Hello, everybody. I hope you are warm and as excited as we are. Yes, so good morning, everyone. We are very honored to welcome you to the Legrand 2024 CMD. I am Ronan Marc. I'm heading Investor Relations and also Financing and Treasury for the group. Our last Capital Markets Day was in 2021 in September, and it was, if you remember, a comprehensive exercise around our strategy and the definition of our midterm model. Today, we will develop three key topics. The first one will be a short reminder of who we are, and then what we delivered against this midterm model, of course.
Second topic will be, going a bit in detail through the, key trends shaping our future, and, we will detail our path to 2030 and, our growth enablers. The third part of the event will be the presentation, of our ambitions for 2030. Now, a bit of logistics. We will have a 30-minute break at the middle of the event, so at about 10:00 A.M. or 10:15 A.M.
Then, at the end of the event, at 12:00 P.M., we'll have a 1-hour Q&A, live, with all of you in the room, but also through a web chat for all the attendees, on the webcast. All the speakers participating to the event will be here to answer all the questions you would have. The event will finish at 1:00 P.M. U.K. time, and this is it, so now I'm handing it over to Benoît Coquart, the CEO of Legrand, for a short introduction.
Thank you very much. Hello, everybody. Once again, I'm honored to have you here today. A couple of words. Sorry, it's not moving, guys. I discussed with one of you before entering the room, and he told me, "Look, guys, your 2030 ambitions look very much like your 2021 guidance. So you have to explain us what has changed and why Legrand is today stronger than it was couple of years back." And we have four hours to demonstrate that Legrand has changed, even though we have kept our strengths, and that we believe we are well positioned to make the most of the years to come. A couple of words to start with.
Compared to last CMD, which was hosted back in 2021, what remains and what has changed? So what remains, we are the only sizable player in our industry. We have a unique positioning, I will come into that a bit later, unique position of a giant in niches. We have natural barriers to entry, coming both from our products and from our local presence. We are the sector's best cash flow and profitability, and we have a committed governance and highly engaged teams. Those are strengths of Legrand, which has not changed and which will remain in the years to come. What has changed compared to three years back? Number one, we have enlarged our addressable market, so we have a larger playground to play on of about EUR 130 billion.
Number two, we have reinforced our growth profile. You know that we have invested heavily into what we are used to call the faster-expanding segments. Those faster-expanding segments represented last year, in 2023, 36% of our sales. We have a major data center exposure. Data center represented last year 15% of our sales, and if we had consolidated in 2024 all the four acquisitions we made this year, this 15% would have probably been closer to 17%. So we have a large data center exposure. We have strengthened our core model, especially with two topics which are very important to our model: customer satisfaction and R&D. Again, I will say a word on that a bit later. We have raised our ambitions on CSR.
We are currently closing our 2022-2024 roadmap, and we will soon open the next one. What we are trying to do is to keep, maintain, reinforce the traditional strengths of Legrand and adding a few specificities, a few characteristics we will describe. If we look at the numbers, we took a number of commitments three years back, and I'm happy to report that we have delivered as per the commitment. We told you we would grow between +5% to +10% per year, organic plus M&A, and we did +9.2%. So it is true indeed that we have made probably a little bit more pricing than expected, a little bit less volume than expected, to be very open.
We also have to admit that the economic environment, and especially the building market, hasn't been as supportive as we would have liked it to be. We told you that we intended to deliver an Adjusted EBIT margin of about 20% of sales. We delivered 20.6%, so slightly above our midterm model. And we intended to generate free cash flow, normalized free cash flow, between 13% to 15% of sales, and we delivered on the upper end of the range with 14.8%, despite the investments we decided to make to reinforce our level of inventory in order to better serve our customers. So all in, I'm happy to say that we have delivered as per our plan.
As far as today's agenda is concerned, so Ronan already said a few words about that. So we'll make a sort of taxonomy of who Legrand is today, and our strategic model pillars. Then we will describe the path to 2030, and we will go segment after segment to tell you where we are in terms of product offering, what are the trends underlying each of the segments, and what our strategy is. Then we will go through our 2030 ambitions, and we will conclude. So starting with the part one, our strategic model.
And I'm happy to welcome Franck Lemery, all of you know, the CFO of Legrand, and Virginie Gatin, our Executive Vice President for CSR, which will help me to go through this, this part. So a couple of words on Legrand. I'll try to go fast because most of those facts are known. Starting with our purpose, our values, it's this slide is important because those values are really driving the relationship we want to entertain with our teams, with our customers, with our stakeholders, as well as with our shareholders and with the financial community. Couple of words on our product offering. We happen to have the broadest product range in the industry.
If you look at the Legrand catalog, we have three hundred thousand standard products, standard SKUs, to which we should probably add something like two hundred or two hundred and fifty thousand customized SKUs. We don't have the precise count actually, to be fair. So we have a very broad product offering, and you see a couple of functions we are proposing to our customers. Of course, it is a lot of complexity to manage. Complexity in terms of engineering, complexity in terms of supply chain, complexity in terms of manufacturing, but it is also a fantastic barrier to entry. If somebody wants to compete against Legrand, if he want to be relevant, he has to have a couple of hundred thousand SKU, which is a lot of product to develop.
This is probably the reason why we don't have a lot of cheap makers that are interested by our trades. They are focusing on businesses which may be easier to penetrate. We have a quite a balanced exposure, which give us some sort of resilience to crisis. We are doing more or less 40% of our sales in Europe, 40% of our sales in North and Central America, and 20% the rest of the world, of which close to half in renovation. As far as end markets are concerned, slightly less than 40% in residential, slightly more than in non-residential. Data center, as I said, 15%, and other 5%.
So quite a balanced exposure, again, that gives us some sort of resistance to downturns, if any. As I said in my introduction, we have much larger exposure to faster expanding segments than we used to have. Last year, those faster expanding segments, namely data centers, connected products, and energy efficiency solutions, represented 36% of our sales. And as shown on this slide, in three years, we have added, both organically and through acquisition, more than EUR 1 billion of sales in those faster expanding segments. So our growth profile has been boosted, enhanced by those faster expanding. We have quite a unique positioning. We believe our market is worth approximately EUR 130 billion, as I said.
So it's not a market which is as documented as other markets, so it's our own computation. And we think it's, it is made of two set of competitors. Large companies could be GAFAM, it could be electrical conglomerates, it could be a very large player, which indeed have strong financial and technological capabilities, but which have less focus on Legrand, on our core market. If you look at our big listed peers, for example, all of them have an exposure to the building market, which is smaller than 35% of their sales. So they are doing many, many things, but less focus on the Legrand core market. And half of the market is made of small and mid-sized companies.
We have counted five thousand competitors, but it's likely that you have more than that, six, seven or eight thousand competitors. They are very strong and tough competitors, very active ones. They have a strong intimacy with local customers, channels, standard. They are really sticking to their market, and of course, they are also the core acquisition targets for Legrand. So this high fragmentation of the industry is, for us, a competitive challenge because we have many competitors to compete with, but at the same time, an opportunity because it gives us the opportunity to purchase a number of companies. If you look at the market between 2019 and 2023, you see that our markets went up from EUR 110 billion- EUR 130 billion.
Not a lot of organic growth, I have to admit. Our estimate, and again, take that as an estimate because sometimes not easy to precisely size and measure the KPIs of our market, is that our market has grown all in, so volume and price, not more than 2% per year, driven by data centers. Excluding data centers, our market was flat and probably down in volume, but on top of the organic growth of our market, which hasn't been very supportive for the past four years, we have added new adjacencies. In other words, we entered into new markets, a number of additional solutions for data centers, liquid cooling, transceivers, console, for example, connected healthcare and a few others. So we have added basically EUR 10 billion of additional market.
Between 2019 and 2023, our market grew more or less from 110 billion- 120 billion, to which we have added 10 billion of adjacency. This is really important to have in mind because this is part of the Legrand model, regularly, every year, every two years, to add the new market segments of 1 billion, 2 billion, 3 billion, accessible market, and progressively to enlarge our market. You may think, look, the market is worth EUR 130 billion. Legrand is eight point something, so you guys have around 6% market share. You are a small company in your trade. How can you keep growing and be so profitable? The answer is on that slide.
The key metrics for us is not the market share we have on the total market, but the percentage of our sales made with number one or number two positions. When you are on a given segment, in a given country, a strong number one, you are more profitable than anybody else because you have economies of scale. You are two or three times bigger than the number two, because you have pricing power. You are more able to resist during crises, because when there is a crisis, customers tend to fly to the leaders. You are more able to grow, because when you are a leader, you are distributed everywhere with your distribution partners. You have a brand equity which is so strong that when you are coming up with a new product, your customers will at least try it.
Being a strong number one and number two is a must in our business. As you can see, we are doing two-thirds of our sales as number one and number two, and this is more or less the same in all zones. You could imagine for Legrand if we had 6% market share everywhere, we wouldn't be as profitable and as growing. The 6% is actually a mix of positions where we have 30%, 40% market share and business segments in which we are absent. This KPI is extremely important, and we are tracking it very, very carefully. We are delivering a major benefit to all stakeholders.
We are in a complicated channel, where we have plenty of distributors, from large distribution chain to small retailers. A lot of specifiers, engineering companies, architects, a lot of installers, contractors, from the small guy who will come at your place to fix a panel board, to the big contracting company, to maintenance teams, to panel builders, and of course, a number of end users, from you as a homeowner to Google or Microsoft as big customers. And to those customers, we are offering a number of benefits. We have a large offer, we have brand recognition, we have a strong install base. Once again, the complexity of the channel is at the same time a strong barrier to entry and an opportunity for us to grow.
We have enhanced our customer value propositions. It's not very much visible from the financial community, but for the past four years, we have invested heavily into two things: customer experience, so we launched a program which we called Best of Us, in order to measure and improve customer satisfaction. You see that our numbers are not bad in 2023. They could be even better, but it's a good starting base. We have a customer satisfaction rate of 78% and an NPS of 44%, and we have also kept investing heavily into product vitality. Despite the economic environment, which has not been very supportive, we have not made any compromise in terms of investment in R&D and marketing. We kept spending a lot in R&D.
Between 2018 and 2023 , our cash invested in R&D has grown by 27%. Interestingly, when we measure customer satisfaction, the top three items are where we are ranked the best by our customers, are product installation, product quality, and product features, with a total satisfaction of about 90%. Last slide, and I will turn to my colleagues. We have an organization performance model, which we believe is crisis-proof. But you know the Legrand organization, I will not describe it much. Maybe just to mention that we have very reactive decision-making process, lean central functions, flat organization chart, solid process, well-spread incentive model, perfect alignment in terms of incentive between a CEO, executive committee, management team, public commitment, and the financial community.
The best evidence of this flexible organization is in 2020. You remember the COVID year, 2020, which was the worst crisis for a couple of decades. Our EBIT margin before restructuring was about 20%, so quite a good and healthy level of margin. And we have highly engaged team. Couple of numbers, 80% engagement rate in 2024. We have a low turnover, 7%, and we launched last year. Was it this year or last year? This year, actually. The first employee shareholder plan, international, with a very strong participation rate. So that was a short introduction. I'm now handing over to Franck and Virginie to continue to give you some insights about who is Legrand.
Thank you, Benoît. Hello, everybody. Very pleased to be with you to today. I will drive you through the financial pillar of the Legrand strategic model. And to do so, I will illustrate it with the last five-year performance. Before some heads-up about the context of this last five-year performance. Obviously, it has been quite a bumpy period. Many things have happened. Many crises across the world, which ended by hurting a little bit our market with probably volume flattish to slightly negative. But the most important thing to retain from that period for us, and a much positive item, is that energy and digitalization transition is a tailwind, and it is a tailwind which is reinforcing.
Now, looking at our performance over the last five years and the pillar of Legrand model. First pillar, our ability to grow. In that adverse market conditions, we were able to grow plus 7% during the period, leveraging three Legrand strength. One is pricing, second is regular M&A, and the third one is the success of our faster expanding segment strategy. Those segments grew 15% CAGR during the period, combining M&A and like-for-like. Second pillar of our strategic model is our best-in-class profitability. During that period, those five years, including 2020, we delivered 20.2% of Adjusted EBIT margin. Let me have a side comment about what is adjusted EBIT margin for Legrand. It's all-in. It includes restructuring, exceptional item. It's not EBITDA.
EBITDA would be, well above 20%. So during that period, 20%, 20.2% of Adjusted EBIT margin, which has been, which is a nice level, which has been sustained during the period, even slightly improved between the beginning of the period and the end of the period, and that despite the normal, the mechanical dilution of our M&A strategy. How did we achieve this nice profitability? It's about two main items. The first one, which is not a surprise for you, it's our pricing power. Legrand is well recognized for its pricing power. Pricing power, it is of course, the capability to pass through inflation, but above all, it is the recognition of the value proposition of our product.
It's about the quality of our offering. It's not only passing through inflation. During those last five years, we can see on the slide that we have a quite a fine-tune management of the balance inflation, with sales price, raw material cost, and wage increase, which were pretty much the same, around 23%-24%. So for me, the two main takeaways of this slide, demonstrating our pricing power and our pricing strategy, is first, during that period with huge inflation, we had an efficient pricing power enabling us to offset inflation. Second takeaway is that the pricing was smart, was balanced, in order, and reasonable, in order to keep the strategic asset intact and powerful for the next years.
The biggest driver, finally, of our profitability during those five years is productivity. We have delivered quite meaningful productivity around those last five years. Talking about productivity, there are three main item that we are leveraging in order to unlock productivity within the group. The first one is a kind of daily continuous improvement with operational excellence, deployment of best practices, what we are calling the Legrand Way. We see that it's expanding everywhere and in every jobs. The second one are the opportunities provided by the digitalization. One good example is the Industry 4.0, that we are also broadly deploying in all our factories. And the third one is much more structural. It's much more about big move. We are talking about restructuring.
Restructuring, in which we have invested over the last five year, EUR 240 million. And what we can see on the slide are the results. Just two numbers to assess how efficient were those three levers. Talking about headcount optimization on a like-for-like basis, headcount in production diminished by 17%. It was also the case of a strong decrease in administration, of course, excluding R&D, that was safeguarded. The second KPI demonstrating the productivity is about footprint consolidation, and the bridge illustrate the beauty of the Legrand model. At the beginning of the period, 120 industrial sites within the group, we acquired 20 sites, and d espite that, at the end of the period, there were eleven, one hundred eleven industrial sites in the company.
So that's it for productivity and profitability. Now, third pillar of our financial model is the strong cash generation. The numbers speak by themselves, 15.5% of free cash flow in the period, 125% of cash conversion in the period. Obviously, it is the results, first, of the high profitability; second, the lean working capital; and third, low-intensity business. Before wrapping up, just one word about those financial metrics within those last five years.
In the last five years, the faster expanding segment share in our sales grew from 25% to 36%, so plus eleven points. With that growth didn't change the big financial equilibrium of the group. 20% of Adjusted EBIT, more than 20%, 13%-15% of free cash flow, 5% of R&D to sale, working cap. The change in the mix of our portfolio hasn't changed the financial profile of the group, which is still a very solid financial profile. As a conclusion, what was the value creation during those last five years? Sales, plus 40%; EPS, plus 50%; very solid free cash flow.
Talking about capital allocation, priority given in M&A, allocating a big part of our free cash flow to the growth. Second, dividend payout, which is attractive around 50%, and all that, keeping a strong balance sheet. And the last KPI is our ROCE, around 15% last year. So that's almost the end of my presentation. I would like to share with you a short video to illustrate what we have seen about the productivity. It's a video which has been filmed in one of our factory in China. It's in Wuxi. It's a factory of roughly 300 people, and you will see what has been done in terms of productivity. Thank you. And now, let's speak about CSR with Virginie.
Thank you very much, Franck. Hello, everyone. So alongside our strong financial performance, we have a strong CSR performance, which I'll detail. We are creating value for our customers, and this is, of course, key for us with our energy efficiency products that we enable them to save energy consumption and therefore emit less CO2 emissions. I think one interesting KPI behind this is across the last two years, so 2022, 2023, we enabled our customers to save 9.5 million tons of CO2 through our energy efficient offers. So I think these are really important numbers. Benoît mentioned it as well, customer centricity is really key for us, and so we're really pushing the focus on customer satisfaction and everything around that. So customers really at the heart of our value creation.
Other stakeholders, especially our value chain, is a really important pillar as well. We really want to help and to take on board our whole ecosystem on our CSR commitments and good practices. One good example is our supply chain. So we've been working with our suppliers, engaging them, and we have 195 key suppliers that are committed alongside with us to reduce their greenhouse gas emissions by an average of 30% by 2030. So we've been really working with them for them to really move on their CSR commitments. And of course, very important for us, our employees, and we really focus on creating value for our employees. This means that we want a safe, a diverse, inclusive, and stimulating environment.
We work very hard on many topics, and one key number I wanted to pick out is at the end of 2023, we had 29.1% of our management positions held by women. So that's an increase of 5.6 points since 2019, and that's a really important commitment, but also really creating value for all our employees, not just women, but just making us a more diverse workplace. So you know, this is important part is the value we're creating, but it's also how we're embedding this into our performance. We have been committed to CSR for 20 years. This year is our 20-year anniversary on CSR.
So I think it's important to explain this because it's really the way we work is a strong historical commitment translated into CSR roadmaps. Benoît mentioned it. We're currently in our fifth CSR roadmap, 2022 , 2024 . We'll be launching our sixth CSR roadmap early next year, and this is really embedded into everything we do. Another very important point, and key for the success of our CSR commitment, is the fact that we have CSR integrated into our incentive schemes. We are, as you probably know, a very KPI-based company, and CSR is no exception to that. It's embedded into the incentive of many of our employees, of key managers, over 1,400 people, and I think it's really a trigger to get everybody moving on CSR.
Just an example, 17.5% of our CEO's remuneration is based on CSR, and also, the credibility is important. Since 2015, all our CSR results have been audited externally, and I think that really makes everything that we or the KPIs that come out much more solid and reliable. All this great work has been recognized by the CSR ratings, so just a couple of examples. We joined last year the CDP A L ist, which we're very happy with because it's really proves all the work, all the hard work that's been done internally on climate.
We have also been recognized for the past two years by the CDP as a leader in supplier commitment, meaning that we are extremely transparent with our own customers on the climate impact of our products that we sell to them. Another one is EcoVadis. We've had the platinum rating since 2021 . So good performance, strong performance, reliable, audited, and recognized. I just wanted to focus on one topic, which is extremely important. Benoît mentioned it, it will be mentioned again, but it's really important for us, is all our work on energy efficiency. It's a big market. So overall, buildings in the world represent about 40% of greenhouse gas emissions worldwide. So that, that's big. Everybody's aware of it.
We're seeing a lot of regulations coming, government policies to try to reduce that. But of course, it's a challenge, but also it's a great opportunity for us because it means all our energy-efficient offering is out there, and our clients really need them. We have very diverse portfolio of energy efficiency products and solutions, and they can bring up to 35% savings for our customers. As you've seen, this segment has really grown, and we've reached 24% of our sales on this in 2023. I'm now handing it back to Benoît for the conclusion.
Thank you. Thank you, Virginie, so we are at the end of part one. To make a long story short, we believe we have undisputed strategic positioning and assets. We have delivered as per our plan and our commitments. We gave you a lot of numbers. If you have three numbers to remember, over the past five years, sales up 40%, EPS up 50%, and carbon direct emissions down 40%, and what is, I believe, as important as those numbers, the fact that we have prepared Legrand to make the most of the next cycle. We'll see that. We have kept acquiring a number of companies that give us a lot of assets to enter into new geographies and new markets. We have kept innovating.
We have improved our customer service and our customer satisfaction. We have been very reasonable on pricing. You know that pricing is an important lever of Legrand performance. The market has done a lot of pricing for the past three or four years because of the increasing price of raw materials and components. So have we, but we have tried to be very sensitive and cautious about not doing too much pricing. So we still have some margin for maneuver, to make a long story short. We have worked a lot on our cost base, but don't believe that it is the end of the story. You saw with Franck that every time we acquire a new company, we are reloading, if I may say, our capability to do savings. So we have done many things which I believe will position us well for the next couple of years.
Okay, so thank you, Benoît. Thank you, Franck. Thank you, Virginie. This is-
So it's time for part two. The objective is to give you a bit of insights about how we're gonna grow in the years to come. Starting with a couple of trends shaping the future. I'll go fast on those ones because those are well-known facts, but we thought it was important to pinpoint a few data points. Among the key trends, digitalization and demographics. If you look at digitalization, we'll come back to that in a couple of minutes. Data centers, of course, gonna keep growing, and they are set to represent 4% of the world electricity consumption in 2030, against 2% today. And I have to say that those 4% are probably...
An estimate which many people believe is gonna be more than that, actually. Data center capacity, 40% of the data center capacity will be dedicated to AI, and the number of connected devices is supposed to explode between 2023 and 2030, and to more than double. So this trend between, I think, to digitalization doesn't come without challenges. We'll see that in terms of use of resources, but it is a fact, and it is for Legrand, a mega trend that should support our top line. Demographics will help. The middle class is supposed to increase by 37% over the next decade, and middle class means additional means in terms of security, comfort, and so on and so forth.
The number of people being more than sixty-five years old will double between now and 2025 , and again, we'll see that with, with Chris. It comes together with a number of additional needs in terms of electrical installation. Among the trends, the building market, which hasn't been very supportive, to say the least, for the past couple of years, will be, at some point, supported by some interesting mega trends. There are a number of countries where there is a structural lack of housing. So we gave the example of France.
In France, we have about three hundred thousand new houses being built every year, and the demand or the need is estimated to be in excess of four hundred thousand for a couple of reasons, including the fact that increasing number of families got split and need additional houses, and this structural lack of household, it's true for France, but you could say the same for Germany, you could say the same for the U.S., you could say the same for the U.K., you could say the same for India, so there are a number of countries where structurally there will be some... the need to build new houses. This is for residential, and for non-residential, there is a tendency toward adding value to offices.
So I know that in a number of countries, especially in the US, the number of square feet that have been built or renovated is lower now than before the COVID crisis, but it will be, at some point, compensated, and more than compensated by higher adoption of digital technology. You have this number is interesting. The so-called Class A offices, which are modern premises with a number of additional features compared to the traditional offices, represent 30% of the existing offices in the US, but 85% of future construction. In those Class A offices, we have the ability to have, to sell more advanced product like AV, audio, video, for example, distribution, nice architectural lighting, and so on and so forth.
The building market has been depressed in many geographies, will recover, boosted by a number of stronger trends. Environmental urgency, energy efficiency. You know that the building operations represent 30% of global energy consumption, so we will not be able to tackle the energy dilemma or energy issue without improving the building energy efficiency. The energy efficiency expenses are set to more than double between 2022 and 2030, and the certified green building in square meters will be multiplied by almost ten between 2021 and 2030.
So there is, you know, regardless of politics, if I may say, there is a trend toward better efficiency of buildings that will definitely support our business. Electrification, again, a well-known trend. The share of electricity within the global energy mix will increase from 20% to 41%. So a world which is more electric means a world with more electrical products. We'll again see that in a minute.
The share of renewable energy is supposed to move from 30% to more than 80%, and the number of electric vehicles, there's a debate whether it will be 350, 300 or 320, but at the end, there's no doubt that the number of electric vehicles being sold gonna explode from 16 million today to 200, 300 or 350 million, it's a stock, of course, by 2030. So a number of very positive trends that will help our business. We have slightly adjusted to make the most of those trends. We have slightly adjusted our market segmentation.
So, on the left hand of the slide, you have the previous segmentation, the so-called fast expanding segments, 36% of our sales, energy efficiency 24%, data center 15%, connected 15%. We have quite a significant overlap. What does this overlap mean? It means that a product, connected product which helps reducing energy in data center, would fit into the three categories. So it was a bit complex. It wasn't perfectly in line with the market trend, so we have adjusted our market segmentation, to get rid of this overlap and to account for the fact that a lot of our products are connected, regardless of the segment in which they fit. So it is now classified into Energy Transition, which is a broader product offering. We'll see that in a minute.
It includes also typically circuit breakers, which were not part of the segmentation before. Data center, not a lot of change, and digital lifestyle, and we will definitely get into each of those segments. So to be extremely clear, we are not doing fast expanding segment washing. So the objective was not to move from 36% to 46%. This is an internal move we made, and we really wanted our subsidiaries to be completely aligned Energy Transition in front of electrification, data center in front of AI, if I may say, and digital lifestyle in front of connected homes. So we really wanted to have a market segmentation, which was perfectly in line with our objectives.
Needless to say, because one of you asked me the question before we entered the room, our reporting to the market will not change? We report by country, we are organized by country, and we'll keep reporting by country. So for the analysts who are in this room, you won't have to change your 30-year spreadsheet. You can keep the numbers by, of course, by geographies. So this market segmentation, we have 54% of our sales, which is made of essential infrastructure products, and again, we'll go into the details. So the growth is steady over the long term, and it is very much driven by building construction and renovation cycles. So the input or the key drivers are new build, consumption, square feet, and so on and so forth.
You have 46% of our sales, which are dedicated to energy and digital transition, which growth should be over the long term above construction market, and correlated to the mega trends I have described. Slightly more than half of our sales in essential infrastructures and slightly less than half of our sales in energy and digital transitions.
Thank you, thank you, Benoît. We'll now invite Brian DiBella, CEO of Legrand North and Central America, to come on stage, and we'll talk about data centers in details.
Before giving the mic to Brian, I would like to say a few words about our data center exposure. Those are interesting numbers. We believe that the Legrand potential market in data center, it's about EUR 70 billion . Of course, it doesn't include everything that fits into a data center. It doesn't include, for example, the IT equipment. We are not active in servers and so on and so forth. Otherwise, it would be a couple of hundred billion euros. Within this potential market of 70 billion, which is made of 20 billion white space, 50 billion gray space, our current accessible market, the market for which we have today some offer in our catalog, represent 11 billion, half white, half gray.
With this 11 billion, we have a market share which is slightly higher than 10%, so we had last year sales of EUR 1.2 billion. I have to say that I love this slide. Why do I love this slide? Because it shows what are the growth drivers for Legrand in the data center market. It's really a triple engine growth. Number one, the EUR 70 billion market will keep growing, probably high single digit. So the EUR 70 billion will become EUR 72 billion, EUR 75 billion, EUR 77 billion. Number two, our current accessible addressable market will grow. Not only, you know, following the total market growth, but on top of that, every year, every two years, we will add a new product family on which we are not.
For example, over the past four years, we added EUR 1 billion of accessible market to Legrand by entering into rear door cooling, by entering into transceiver. So the EUR 11 billion, regardless of the growth of the market, will become 12-14 billion EUR. And third, growth lever, of course, we intend to keep gaining market share. So the market will grow, our addressable market will grow because we will enter into adjacencies, and hopefully our market share will grow. So we see the triple engine growth. This is a bit complex. I'll not comment in detail, and I recommend that you spend a bit of time on this slide.
It shows where we are in terms of product offering, and we have quite a broad product offering in data centers. Both for gray space and for white space, even though we'll see that in a minute, we are much bigger in terms of sales in white space. How do we decide in which product family we want to enter? We look at the functions which are mission critical for data center operators. And number two, we look for segments where technology can address the issue. And if a segment is mission critical, and if technology can help, then it is a segment of interest to the world.
There are a number of market segments in which we will not enter because we believe that those segments are not mission critical, or that something else than technology will solve the issue. Today, we have quite a broad product offering, ranging from busway to transformers, transceivers to KVM, and so on, and so forth. In terms of sales, last year, we did 1.2 billion EUR of sales in data centers, 15% of our sales. Seventy-six percent of those sales are made in North and Central America, which is the biggest market, and it is also where we made a number of acquisitions and where we started, if I may say. Brian has a big responsibility, and he knows it.
In terms of space, 95% of our sales are made in white space and 5% in gray space. It's definitely 5% is too small, and we have made a number of moves, especially in terms of acquisitions, to grow this 5% to 10, 15, and 20% or more. Couple of trends, I'll go fast. Of course, AI is a real game changer for data centers, and the large language model training will require much higher density data centers. It is estimated that the installed data center power capacity for IT loads will grow by about 18% per year until 2026, 2027, and then close to 10%.
By the way, some of you may be surprised because you are hearing that, you know, mega billions of euros of investments here and there, which indeed will happen. But don't misunderstand or, you know, the time those investments will be spent. It's a couple of years, so of course, we're not on a market which is gonna grow 50% or 60% per year. And we believe that the IT loads will grow slightly more than double digit. And as far as our market is concerned, it will probably grow high single digit for a couple of years. The chart on the left is interesting. It shows the racks per capacity.
Typically, for example, the red chart shows all the racks, the percentage of the racks below 10 kW of consumption. Needless to say, the average density of the racks will increase, and by 2027, 40% of the racks will have a capacity above 20 kW. It is very interesting because, of course, we will see that, but the denser the rack, the more electrical equipment in it. It also shows that you will still have a remaining market of lower density racks, which will be very significant. 60% of the racks, by definition, will be lower than 20 kW, and we also need to address these lower density racks.
The type of data centers, most of the time, we focus a lot on the big hyperscalers. Of course, those are the guys investing heavily, you know, the Microsoft, the Google, and Brian will say a word about that. But we shouldn't also forget that you have other type of data centers, which we intend to address. Either what we call near edge, so countrywide data centers, which are based on big metros, or even on-premise data centers, which we call far edge. Of course, we should have the ability to address all type of data centers between big hyperscalers, which are 100 MW facilities.
Today you have facilities at 100 MW, 120 MW, 150 MW, and much smaller data centers, which are below 1 MW. Data center implies a lot of energy demand and constraint on resource. I'll not comment more this slide. I already said that the share of electricity dedicated to data center would move from 2% to 4%, and maybe more, even 5% or 6%. The constraint on electricity is also a constraint on land, space, and water. It is a world where increasingly technology will have to provide a number of solutions to data center operators in order for them to limit the resource consumption. Resource being, again, electricity, land, water, and people.
You already have a number of trends. For example, you have some moratorium in some geographies. Some countries that say, "We're gonna slow down the number of data centers being built or renovated because we don't have enough space." We have accelerated regulations, typically Germany, which will require data centers to have a Power Usage Effectiveness of 1.2 maximum by 2027. By the way, what is a PUE? It's a number of input power you need to run the IT equipment. So it has to be as close as possible to one. One means that to run 1 MW IT equipment, I need 1 MW of power.
Two means that to run 1 MW of power, I need of IT equipment, I need 2 MW of power because I also need to power lighting, cooling, and a number of other equipments. So the more efficient the data center is, the closer to one the PUE is. But typically, this kind of regulation will happen in a number of geographies, and so on and so forth. So, the data center world is a world where, of course, you have huge potential prompted by AI, but also a world where the resources will become increasingly limited and where technology will have to help. Well, the data center market used to be a very North and Central America, principally U.S., market.
In 2023, we estimate that our market is still more than half U.S., North and Central America, 29% rest of the world, and 19% Europe. As you can see on the right-hand side of the slide, under developments are a number of hubs: Mumbai, Chicago, Phoenix, Beijing, London, Dublin, Jakarta, Seoul, and so on and so forth. It is increasingly a worldwide business. Of course, a number of specs are done in the U.S., but it now you have regional hubs which are built everywhere. It is a competitive advantage to be a worldwide player. What is our value proposition?...
We intend to provide with our customers a best-of-breed suite of technological solution, as I said, for mission-critical applications to improve efficiency and sustainability. And this is a very strong competitive advantage. We have an AI-ready offer. Well, typically, a US ystems rear door cooling. You know that cooling high density rack, or 50 kW or 60 kW or 80 kW rack is a challenge, and if you are doing it with a traditional cooling system, this cooling system can take up to one third of the space of the data center, which is of course a loss of money, huge, for data center operators.
You have to cool as close as possible to the rack, and the rear door cooling, which is basically a liquid going through the door and cooling down the entire rack, which we are able to propose, is a much more efficient cooling solution. We could say the same for busway, for example. Busway is an alternative to cable. If you have to feed a very high density rack with cables, the number of cables you would need is just huge. So it's a lot more efficient to feed the cabinet with a busway. We have a best-of-breed technology.
As an example, we are showcasing the Infinium acclAIM fiber offer, which is a new offer for fiber optics distribution in cabinets, which avoid the use of the traditional cassette, which is progressively taking off. We are DCIM and BMS agnostic. Our solutions can be connected to any data center infrastructure management solution. So of course, we have partnership with a few DCIM makers. So if the data center operators want us to propose a DCIM, we can. But we can also connect to any DCIM solution available on the market.
It is a strong competitive advantage to tell the data center operator, "Pick up the DCIM you want, anyway, our system will be compatible." And of course, we are. We have a product offering which is adapted to all type of data centers, the example being circuit breakers. We have small circuit breakers adapted to a edge type of on-premise circuit breaker data centers, and we can go up to six thousand three hundred amps, so very big circuit breakers. And actually, we have recently supplied a full suite of gray space solutions, transformers, UPS, and circuit breakers and switchgear to a very big data center in Switzerland.
Our business, if you look at our sales in data centers from 2019 to 2023, our sales grew 17% per year, of which 13% like for like. So it is above the market trend, and it has, of course, been a very satisfactory growth. In terms of business priorities, well, not a surprise, we'll keep investing in technology, service, and capacity. Well, technology, it is part of the Legrand model. We are increasingly platforming, so Legrand strategy to acquire a capability and then to platform it and to make it available to other geographies. Good example being busway. We acquired the U.S. market leader in busway, called Starline, back in, what? 2019?
2019
2019. But it's a bit difficult to sell U.S.-manufactured busway into China because it's heavy, and it costs a lot to carry to China. So we are developing a local capability. We developed, actually, a local capability of busway in China with a product called PowerFlex, based on the Starline technology. And of course, we are deploying capacity. Some of the product families are growing 20%, 25%, 30% per year, and we have to do a bit of capacity build-up. We accelerate the deployment of existing solutions. You have to know that today, we have what we call internally LDCS teams, so Legrand Data Center Solutions team in more than 45 countries.
We have dedicated sales and support teams addressing the data center market in 45 markets. We'll pursue bolt-on acquisitions. We have done 11 acquisitions in 5 years in data centers, of which 4 in 2024 so far. We have added EUR 1 billion of additional adjacent markets over 5 years. Many opportunity remains. When we talk data center, you always think big guys, big companies, but actually, the type of competitors we have is very much similar to the type of competitors we have in the traditional building segment. There are plenty of small and medium-sized companies in this data center world.
So I can tell you that we have a long pipeline of opportunity, and I'm very confident on our ability to announce more deals in data centers in the coming quarters. That's a short introduction I wanted to make, and now I'm turning to Brian. Maybe, Brian, you can say a few words about yourself and then make your presentation.
No Italy video? There is a video before.
And there is a video before. No, right. Before turning to Brian, we have a small video made in Italy and showcasing the data center project in Italy. One word on the fact that you will hear many brands which are mentioned, Raritan, Starline. Worth mentioning, all those brands, of course, belong to Legrand, huh? So, don't be surprised if you don't hear a lot about Legrand, but you know, all the brands that will be commented here are brands bought or developed by Legrand.
The Tuscany Cloud System is the result of a series of initiatives started by the Tuscany region in the early 2000s to develop a regional data center, which gradually evolved into the Tuscany Cloud System tender, which aims to offer an advanced infrastructure to the Tuscan public administration, with three interconnected nodes at very high speed, with high business continuity, disaster recovery, resilience, and high reliability characteristics that will therefore enable not only the Tuscan public administration to benefit from advanced cloud services. Today, the Tuscany Cloud System infrastructure involves more than three hundred public bodies, eighty of which have already joined the new cloud mode. There are more than two petabytes of data, more than one thousand services, and more than four thousand systems involved. The system is widely used and spread throughout the region in terms of covered services and population.
The Tuscany Cloud System has been created here, a data center at regional level, an interconnected service at the forefront of cybersecurity that aims to become a reference node in Tuscany for national cloud strategy for public administration. In the two medium voltage and low voltage transformers, the four green dry resin transformers with high efficiency and reliability guarantee continuity of service at all times, as well as reduction of the environmental impact, simplification of installation, flexibility in the operating phase. The range of Legrand Group circuit breakers installed in this system respond perfectly to the stringent demands of designers in terms of electrical protection and continuity of service. The same criterion of service availability was the basis for the choice of our nine Eco air conditioners, installed with 2N redundancy and each with double power supply source upstream.
In the core of the power center, the Keor MOD guarantees continuous cooling, thanks to its three-phase power modules and the series of hot swap batteries. It is in the white space, the core of the data center, that our solutions represent a competitive advantage in terms of scalability and flexibility, essential requirements in such a challenging project. Starline, Legrand's busway free maintenance system, allows you to create a simplified power supply system without wiring in the room. The tap offs can be easily installed along the entire channel without the use of staff specialized in electrical work. This solution allows an easy upgrade of the entire system by adding, replacing, or moving the tap offs without interrupting the service, in order to meet the customer's needs in view of the continuous evolution typical of IT infrastructures.
Energy saving is now an indispensable requirement in the construction of data center systems. To achieve the goal of creating an efficient data center, a continuous and effective collaboration has been developed between the Legrand Data Center Solutions team, the owners, and the designers in order to create a specific solution for the cloud. The white space project fully responds to the need for energy savings, thanks to the solution based on the Nexpand platform, with the implementation of the Cold Corridor and cabinets complete with the innovative airflow management. High efficiency is also guaranteed by the free cooling system that allows you to manage the refrigeration of the white space by exploiting the outside air when the environmental conditions allow it, thus avoiding the use of mechanical compressors. For the distribution of energy within the white space, Raritan products have been chosen, the most reliable PDUs on the market.
The Raritan PDUs are equipped with the iX7 controller, with great computing power and very high efficiency processors, and a series of additional ports, including the gigabit Ethernet port that allows you to connect multiple PDUs in cascade. Reliability is the main focus of Raritan PDUs. That's why the iX7 controller with power sharing will continue to maintain full network connectivity, even in the absence of power from a PDU. You can easily access the PDU interface from mobile or desktop in order to manage asset management, access control from rack, environmental monitoring, and capacity management. It is possible to manage all these data also through DCIM monitoring software as the Power IQ solution chosen for the Tuscany Cloud System.
Brian, the floor is yours. You are traveling from Italy to the US.
Yes, well, I've been to many data centers, but none in a site quite as beautiful as that, Northern Virginia, the desert in Mexico. So I'm doing something right, but maybe something wrong there. But thank you, Benoît. So Brian DiBella, President and CEO of Legrand, North and Central America, and talking about data centers today is sort of my career coming full circle with Legrand. I actually started back in 2003 as an IT consultant to the company, and was hired on as the first head of IT in 2004. So I was operating Legrand's data centers as opposed to selling products and solutions for them. After three years, I was given the opportunity to make a pretty significant career pivot into general management, and I ran the wire and cable management business unit within the US.
2014, was promoted to run the entire electrical business in the US, the electrical wiring systems division, as we call it, which included the cable management and PL2 wiring devices product. 2022, took a lateral move, but a very fun move to take over the data center business, and then in March of this year, took responsibility for all of North and Central America. So it's been a great journey and a great career, but this is a great topic to be talking about.
Legrand, or so Benoît had shared a pretty good overview of the data center market, where Legrand plays, what our views are of trends, and what I'm gonna do now is dive into some specific customer examples to really illustrate Legrand's value proposition, the strength of our relationships, and why we're so excited and encouraged about the future. We'll start out with the products that we're in. As mentioned, in North America, heavy focus on the white space. The white space is where the critical high-value equipment is. This is where servers and networking gear is. I want you to think about the data center market right now as a race, and it's a race for speed, and it's a race for efficiency.
So I don't know how many people have heard, but the headline about Microsoft actually signing a deal to reopen Three Mile Island. Everybody heard about that? So just last week, there's such demand for power that we are literally reopening closed or attempting to reopen closed nuclear power plants. And so there's a race on one hand to get real estate, to get access to power. The other part of the race is bringing new technology online, and I'll talk a bit about artificial intelligence and what it means for our products. Benoît provided a really good overview, but everybody's racing to have the next greatest thing in terms of AI, so speed is really important. Efficiency comes into play because power is a limited resource.
If I've only got so much power in the grid, I better make the best use of it within the four walls of the data center and make sure that I'm really efficient with the infrastructure, right? Total energy consumed, divided by the power for compute. I want that number to be as close as one as possible, and I'll talk a bit about how our solutions enable that. So let's take a look at where we're playing right now, the major product categories for us. First one, we saw that great video, Starline Busway. Number one position in terms of market share. This is about flexibility and scalability. As the video showed, you install the busway, and then the tap boxes can be configured at different power levels. They can be moved to different locations. They make the installation and provisioning faster and more efficient.
KVM, keyboard, video, mouse. The early days of data centers, you'd have a cabinet with multiple servers, and you'd have this device that allowed you to switch from server to server, so you didn't have to have five keyboards and five mice and five monitors. Well, that's evolved today to basically a remote control system for data centers. You can access from outside any number of servers, networking equipment for troubleshooting, for automating routine. We call it KVM over IP, so it's KVM over the network. There's no more little box inside. It's all done with remote control and management, an essential part of productivity and asset management in data centers. Intelligent PDUs, so that's PDUs that have chips, and again, we saw the example of the Raritan PDUs. These are smart. They have computers built into them.
They have networking equipment built into them that allow them to communicate to one another, to support sensors and sensing technology, including even access to the doors. So You know, you can open and close the doors by communicating through a PDU to a data center aisle. So a lot of functionality that gets built out of that core technology. Again, number one market share position in intelligent cabinets. This is a fragmented market. There's very basic cabinets all the way up to highly custom that have specialized features for cable management, for supporting heavy weights or different types of cooling technology. I would say Legrand, through our strong relationships with key end users, has really taken the premium segment of the cabinet market, where high customization is creating high value for those deployments.
And I'll share an example of how we actually cut the deployment time for an AI solution by two-thirds because of the cabinet overhead system, so our Cablofil system, number two share position. What's important about this product, we have global specs with pretty much every major data center player, from the hyperscale technology companies, to colocation companies, to traditional business enterprises. Lots of Enovation around the data center application, and then what we heard about rear door heat exchanger, it's a technology we like a lot. Liquid cooling, again, it's a very fast emerging, fast changing market, still very fragmented as the market is sort of settling in on which technology is gonna win. The advantage of rear door, it's efficient, and it's easier to retrofit than any of the other liquid cooling technologies. We like our position, number three in North America.
Okay, well, since we're talking about data centers, I've got to talk about AI, and I think Benoît provided a good overview of this. You know, at the end of the day, there are a lot of big numbers that get thrown around artificial intelligence. Statista published something earlier this year that said it's gonna be a $2 trillion industry by 2030. Well, I don't actually know what that means. It's hardware, services, software. What I can tell you is there's some really concrete numbers that exist today, and it's about what's happening in the market, the race to deploy AI. So the chart here on the right, this is published earlier by research firm Omdia, earlier this year. This shows in 2023, all the shipments of the NVIDIA H100 GPUs.
These are effectively the computers, the processors that do AI training, particularly for the large language models. These are their top 12 customers. I'll summarize the math for you, so you don't have to look too closely. They sold about 650,000 GPUs last year. Those are individual chips. Those would then go to integrators. It could be companies you've never heard of. It could be computer manufacturers like Dell that take those GPUs, and they assemble them into servers. So 650,000 GPUs will translate into roughly 80,000 AI servers. Now, those are gonna be deployed. The programs, they're not all done at once. Generally, companies like Microsoft, Meta, they have two, three, four-year roadmaps. So those. Think about those as being deployed over three years. So, you know, 20,000 to 25,000 per year.
That creates an annual addressable market opportunity for Legrand infrastructure of about $1 billion. So it's an incremental market on top of traditional compute, traditional storage, and networking. Just for those AI servers, about $1 billion per year, and again, that's continuing over multiple years. So $3 billion over three years is the other side of that math. That's PDUs, that's Busway, that's cabinets and cooling. Okay, so I wanna talk. The examples I'm gonna go through are customer specific, but these are pretty confidential and sensitive projects, so I can't share customer names. So before we jump into that, I just wanted to give you a sense of the types of companies and the profile, the split of business that we have. And I think what I'm most proud of is the diversity of our customer set.
Maybe more than that, actually, the relationships we have, but we're pretty diverse. The hyperscalers, that's, you know, a third of our business. It's roughly a third of the data center market. These are the companies that you know well. It's Google, Amazon, Microsoft, Facebook, Meta, et cetera. We have long-standing relationships with all of them. Next, we have global enterprises. So some of these are technology companies. I would put Tesla, Twitter, Oracle, financial institutions, large banks, and traditional manufacturing enterprises would fall there. Strategic distribution, so these are IT distribution companies, Ingram Micro, CDW, and traditional electrical distributors. WESCO, Anixter is another example. And then there's everything else. There's a lot of companies in the data center business that aren't these huge technology companies. They could be traditional manufacturers like Legrand.
They could include startups that are using AI technology to develop brand-new service offerings. It's a really, really fragmented market, and again, this is our customer mix, so we're doing business across the spectrum of data center businesses. Now, that's great. We've had relationships with these companies for years, really since the start of the data center industry coming on in the early 2000s. What's key about that is that our R&D teams have access to the current issues, the current problems, the current projections that these data center operators or enterprises are trying to solve. It helps us be first to market with new innovations. It helps us be first to market with the types of technology that's gonna drive the future.
You know, we heard about, again, our Xerus, the intelligent PDUs, being able to integrate those into the environment with the control management systems that these data center operators are choosing. I'll give you an example where this really paid off well for us. So we heard from Virginie. Legrand has been, you know, very ambitious and a leader in CSR. Early 2022 , had a meeting with the head of network operations for one of the hyperscale companies, and the hyperscale companies tend to pay attention to one another and sort of copy each other. And he said: "What you need to know, here's some things on technology and networks.
But CSR, if you haven't started paying attention to CSR, you better get on it fast because all of us," meaning the hyperscale companies, "we're all gonna be talking to you about CSR." That was beginning of 2022 . I will tell you, started last year in 2023 , several of them in our quarterly business reviews were asking about CSR, and now pretty much every major large data center company has a CSR agenda topic. I would say, I'm proud to say we have sort of passed the test with flying colors, but we knew about it before it happened. We were ready, but if we hadn't, that customer insight, that close relationship that they shared and advised us, "This is what you need to do. This is what the market's gonna do.
Here's how you can be successful." Okay, so this is our first real customer example. It features the Starline Busway. This was a cloud software company, and, you know, I mentioned this is a race, so everybody is looking to get space, power, real estate access. For the smaller players, this can be a real challenge 'cause the big guys are out there trying to procure as much. They have more leverage because of their size. So they had a multi-year plan to roll out their next-generation software, including AI, and this goes back several years ago. Now, one of the tricks is that they were planning to deploy in parallel to procuring new sites.
So they didn't know exactly where their data centers were gonna be, but they wanted to design their solution so they could, once they got going, they could deploy quickly and grab as much capacity as they can under the radar of the big players that were trying to take the big spaces. What that meant is we had to develop a solution for them that was able to adapt to a space that was yet to be determined. And again, we saw in the video that busway going overhead, it's just laid out in the space, and then we can fit the tap boxes in later when we actually get the final configurations for the rows. That was a very, very key differentiator.
We started with really sitting down and talking to them about how much power they expected to have in each rack, thinking about the different profiles of the rows, how many racks would you have in a given row? And from there, designed the minimum number of options that could suit any number of spaces, any number of power levels, and then began the global deployment. We did a proof of concept over eighteen months with them, proving that we had the right offering for all the different mixes that they might see. Well, they ultimately said, "Yep, this works. You've got a global supply chain, you've got manufacturing all over, so as we pick and choose where to go, we know you'll be there with service and support." That is, again, not a hyperscale company. It's a mid-sized company.
It's a $100 million Legrand customer today, and we are sole sourced on that infrastructure. So AI hardware leader. This is a company that makes, you know, well-known AI hardware and enterprise companies. So not the big hyperscalers, but enterprise companies and AI technology companies approached them and said, "Hey, can you... You know, we don't need a whole data center full of AI. We just need to buy a few cabinets for our own internal development." Maybe they have a data security issue, maybe it's intellectual property, or it's a startup company that wants to do things sort of, you know, in the garage. So they approached this AI hardware company and said, "We need a turnkey solution.
Just something that is sort of AI in a box, using your servers and the infrastructure to support it." If they're gonna put their name on it and their reputation at stake, they're gonna wanna use proven technologies. We worked with them to design a suite that includes the actual cabinets, the overhead busway system, and the PDUs, the power distribution units that go into that cabinet. All have been designed based on proven technologies, things that have been around for a long time, and then features that were optimized for that AI application. They made them more durable, they made them more energy efficient, they made them look aesthetically better, and they're designed to deal with those high power loads of AI. Again, traditional compute, maybe 10 kW for a cabinet. These were over 60 kW, so almost five times the normal load.
Again, great example, and for us, how much was this? Yeah, EUR 25 million last year, and that number is growing as private entities continue to deploy AI internally. So now we go to what I'll say the humble cabinet story. So I mentioned that the big technology companies watch each other. They kind of move as a herd. Once one starts to do something, the others kind of follow suit. Take you back to late 2022, ChatGPT, right? Well, what was our lives like before ChatGPT? It really surprised everybody. It was the fastest adopted new technology in history, over 1 million users in just five days. It caught the industry by surprise, and that is what created the, I call it, the arms race that we're in right now for AI.
This is a case of a technology company that didn't have an AI plan. They were working on some experiments in the back. ChatGPT hits, their CEO goes into, you know, lockdown crisis mode: "We need an AI solution. We need it deployed as quickly as possible." They begin, you know, looking at different options, converting existing data center space to AI. Where does the cabinet fit into this story? Everything has to ultimately get put into a cabinet. The way that this would typically work is we would build all our cabinets, we would ship them to the data center, all the cabinets that they need, and then the integrators would come in, install the servers, install the PDUs, and this would typically take three to four months just to do that fit out of the cabinets.
They didn't want to wait that long. This CEO is well known for being very demanding, so we need it in one month. So what we did is something called a rack and stack solution that we developed with the integrator. We began as our cabinets came off the line, and they were designed to be very robust, very durable in terms of the physical support. They had multiple options for cooling because they were retrofitting this AI into existing data center spaces, so they didn't know exactly how they were gonna cool, but we had a lot of different options available. So again, we're running - we're flying the plane and building it at the same time, is the way I like to describe it.
So what Rack and Stack says, instead of shipping everything to the site and building it there, we basically did it in a factory. We shipped the cabinets to the integrator's site, and they populated all of the equipment on their site and then had to move and transfer ship all of those fully populated cabinets into the data center. And again, rather than waiting till we had everything built, we were doing daily shipments to the integrator with factories on both coasts. We were going to two different sites, and they were building as they came off our line, basically, we sent them to the integrator. They were populated and deployed. It allowed them to make a claim very quickly, "Yes, we have our AI training. We have our AI.
We'll have a great offering, just like ChatGPT and Microsoft and the big players. Bottom line, we took 90 days down to 30 days, all with the way we manufactured and worked with the integrator on that deployment, so again, you know, power is a big deal. Cooling is a big deal. Densities are only going up. This is a case where the available power to the Data Center was limited. The grid only had so much power. That means we can talk about AI loads being huge, but if you can't get power from the grid, you are capped, which means everything that's in that Data Center has to be maximized for efficiency, and that's where the USystems Rear Door Heat Exchanger came in, so there's a figure. Again, it's power usage effectiveness, total power over compute.
You wanna be as close to one as you can. I'll give you the punchline here. In this case, the rear door heat exchanger, the US ystems exchanger, was one point zero three five. That means only 3.5% of the total load was necessary for cooling. In a data center, that is a big deal. Cooling is the number two source of energy usage in a data center, and we were only 3.5% of the total consumption. That was the difference maker for this job, difference maker for this client, and again, one that we're very, very excited about where this fits because of the efficiency levels. The other thing that the efficiency gives us is the ability, from a rear door heat exchange solution, to go to very high power levels, right?
There's a correlation between efficiency and how much power you can cool. In this case, up to two hundred kilowatts, which is much higher than most of the other competitors in this segment. Okay, so last slide. We're talking data center, we're talking future. We have a very robust pipeline of new products. I'll give you the highlights here. You know, on sort of the bookends of the slide are new firmware, new software technologies, new chip technologies. We're making sure, one, that we're designing in the features that our customers and clients need. They need intelligence, they need high-performance monitoring, they need very secure platforms. Data security is a big deal, and that includes remote management capabilities.
We also wanna make sure with our suppliers that we're on their product roadmaps, so that we will have a reliable, efficient supply chain of all those key electronic components. In the middle, power monitoring, that is on our Starline Busway system. Again, as these power levels go up, as AI power usage changes the profile of data center, it's more important than ever to be able to monitor and track. You can tell if things are going right or wrong with AI training based on the power usage. The way the servers are behaving will tell you what's happening. The profile is very different from traditional compute, making this absolutely critical. Leverages that same firmware platform that we mentioned, so we're platforming across all of our products for a common technology, and it's been continually updated to integrate with data center management software. And then IP-54 Busway.
Everything is a data center now. We shared the video that showed our factory with all the automation. All that automation requires control. It requires networking. The data center is moving from very clean white space into factories, into outdoor spaces, and we're just adapting our products to move with the market. That's it from North America and data centers. Thank you.
So thank you. Thanks a lot, Brian. We'll now invite Amelie Zegmout, CEO of Legrand Iberia, to come on stage and to talk about Tnergy transition.
So thanks, Brian. Welcome, Amelie. I will say a few words. Actually, I was tasked by my team to go faster because we are a bit late, so I'll go much faster. But of course, I'll be happy to answer any questions you may have on this piece. So Energy Transition for Legrand, it's a new guy in the portfolio. Not new, newcomer in the portfolio, but it's pretty new for you. So it's worth spending a bit of time explaining which product fits into this category. We basically have three categories of products, everything which is used to protect electricity.
So it's about circuit breakers, it's about transformers, it's about UPS. So every time you are adding an electrical line, you need to have somewhere a transformer, somewhere a circuit breaker, a switchgear or a UPS. Number one category. Number two, products that help to do energy savings, so energy management and lighting controls. And number three, EV charging stations. So it's really all the products connected to electrification. In terms of numbers, this product category represent a quarter of our sales, slightly more than EUR 2 billion of sales. More than half of those sales are made in Europe.
The big difference between Europe and North and Central America is that we don't have a switchgear product offering in North America, and we do have one in Europe and in a number of countries, so 55% of our sales made in Europe. In terms of verticals, 73% of those sales in commercial buildings, 22% in residential. Those will typically be the small electrical cabinet you have in your home with a few circuit breakers, measurement product and so on. Five percent, a small 5% in industrial, in infrastructure. A few megatrends, not a surprise. As per the official numbers, electricity demand will double by 2050. Even though the final energy consumption should decrease by 2%, nobody really knows if we will make it.
But whether we make it or not, there's one thing which is sure, is that electricity within the electricity mix will significantly increase at the expense of fossil energies. It will be driven by a number of things, new loads. The fact that in a number of countries you have middle class emerging with new needs, and the number of loads per home will increase. Electric vehicles, of course, so you have a couple of measures, which I will not comment. Nobody knows if in 2030 it will be 40, 50 or 60 million electric vehicles are gonna be sold, but one thing is for sure, is that it will be a lot more than the 16 million which are sold today.
Heat pumps will replace traditional heating systems, and so on and so forth, so more and more electrical loads, more and more electrical circuits, more and more protection devices, measurement devices, control devices, for those loads. Interesting to note that out of the tens of millions EV charging stations that are gonna be sold, it is now admitted by most industry specialists that more than half of those electric vehicle charging will happen where Legrand is strong, i.e., at home or at the workplace, and not necessarily at some charging point operator's place, so it's a good business opportunity for Legrand. This slide is interesting. It's worth spending a bit more time on it.
You know, that building accounts for about 40% of the world's CO2 emissions and 30% of final energy consumption. But actually, small and mid-sized building, which represent 80% of the markets, are not equipped with energy management systems. Not yet. The big ones are. Ninety percent of the big buildings or the large buildings are equipped with a BMS system. And this is the reason why actually the BMS market share is not moving much, because most of the big buildings are already equipped, but the small buildings are not. Main reason being complexity and cost. Not all buildings can afford having a full BMS system, heavy BMS system, which costs more than EUR 50 per square meter.
But now there are a number of solutions which exist, and which can provide, we'll see an example in a minute, lighter automation solutions to smaller buildings. The big challenge we have, if we want to meet our energy reduction or energy efficiency targets on a worldwide basis, is to tackle this large base of small and mid-sized buildings which are not equipped with any energy management system. Our unique value proposition, we want to propose an open and versatile offering for buildings with state-of-the-art power distribution and protection products, from transformers to EV charging stations. Our products are adapted to the most demanding works. You have here an example of a pediatric hospital, where we supplied our full set of switchgear. Again, we are BMS agnostic.
Our energy management solutions and lighting control solutions can be connected to any BMS. And actually, we are connected to the, you know, most spread BMS system, being Johnson Controls, Honeywell or Siemens. A lot of our products are conceived to reduce CO2 emissions. Actually, you had an example in the data: Italian data center with the transformers. Actually, worth mentioning that all those Energy Transition products that are sold into data centers, as per the Legrand classification, are classified into the gray space in data centers. Well, of course, not double counting. But of course, the same transformers can be installed in a data center in a big commercial office. And our solutions are supported by software and services.
You have here an example of Nemo Green, which is a software that we launched two years back, which is a platform allowing multi-location companies to track their energy consumption per site with the type of loads and so on and so forth. We have a number of leadership positions in this Energy Transition category. You see that we have more than 24 countries where Legrand is number one or number two, and I remind you how important it is in terms of profitability and capability to grow. We made a number of acquisitions, not much in the last three or four years, but before, and now we are in the process of localizing those acquisitions, so we are taking the know-how.
Take, for example, busbar. We made a couple of acquisitions in busbar, and we localized our busbar offering in China. We localized our busbar offering in Colombia, and we'll keep doing it. In terms of sales, we grew our sales by 9% per year between 2019 and 2023, all organic. So it has grown very nicely, and the growth rate of this category has been almost as fast as the one for data centers, and in terms of business priorities, we will accelerate on power infrastructure, so we keep investing into our product offering. We will enhance our project approach. We need to provide more specification, project management, commissioning, maintenance.
So that's what we are doing, either organically or through acquisitions, in order to tackle big projects. There's also a capacity expansion plan, because again, some of the products are growing faster than the average 9%, and we need to build capacity, and we'll keep doing focused M&A. Good example being Clamper in Brazil, which is the Brazilian leader in surge suppressor, which is important for countries with a lot of lightning strikes.
Lightning.
Lightning.
Lightning, yeah.
We'll further expand into energy management, especially BMS Light, and lighting controls, and we will double down on EVCS. We have made two acquisitions in EVCS, one in the Netherlands, one in Scandinavia. I'm not sure we'll do a lot more acquisitions, because you have a lot of companies that are not so attractive in terms of margin profile or technology capabilities. But organically, I believe we have now a number of assets that we can deploy without having to make a lot of acquisitions. Now, if a good opportunity was to arise, we will, of course, look at it, and we will keep deploying otherwise what we have.
This is, in a nutshell, what I wanted to say as an introduction to this energy and transition category. Now, before handing over to Amelie, we have a small video about a new product offering we are launching. So it's a bit of commercial advertising, but this small movie was conceived as an introduction to our customers. So please launch the video. So the floor is yours. Maybe you can start, Amelie, by introducing yourself.
Yes, absolutely. So I'm Amelie Zegmout, CEO of Legrand Iberia today, since September of last year. I've been actually celebrating my twentieth anniversary within the group as well, like Brian. Having held various positions in the group in Europe and Middle East, the latest one being Managing Director of the Gulf Countries subsidiary based in Dubai, and Head of the Tertiary and Industrial Markets for Legrand France. So as the CEO of Legrand Iberia, I'm extremely pleased to be here, honored to be with you, and obviously very pleased to be given the opportunity to showcase some of Legrand Iberia's contribution to Energy Transition, mainly in electrification and energy efficiency initiative. So let me first give you a brief overview of what Legrand Iberia is. Legrand Iberia, that is obviously Spain and Portugal, is made of 415 committed individuals.
It represents sales of EUR 200 million today, with a mid-single-digit average growth between 2019 and 2023. If we look at the Energy Transition perimeter, we consider a double-digit average growth within the same period, and Energy Transition solutions today account for more than 30% of our total sales, so quite well exposed within the Energy Transition markets. Legrand Iberia benefits from quite a solid local footprint. We are in the market, physically present in the market, for more than 50 years. We do have a local manufacturing unit just beside our headquarters, which is based in the suburbs of Madrid. We've got 8 commercial regions, six in Spain and two in Portugal, and three showrooms to welcome and train our customers.
Our front office structure is basically based on two pillars, which are technical expertise and customer centricity. Regarding customer centricity, we have decided to basically build our organization based on two main teams: regional teams that are there to handle, I would say, the daily activities, very close to the customers in the different regions of the area, making sure that continuous and optimum service is being secured, and they're organized per customer type, so you will have people dedicated to investors, to consultants, to installers, to distributors. In support of that regional team, we decided to build a national team of experts with a very dedicated approach per vertical and per key account, so here we are more talking about a centralized device answering to customers that have centralized organizations and centralized requirements.
So that twofold organization truly allows to maximize customer centricity and customer reach. Technical expertise is the second pillar, and in that case, we've talked about it, but we provide services such as training, which is absolutely key, design and engineering, project management, commissioning, and after-sale service. These bundle set of services really bring added value in addition to our innovative solutions, and we will see in the examples that we will showcase, that it does make a difference to our customer... Before moving on to the case studies that we would like to share with you, I would like to give you a snapshot on where is Spain in regards to decarbonization. If you look on the left-hand side of the screen, you would have the electricity generation in 2023.
The official numbers are here, and we can see that, basically, renewable energy, for the first time in history, accounts for more than 50% of total energy generation in 2023. It was at approximately at 42% in 2022, so there is quite a massive jump, positive jump into that matter. If we consider nuclear, being a low-carbon energy source, we would have a 70% share of low-carbon energy within the total national mix of energy generation.
Spain is positioned as number two when it comes to energy production capacity, with seventy-seven megawatts, gigawatts, sorry, of production capacity, which is number two after Germany, and that obviously constitutes a very solid base to make sure and enable Spain to reach out to the targets, ambitious targets, which are reaching out to 74% share of renewable energies in 2030 and 100% in 2050. So that's pretty good news, and Spain is really a good student in that regard. Now, if we look at energy consumption, the situation is slightly different, and we can see here two main levels for further decarbonization when we look at energy consumption again. Number one is transport, because it accounts for 42% of energy consumption today in Spain, and the number two is residential and commercial buildings.
So we talk here about sustainable mobility, obviously, electrification of vehicles, energy efficiency initiatives in buildings, and self-consumption in homes and SMEs, which is still at its initial stage of development in Spain. We do have the Spanish National Climate and Energy Act, which set a very ambitious target of improving energy efficiency by 40% between the baseline of 2021 and 2030 , and outlines a series of initiatives. So a lot of regulations, a lot of initiatives, a lot of incentives are driving the willingness to reach out to that 40% energy efficiency improvement. I would name, for example, all the green renovation programs that are going on at the moment. Within the sustainable mobility, we have the MOVES III, MOVES III, or MOVES III incentive plan.
So here we are talking about a grant program to push consumers to go for electric vehicles and install EV infrastructure in their homes or nearby their offices. And we, of course, have also the critical infrastructure drive, mainly through the growth, exponential growth of data centers, which has recently starting in Spain. What I propose now is to basically dive into very concrete examples of what we have done in Spain in the recent months and years to contribute to those initiatives and to drive electrification and energy efficiency in the market. To start with, I would like to give you an example on sustainable mobility. The business case here was the installation of 75 EV charging units, 22 kW EV charging units, within petrol station of a very large energy provider in Spain.
As you can see on the slide, the value chain was pretty short because we did have an end customer, which is a leading oil company, as I mentioned, and we did have an in-house charging operator. It's not always the case, but in that particular example, we worked directly with the end customer. As I mentioned, we did supply 75 EV charging units, along with the electrical panel and the breakers to protect and secure the installation. As we were discussing with the operator, and as the operator was truly the main decision-maker in the process, what really mattered to them was our ability to configure our software, configure our system, to match their revenue model, how they would foresee the use of the stations in regards to consumers like yourselves, okay. That was absolutely key.
We spent six months discussing with the customer to make sure that we reach out, