends from the weather, it depends. So mostly numbers are not relevant. Neither will I comment April except to remind you that we have of course an easy comp because the month of April last year was down 41% like for like. But again, we will comment Q2 numbers when we will release Now of course, you may complain that I'm not giving enough granularity to the Q1.
Well, I think that By releasing full set of results, full accounts, P and L balance sheet, cash flow statement, I think that it gives For a question, I'll say, we're running IT.
Absolutely. Thanks very much.
Thank you. Thank you, guys. Thank
you. Next question from Alexander Vielbo from Bank of America. Please go ahead.
Thanks very much. Good morning, everyone. I was just wondering if you could give us a little bit of color on your comments around data I wonder whether you could talk a little bit about the differences in regional demand and customer demand there
just to give us a little
bit of an understanding of
how that It's developing. Thank you.
Yes, of course. So data center, which is as a reminder about 10% of our sales globally And a little bit more in the U. S. Has been up very nicely in Q1 more than the average of the group. And this has been true in all regions.
So Europe, North and Central America and the rest of the world. So very strong growth in Q1 in data centers. And I have the feeling that With the market positioning that we have and the acquisition that we have made in data centers, which are not only acquisitions of U. S. Companies, so of course, we are very happy and Pleased by the acquisitions of Starline, Harrington, Theratec, but we have also made in the past 10 years a number of acquisitions in China, in Europe, In Singapore, I have the feeling that we have a very strong positioning, especially the white space.
So the space where you have a server room basically and especially amongst big customers that are pulling the demand for data centers and which are big that are putting the demand for data centers and which are big guys what we call the super aids, so the Amazon Web Services, LinkedIn, So we are very happy with the growth we have been experiencing in Q1 And which came after a very good year 2020 and a very strong over performance in data center Compared to the rest of our sales.
Great. Thank you very much.
Thank you. Next Question from Daniela Costa from Goldman Sachs. Please go ahead.
Thank you very much for taking my question. Good morning. I have 2. I'll 1 at a time. I want to come back to, I guess, very clear on your point on the 4% to 7% guidance on what you see Still in terms of uncertainty, but didn't hear you mentioning anything regarding stimulus.
And we had a couple of announcements, like Biden, We have the Green Deal and a few other regional country announcements regarding renovation. Is it fair to say that You haven't factored those in even at the top end of the organic growth guidance. And can you give us an overview of sort of how you're seeing things panning out For your portfolio given some of the measures that are being discussed? That's my first question.
Hello, Daniela. Though we have not factored in a lot of impact of the stimulus plans in 2021 because we feel that whether the U. S. Or the European stimulus plan, those are plans which are not yet enacted And it will take time before they are. Maybe I can take as an example the U.
S. Plan. So as you know, There was US1.9 trillion dollars American Rescue To plan, this is his name, which was voted and which was implemented. Well, this plan is of course massive, but there's nothing specific to our trade. It is a plan which is mostly Driven toward direct stimulus to individuals and to education.
So for example, you have more than $400,000,000,000 of stimulus checks. You have an extended employment programs. So This plan was massive. It probably had a positive impact on the consumption and it is probably Supporting the very good growth we are experiencing in residential in the U. S, but there's nothing specifically targeted at our auto trade.
The one plan which could be of great interest rate to our business is the so called American Job Plan, Which is if I remember properly something like $2,000,000,000,000 on 8 years. This is the one which is supposed to be financed through tax increases. And here you have a number of topics that could positively impact our business. For example, you have something like US200 $1,000,000,000 which are supposed to be dedicated to the Manufacturing and retrofitting of so called €2,000,000 affordable house. You have investments which will be directed to modernize the schools, To modernize federal buildings, childcare facilities and stuff like that.
So of course all that It can very positive impact our freight, but this American job plan hasn't been voted yet And we know that it would take a lot of discussions and debates at Congress before it is voted and nobody knows Under which format is going to be voted? So you see for this specific U. S. Situation, yes, a positive impact of The American Rescue Plan, which is somehow indirect to consumption. And as far as the plan specifically dedicated To energy efficiency, refurbishment of buildings, it is not yet voted and before it is voted, enacted and implemented, it will take a couple of quarters.
Same comment for the Green Deal where you currently have a number of countries that are submitting their commitments and plans To the European Union and again it will take a couple of quarters I believe before plans are effectively Even though some countries have already started to do their own initiatives such as in France. So to make a long story short, All those plans are obviously positive. We believe that over the years to come they will support The growth of our business, but we don't expect to have massive impact as Early as 2021.
Thank you. And my second question relates to M and A and the pipeline. Over the years, you've always shown us a correlation between organic growth And M and A growth and how the 2 normally go along together. Now with significant acceleration in organic sales growth, Should we expect, as we move into the coming quarters, a significant acceleration on the M and A pace as well from the 3% that you're, My guess has the carryover? Thank you.
Well, I wouldn't like to shoot a number. I mean, clearly, our objective remains to do at least 3%. It's Difficult to comment on anything different today, Adena, because you have a lot of uncertainties as you know in M and A. And of course, we don't want To do M and A for the sake of doing M and A. We have to do the right deals at the right price and with a good fit with our strategy.
So what I can tell you today is that we have a lot of contacts, a lot of discussions going on With interesting targets, traditional bolt on targets, of course, that's anything different from what we've been doing. I'm pretty confident in the fact that some will materialize in the quarters to come. But of course, It depends on how long will the discussions last. It depends on this and the mix of peaks. So again, I'm not committing to anything more than 3%, Please 3%, but we are very active on M and A and I'm very confident that we will be able in the quarters to come to demonstrate our ability to do good deals for
Thank you.
Thank you. Next question from Lucie Carrier from Morgan Stanley. Please go ahead.
Good morning, gentlemen, and congratulations on the strong start. I have three questions. I will go one at a time if I may. The first one was to have a bit more visibility maybe on the trend you are seeing On nonresidential in the U. S, you mentioned the year on year comparison to minus 20 in the Q4 minus 10 in the Q1.
So how does how has that evolved I would say sequentially between the Q4 and the Q1? And just a little bit outside of Commercial non resi, but on the data center business generally do you have more visibility versus the in the business versus What you have in the rest of your segment?
Well, hello, Lucie. I have to admit that I'm not a It's a great sign of sequential comparison because we're in a trade where quarters can hardly be comparable because of the month of Jan, the month of December, the month of August and many of many other factors and restocking, restocking Yes, Stephane. So I'm not a great fan of sequential comparison. The feeling though is that things are improving in Q1 twenty 21 compared to Q4 2020. It is more qualitative comment that I'm making or comment based on Soft signals such as the number of quotes we are getting from our customers or a number of statistics That we are looking at.
So it seems to have an improvement even though it's It's difficult to quantify it. My feeling for the U. S. Is that you have Three things short term, mid term, long term. Short term, it is somehow likely that There will be some works being performed.
At the time, people will go back to the office. And there's now a general consensus in the U. S. That more and more people will be asked to come back to their desk by mid year. So hopefully, this will help a bit our business.
Then you have medium term. As I said, we have, for example, the so called Index, which is a leading economic indicator for non residential activity, which increased in February for the first time in a year. So it is a positive signal, but this will not translate and should not translate into jobs, let's say, within 6 to 18 months. So there's a significant time lag between the time those indexes are improving and the time we have actual works being performed. So big question mark on whether it will last, that's the one big question mark and whether and when it will hit our top line.
And there's a sort of more fundamental structural and long term Trends were a lot more positive than many that what many specialists were used To say 6 or 12 months back at the time of the pandemic on office building. I have a strong feeling that you have a number of trends that will support the growth of non residential buildings, namely The need for energy savings and monitoring, namely the need for network upgrade, for infrastructure improvement, For remodeling in order to accommodate the sort of work from everywhere trend. And I'm pretty convinced that in the next years to come the office space will be an interesting space to be. So I know that it doesn't straightforward answer your question. But short term, Hopefully some positive impact from return from home.
Midterm all the signals that we are seeing that should translate Works within 6 to 8 months and long term there's a very strong trend that should support the business. As far as data center is concerned, We don't have a lot more visibility because even when customers are big customers such as AWS or Google, They don't necessarily tell you what they're going to order in 6 months from now. So even for data centers, We don't have a significant order book that would help us to predict What H2 2021 or full year 2022 going to be? What I can tell you is that three things. Number 1, as I already said, it was very positive, Growing fast in H1.
Number 2 in Q1, sorry. Number 2 that midterm, we expect this business to Keep growing at the fast pace because of the need for data and data management coming from all the changes, the habit We have seen for the past 12 to 8 months, streaming, increased use of smartphones, tablets Well, as far as H2 is concerned, of course, there's always a question mark What will our customers do? That could be basically for comparison topic. That could be many things. But so Short term, I cannot commit to any number.
But long term, I can tell you that this is an area where we have a lot of cost prospects. Also more at Legrand as We have our internal gross engines. The fact for example that even though we are very strong in the U. S. In data center, Yes.
There's a number of regions where we have a small market share. So we are currently in the process of deploying geographically our product offering, Mostly in Europe for the U. S. Brands, mostly in Asia for the Chinese brands we have. So whether it's prompted by external factors or by our own strength, I have a feeling that mid term we have a lot of very interesting cross prospects.
Short term same lack of visibility as elsewhere.
Thank you for the color. My second question was around the cost structure. Sure. I seem to see from the slideshow that your cost for admin selling and R and D were about 4% lower. So they were 30% of sales in the Q1 versus 34% last year.
I was just wondering if all of that was quite sustainable in terms of cost reduction or whether part of that was kind of more temporary As you transition your cost structure from a COVID time to a non COVID time or maybe had if you had Some phasing in the R and D project because that's quite a decrease in terms of that area of Cost from last year.
Yes. Well, the numbers you are seeing In the P and L, of course, includes ForEx, includes Perimetres. So it's not straightforward. What I can tell you To give maybe a more accurate number is that our total expenses I. E.
Production expenses and SG and A We're up like for like 3% in Q1. And as you know, our top line was up 13%. So plus 3% for production expenses and SG and A, plus 13% for our For our top line. So clearly our fixed cost Have been well under control in Q1. Is it sustainable?
We will have especially on the SG and A front a ramp up in expenses Because we believe that this ramp up is necessary for us to fuel growth In the years to come. So there will be a ramp up in commercial expenses. There will be a ramp up in R and D expenses even though we haven't Customer charge expenses last year and this is what we have tried to factor I mean to say when we said that That's the limit to the rising cost in Q1. So yes, there will be an increase in cost. Now it has been factored and included in our Revised guidance for the year.
So in other words, the 19.6% to 20.4% of sales include not only the impact of Top line growth in volume growth. It also include to come back to the previous question, the balance between the selling price and Purchase price and it also includes the fact that there will be some increase in the number of expenses in the months to come.
Thank you. And just my last question which is more mechanical, but you very kindly gave us the impact of M and A you For this year based on what you have already purchased so to say, how should we think about the dilution on the margin based on this existing acquisition? I think you see it was 30 bps in the Q1. Is that something that we should kind of annualize based on what you have thought so far? Well,
it was indeed minus 30 bps in Q1. You can Assume that it will be between 0 to minus 40 bps. So if you take the same minus 30 bps, you'll not be far from what the actual number would be.
Thank you very much.
Thank you.
Thank you. Next question from Shane McKinnon from Barclays. Please go ahead.
Good morning, everyone, And thank you for taking my question. Just coming back into the sort of guidance. If I look at your European business over the last decade and observe The positive seasonality that we see in Q2 versus Q1 is around roughly sort of €15,000,000 to €20,000,000 Is there any reason given that you flagged Limited or no sort of pull forward effect that normal seasonality shouldn't hold this year. And then I've got one other follow-up question.
Well, I see no reason why seasonality shouldn't play, but It is basically a weak month of August. I mean, it's very connected to the but again, What will master and impact a lot more than seasonality, the sort of profile of our Growth in 2021 is going to be the end demand and that's where the question marks nice. So take Q2, Q3, Q4, Seasonality will have the usual impact, but change in demand, but basis for comparison, we have a lot stronger impact. This is the reason why everybody expects Legrand of course to grow in Q2. As a reminder, our Q2 2020 Well, I think a minus 22.5 percent turning to my colleagues.
So of course, when you have such an easy comp, if I may say, Except if you have a world catastrophe, which we are not expecting, we should deliver very strong growth in supply in Q2. So again, seasonality should play, but it's negligible if I may say compared to number 1, the evolution in demand residential that's And number 2, the basis for comparison.
Perfect. And thanks for the detail around your North American Non res business. I wondered if
you could just sort of break out
a little bit more what segments you're seeing those improving trends. Others have called out health care, Clearly, education, warehousing, logistics. If you could give a bit more clarity around those verticals? And how exposed are you to hospitality and lodging? And then within that, maybe the trends that you're seeing across your non res business for lighting versus non res AV infrastructure?
Thanks.
Well, I would love to give you this kind of granularity, But it's already sometimes difficult to split ourselves between resin and resi because you have a number of products that are sold in both Vertica which are the same. It's even more difficult to break down between the various subvertica if I may What I can tell you is that it's highly likely that the majority of non residential sales in the U. S. Are going to office buildings. We have I think very little exposure to logistics because you know, logistical center doesn't have a huge Consent in Electrical Product.
We do have some exposure in education, health, retail and so on. But I would say that The majority of our exposure to the U. S. Non resi is office buildings. So if we are seeing some improvements, This improvement is clearly coming from office buildings from everywhere including office building if I may say.
And the exposure to hospitality is not a big exposure in the U. S. Now As far as the split between the various businesses, we don't see a lot of differences Between, let's say, AV, cable management, lighting features, The licensing controls and the other, I think it's more or less all of them are dropping low double digit In the nonresidential segment and most of them are growing sometimes double digit when they have some exposure To resi, take for example AV, Audio Video. Audio Video has an exposure to residential, Small amounts for residential. You have some products helping To do an efficient Wi Fi system within the home, you have some small Video conferencing systems, all those AV products are growing sometimes double digit in Q1 as they grew H2 last year.
And on the other side, you have the AV product exposed to non resi, which will be the traditional chief mouse, So the daylight, the smart screens for example and those businesses will be down double digit. So the main, let's say, driver remains the exposure to either resi or non resi. But within Non resi, you don't have a huge difference between the different product lines.
Very clear. Thank you very much.
Thank you. Next question from Andre Kuehne from Credit Suisse. Please go ahead.
Good morning. Thanks very much for taking my questions. I wanted to touch on margin and ask a wider question. You're thinking of that kind of 20% level that you cited before as The fair level that you wouldn't want to really go above that. In the context of having just printed significantly above that and Seasonality is always positive for the Q2.
It looks like you are on track to better performance. I just wanted to check how you're thinking about That for the rest of the year whether there's going to be a kind of a conscious effort to ramp up investment for growth, if you are Looking to be on track to deliver significantly above? Or is that something that you would kind of observe through the year and then beside what you do in subsequent periods.
Well, number 1 comment, this 20% This margin well is not granted for 2021. This is something that we will have to achieve And it is challenging. Of course, we will be helped and supported by the growth in volume. Of course, we have A good level of margin in Q1. So we have only 9 months to go.
But I really want to emphasize 2 things, which we have already discussed. Number 1, the fact that the price in raw material and components is increasing sharply. And even though we will We are shooting to compensate that in value. We might not in margin and it could have a negative impact on the margin. Number 2, as I've just said a couple of minutes ago, the fact that in order to sustain an interesting growth in market share and volumes in the years to Gov will have to put oil back into the engine and to invest in especially in SG and A.
So the 40% is not granted. Even though you rightly noticed that we are shooting for a significant improvement in margin, it's clearly our objective for 2020 Now mid term, I fully confirm that the 20% EBIT margin It is our guidance and our midterm target. And we clearly stated that in February when we released our midterm guidance. And I can reconfirm it again. It's not ideologics.
It's not because there would be a magic ceiling that we couldn't go to 20.5 or 21. But it is because based on my experience and the many analysis that we have done, I think that this is the best balance between value creation and growth. Going to 21% or 22% Could always be possible, but it would imply to cut R and D from 5% of sales to 4%, For example, it would imply to deliver extra pricing, a bit too much of pricing. It would imply to cut Our digitalization expenses and a number of things that would hamper, if I may say, our gross potential in volume. At the same time, we could always do 13%, 14%, 15% I'm not going to the extreme, but 18% EBIT margin, for example.
But I believe that the extra volume growth we would get This decrease in margin will not be as value creative as The current growth we are having with the 20% EBIT. So really I think that this 20% is not a magic number, but it's the best Balance between growth and profitability. And you know the Legrand model. This is something I've I've been telling for 3 years. It's 20% margin, very good free cash flow generation.
And based on those two metrics, let's Try to run as fast as possible, both organically and through external growth. And I think this is It's a very over the long term very value
Second question I had was on the connected devices performance, Elliot, range of products. Could you talk about How that did in Q1 and maybe with some regional color if possible?
Well, we are usually commencing in these numbers once a year, not Not every single quarter because this is not a reporting which is available set out of our machines because it's just actually Mix of many sales in different products at least. What I can tell you though is that from what we could see so far, it's growing faster than the rest of the group. But I don't have a lot more colors to give you. We are very happy with the net atmo growth In Europe, which is also let's say supported by the gross and residential, but which is clearly over performing the market. But again, we will give you a bit more color on a yearly basis more than a quarterly basis.
But it has been growing faster than I said.
Got it. That's helpful. Thank you. And last question I had, again, quite a broad one. On that Future of office and what you mentioned is the near term potential rework that you see As people come back to the office and kind of resetting the space for the new ways of operating, are you seeing that those kind of projects Coming through already.
And if you are, could you talk about kind of what kind of work it is? We're just trying to understand kind of how much What sort of revenue opportunity per square meter per 1,000 employees that could yield just that kind of return
Sorry. Yes, it's very difficult to give you a precise Sort of measurement, if we look at the quotes and the request for quotation that we have from our From engineering offices, architects, sometimes contractors, it's all across the board. And it's about remodeling the space because planning for the return of people to the office, you have A lot of space to remodel in order to have more meeting rooms, less individual spaces, more, let's say, This stands between desks. Every time we are basically moving a table or moving a chair, You are potentially moving some connectivity products like borrowing devices or sockets. You are adding some floor boxes or gromettes So there's a lot of things connected to and lighting features.
So there are a lot of things connected to just Remodeling of space in order to accommodate for the sort of what we call the new normal, which is mainly be made of more common spaces, less individual Spaces, more social distancing and so on. Well, number 2, you have also, As I said network upgrades, the fact that with people working from everywhere including their homes, It also implies office buildings to have sometimes some more solid networks than they have, so that you could Do a remote video conferencing, which are not only on Teams or Zoom, but which can also be using hard topics, AV systems and so on. And number 3 topic, which you will probably which is still probably more to come than actually coming now is everything related to green. And don't forget that in the U. S.
Especially, you have what the federal government can decide and this is a big pipeline Plans that I described a little bit earlier, but you also have a number of local Which can impact positively the business. And if we take it, For example, the U. S, you have a number of states which on their own have been deciding To release the Climate Action Plan, if you have more than 30 states in the U. S, which have been releasing Climate Action Plans, Not only of course California, but you have Washington, New York, Portland, a number of others. But I think it is more to come than really actually I would say that the 2 main drivers are really AV, network quality, bandwidth, WiFi, fiber and so on in buildings and number 2, space reorganization and remoting.
But this is more quite a bit of feedback that I'm giving you, More than something based on the half tax.
This is really helpful. Thank you very much for your time.
Thank you. Next Question from Alain Dier Leslie from Societe Generale. Please go ahead.
Yeah. Hi. Good morning. So a very strong performance in Europe. Just wondering whether you could elaborate a bit more on those commercial successes that you highlight for Europe.
What you think That might have contributed to your growth relative to the market if that's kind of possible to assess? And whether those comments relate more specifically to France and Clearly as well. And then also how much of that is sort of perhaps a shorter term single quarter boost from new product launches, which you've We've sort of seen you report from time to time in the past versus something more sustainable. You talked about many commercial successes, so it sounds relatively broad based.
Thank you. So we didn't have in Q1 a one off Impact of a very significant launch we would have done in France or in Italy. We have commented that from time to time. On a given quarter, some We are launching a new range of supercharger or wiring devices and then there is some inventory built up from distributors that And positively impact given quarter. We haven't seen any of those in France and Italy.
We have of course continued to launch New ranges of products, but none of them did have a significant impact such as the launch in Mosaic in France 2 years back, for example. So when mentioning commercial successes, it's more about the ramp up of some ranges that were announced in the past 2 or 3 years including actually in 2020 and which are doing very well. I can take a few examples. In Italy, we launched Living Now was it 2 years back, which is a complete new range of foreign devices made of traditional products and connected products. And Living Now is doing fantastically well in Italy and definitely they're taking share.
Take in France for example, we Launched last year connected panelboard, which is doing very well even though the numbers are And we are we launched the NESAT MOU Pro I. E. The set of NESAT MOU products through our professional segments Smart thermostats, smart cameras and a number of products which is indeed also doing very well. And we are also able to secure. So It's a tribute to the team, but the products we have So the past 2 to 3 years are extremely successful in France and Italy.
And on top of that, you have, for example, The deployment of our data center play, data center performances are very, very strong in force And we are taking shares on the white room in data centers. So it's across the board. It's not connected or not linked To one specific launch or one specific initiative, but what I can see talking to my customers And looking at my competitors is that we have a very good dynamic in those two countries and we I expect this dynamic to continue.
Great. Could I just have a very quick follow-up on the European data centers? Just wondering if you could give us a sense there of How much of your European sales today comes from data centers relative to the 10% of the group level, which I think we know is very much weighted to the U. S. Still?
Thanks.
Well, I leave it to you to do the math. Data sensors is slightly more than 10% of our sales Worldwide and it's about 20% of our sales in the U. S. So it implies I'm turning to my colleagues who are Faster than me computing, but it implies that 80% of our sales in data center Something like that are U. S.
Based. So it's probably a lot more than 5% of our European sales which are data centers. So data centers It's about probably 20% of our sales in the U. S. And about 5% in Europe.
The data center market is more developed, If I may say in the U. S. And in Europe, but it's going fast in Europe. And that's also one of the reasons why we see a lot of potential For this business in Europe and elsewhere actually.
Great. Thank you very much.
Thank you.
Thank you. Next question from William Mackey from Kepler Cheuvreux. Please go ahead.
Yeah. Good morning to you all. Thank you for the time. Two question areas. Firstly, can we come back to Europe again?
Fantastic growth performance in Europe in the Q1. You called out France and Italy. Can you at least give a flavor of the level of organic growth you achieved in France and Italy in the quarter. And also you said that you expect The positive performance to continue. I know you don't like talking about sequential performance, but can you give Some early indications what you're hearing from your customers in France and Italy about how you would expect demand development to evolve In the Q2 versus the Q1.
I know we have a very low comparative base. The second question is We haven't really talked about your supply chains and the fragility. Can you come back and discuss a little bit where you see the specific risks through the supply chain. Is it particular components? Is it plastics and resins?
Is it semiconductors? Is it particular regions, which create the risk that you've highlighted as one of the factors addressing your outlook caution.
Okay. Let me take the questions one after one. So I can confirm that we are pleased with our performance in Europe and Looking at the 1 year performance, 2 year performance, 5 year performance, I think we are doing very well in this Well, as far as Italy is concerned, the growth in Italy is more or less in line with the growth We are doing for Europe as a whole. As far as France is concerned, it's slightly higher. To give you order of magnitude, it's Slightly higher than XL for example, which released their French sales.
Of course, again, It's not the call for a comparison because we know that The businesses are pretty different. We don't have copper cable for example. So we don't have impact of copper cable pricing. So it's a bit different. But I can tell you that the overall performance is slightly higher than the one I said would have released.
So it's a pretty solid performance. As far as the dynamics are concerned, don't get me wrong. I'm not saying, of course, that we will grow 14% in Europe across the year. I'm just saying that The market share dynamics should continue because in our trade market share dynamics are usually not for a quarter. Once you have convinced Creating number of customers to trust you and go with your solutions and products.
It is not such an easy game To convince them to change again. So I'm convinced that we'll see that. I'm convinced that the market share dynamics will continue. As far as the supply chain is concerned and I'm not talking yet to the supply chain, I mean to the price of raw material components, which I already commented, but about the shortage. So it is true that it has been for a couple of months very difficult To get components in raw materials and it's not only about electronic components.
So of course Electronic components for connected products are under pressure and it's difficult to sort them. But it's also the case for example for a number of metals and even for plastics. If you take polypropylene for example, polycarbonate, we have faced some difficulties to source some product. Now This situation was quite anticipated and as early as in Q3 2020, we have Started to implement mitigation actions, trying to secure some contracts, Supplies and negotiating with suppliers and so on. And as a result of that, we didn't experience any production stoppage in Q1.
And I cannot tell you that those scarcity of resources had A lot of negative impact on our top line in Q1. I believe that the impact was very limited because we could manage it properly. Now it's going to be Difficult in Q2, probably also difficult in Q3 and everybody thinks that it will progressively ease starting somewhere in H2. But we have ahead of us a number of difficult months. For all what you know well, the fact that all those Components and raw materials are difficult to source, not to mention containers So yes, we are facing a difficult situation, which was nicely anticipated as early as Q3, but it's going to be Again difficult in the months to come.
Thank you very much. One quick follow-up. I think Rexel reported about 20% growth in France. If your growth was a little higher, I'm still A bit confused or curious why you say you don't see the impact of a restocking or destocking sort of cycle. But I think 2 of your or maybe 3 of your contemporaries all highlighted the impact of You know, pre purchasing and restocking on the impact of their Q1 results.
So I wonder how you rationalize or see that You don't see the same effect that they do with regard to restocking and destocking?
Well, so First, I think that but I may be wrong, but I think that actually it's plus 18 in France in Q1 and it's plus 20. 2nd comment, I confirm that there is no restocking in France Without any doubt. Well, don't forget that mechanically, No destocking, no restocking in Q1 2021. And destocking in Q1 2020 mechanically of course Has a significant has an impact on our top line. Yes, my colleagues They are telling me that it's plus 18 current number of days plus 20 constant number of days like I said and Of course, we are only communicating and computing on current summer days.
So current summer days is plus 18. So mechanically, destocking in Q1 2020 no destocking in Q1 2021 has an impact on our top line growth. But I can Confirmed that there is no restocking. I'm pretty convinced that our customers would love to restock In order to improve their service level to the contractors, first, it is given the state of the demand And the fact that the market demand was very strong in Q1 and at the same time the fact that it was sometimes of a fight to get The raw materials and the components of this manufacture, even if they wanted to, they would have for Legrand, I'm not talking to for other people Other companies, they would have had difficulties to restock. But I confirm that neither in France nor in Italy, Which are 2 big markets where there could be strong destocking or restocking.
We have seen in Q1 We're talking again our customers, our distributors have been selling more or less what they bought from us.
Fantastic. Thank you very much. Congratulations.
Thank you. Before going to the next question, I would like to remember you that you can ask a question by We have a question from Jonathan Mounsey from Exane.
Thank you. Good morning, everybody. Yes, maybe just circling back to the stimulus that's coming. And I guess it's not a situation you were necessarily expecting before COVID. And I'm just wondering how it maybe changes the strategy.
I imagine you're trying to look at ways To get maximum leverage to. And I guess it's all about energy efficiency to some extent at its heart in terms of the building space. And Does that lead you to think about maybe needing to expand or develop new product ranges to better leverage to that? Maybe a different M and A Pipeline and you would have otherwise pursued perhaps more of a presence in software, in automation and connectivity than you may have otherwise And then as a follow-up, have you managed to assess how much of your product range is likely to be viewed as sustainable within the context of the European taxonomy? And if so, could you sort of share first thoughts with that please?
Okay. So a couple of answers. Number 1, we haven't waited for the stimulus plans To be convinced that making buildings greener It could be a very significant support for our business going forward. We launched years ago The program which we named ELEN, EDIUS for Connected Products, ELEN for Sustainable Products. So we launched very early back a couple of years ago the ELLETE program and we've been both organically and inorganic We're trying to grow ourselves in energy efficiency products.
I can give you a couple of examples. We, for example, acquired years back a measuring company called IME in Italy. We acquired Netatmo, which has a leading market share is smart thermostat. We acquired the CPA clinics in the UK, which is a leading European company, especially Okay. For licensing controls.
And so we acquired PDU companies, which are active in data centers, but it's energy efficiency for data And I couldn't give you the same examples for organic growth. We have had in our product pipeline for years a number of very interesting Development, b, EV stations for electrical vehicle, being lighting controls, Being load shedding and so on to so it's not new to Legrand, but we are of course welcoming all the stimulus This plan and the content and the fact that it is it will bring additional business opportunities. On top of that, don't forget, which is very interesting. Once you have convinced because of an incentive, Somebody being either residential or non residential building owner to put a smart switchgear, a thermostat or whatever in order to improve its Energy efficiency, it quite often leads to additional electrical works. You rarely ask contractor to come to your home only to change your thermostat So even a non ELN products or non energy efficient products, it could benefit From those plans.
Does it imply Legrand to start buying a lot of software companies? No, because this This is not our strategy. Our strategy is to focus on residential building and small commercial buildings. And when it comes to big commercial buildings, To left others providing the software and to come with a number of very targeted well targeted solutions that could help to achieve energy savings. So not buying a software company does not imply that we don't have the right positioning for energy efficiency.
It Implies that we have our own positioning, which is based on our strengths, on our assets, on our know how, on our capabilities. And I strongly believe that it will we will benefit from this trend. Well, as for the European taxonomy, I guess that you know that there were very fresh news. On April 21, there was what we call a delegated act, which was adopted by the European Commission that includes or indicates activities which are included in the EU taxonomy. Based on the first analysis, it seems like the vast majority of Legrande Honore Could be taxonomy eligible.
Now be careful eligible does not mean yet line or compliant. There is a lot of work which is currently being done by industry specialists In order to analyze what we call a technical screening criteria mechanism and this is what will make a product moving from eligible to The line of compliance and this work is currently being done. So even though it's a good news to see that the majority of Our products are eligible. It doesn't mean that the majority of our products will be compliant. It's too early to confirm that to you and to give you an order of magnitude.
All the more as this drilling process which will take a few months is very, very complex. So, to make the story short, we have positive signals so far, but it's still a work in progress and we have to be in the position to give you More clarity, potentially at the next Investor Day, for example, which will be a good time to give you more clarity on this topic. Thank you.
Thank you. Next question from Eric Lemarie from Bryan Garnier. Please go ahead.
Yes. Good morning. Thanks for taking my question. I've got 2 actually. The first on the price increase you mentioned is 1.1 price increase In Q1, could you tell us if it's similar to what you have observed in the markets from Your competitors are you more aggressive or less aggressive than your competitors in terms of price increase in Q1?
And the second question on the workplace change you mentioned and you have described. I was wondering whether you are happy or not with your current portfolio of product today. I remember back in 2019 that you got a so called advanced sensor specifically designed for workplaces. Do you have some of the products specifically designed for workplaces in the pipeline or in the portfolio? Or do you think you might need to make an acquisition to muscle your offer?
So as far as pricing thank you for your questions. As far as pricing is concerned, so it's 1.9%. Okay. 1.9%. I cannot give you a significant answer to the question because it's really we have 100 product families, 1,000 of competitors, 100 countries.
So it's extremely difficult to say. And it's really a highly targeted approach. So when we feel in a given country that the trade off Between pricing and volume leads us to decrease our prices in order to get a lot more volumes. We don't hesitate to make this move. And there are a number of quarters and there's a number of countries where we are pushing our prices down because we believe that this is the best way and the best balance between Margine and William.
There are other countries where there is less price sensitivity because The average selling price of the product is quite low in absolute terms or because of Very strong competitive advantage that we will have compared to our competitors. And in those countries, we will increase prices by 4% for example. And then do you have a decision that you can take on cutting discount and stuff like that? So there's a clear answer to your question. I don't have the feeling that we are doing Too much pricing.
I have the feeling that as usual this 1.9 is a good balance between profitability and market share. Well, it is also that there is a context today, which is more favorable to price increase because everybody knows, including our customers, that The price of raw material and components is increasing. Sorry. As far as workplace changes are concerned, Our portfolio is never enough. Sometimes because we are lacking A feature that we would like to add to our product sometimes because we feel that there is a sub segment or vertical in which we should invest more sometimes because We have a portfolio which is good in this country, but not good enough yet in that country.
So no, we are continuously looking to complement our portfolio. Well, the smart sensor you are mentioning was indeed a sensor that we presented as a CS In 2019, it's a very advanced R and D project in which we are effectively working, which is a very Nice stuff, which helps not the need to which is more than dissecting It moves of people. It can account people, for example. It can so it can do a number of things, which are extremely helpful in the context of innovative workplace. This is one example out of many of things in which we are working.
So both organically and inorganically, there could be interesting opportunities to complement But this is a never ending game. It's not that we are it's not that we are not rightly positioned, but it's a never ending game. Every year, We are complementing a product portfolio with additional products sourced either organically or inorganic fee and we're going to continue this strategy.
All right. Thank you.
Thank you. Next question from Magnus Kruber from UBS. Please go ahead. Magnus
here from UBS on behalf of Superior. Thanks for taking my question. Just one left at this stage. Could you open up a little bit on what you're Seeing in India at this point in respect to the current situation that would be very helpful. Thank you.
Sorry, I didn't catch your question. Could you repeat please?
Yes. Could you open up a little bit on what you're seeing in India? I mean, obviously, very strong in India in Q1 already, but Q2 might
be different given the context. Well, Well, India, there is a good growth in Q1, but Which is, of course, the help, if I may say, but the basis for comparison. But over 2 years, It is still slightly negative. So it's not sort of big rebound such as the one we could see in China, which is Over 2 years up 15% in China. So it's a lot of growth over 2 years.
And again, triple digit growth. So it was for China minus close to minus In Q1 last year, tripled the digit growth in Q2 and over 2 years plus 15%. We're not seeing that in India. It's a strong double digit growth in Q1, but still slightly negative over 2 years. Well, the month of April Going to be an easy comp because last year we made almost no sales in India because of the very it was the 3 test lockdown implemented in all of our countries.
The only product you could sell were products dedicated to hospitals. So our sales were down. I don't remember how much by this 97% or something like that. So we're going to have a Very good basis for comparison for April. But going forward, I'm extremely cautious on India.
The sanitary situation is out of control And it's dramatic and I'm using these words cautiously and consciously. It's It's a situation where you have not enough spaces in ICU units where you have a lot of hospitals lacking oxygen and Well, everything you could see in the news, but we are getting of course very precise feedback from our teams. So it's a dramatic situation. And I don't see how India could escape a very strict lockdown, National 1, in order to solve the situation. So I feel that The situation in the most is to come, but it will be very difficult in India.
Sanitary The situation first and the economic situation second. Now India is Such a great and fantastic country that people have the ability to get out of difficulties and rebound very strongly and very fast. So even though we have difficult months ahead of us, I'm very confident that our India and France and colleagues will And potentially as early as H2. But it is a fact that the situation is today extremely difficult and I don't expect it to improve in the months
Thank you. That's very clear. Can I just follow-up on the comps per month than last year? You said April was almost no Was it a similar situation in the other month? I suspect not quite a bit better in May and June then.
No. We're not giving a comp base balance. What I can tell you is that, of course, for There was last year strong correlation between lockdowns and sales evolution. So the wider the lowdown, Please turn the rundown, the tougher impact of our top line. So it is fair to say that starting mid March The situation, the pace for comparison started starting to be easier.
April was the worst month Last year minus 41% for Q2 which was at the minus 22%. And then the situation progressively started It will improve starting let's say mid May last year because a lot of countries exited from the lowdown. So you can assume that on a monthly basis, the basis for comparison depends very much on the lockdown that were implemented last year. Now this is for the sort of monthly basis for comparison. As far as quarterly basis for comparison, I can remind you the Q2 numbers last year, which were actually minus 22.8% for the group as a whole, of which minus 28% in Europe, minus 17.5% in LMTA in North and Central America and minus 22% in the rest of the world.
So the base for comparison that is Easier for Europe than for North Central America and for rest of the world. But again, on a monthly basis, Started last year in March. The worst month was April. It started to improve in May which was still You had a couple of weeks under lockdown in a number of European countries. And then you had in June, July, let's say, The exit of the lockdowns with many people starting to do some heavy work at home and so on.
Excellent. Thank you so much for the color. Very much appreciated.
Thank you. We It looks like we don't have any more questions. Back to you for the conclusion.
Well, thank you very much for your time. Thank you very much for your questions. We will talk again in the months to come. Please book your September 22nd for the Investor Day. I think it's always an interesting opportunity for us to discuss the Legrand Please ask for that and to give you many colors on many topics and also for you to meet the management team.
And that's it. Thank you very much and hope to meet you soon. Thank you.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank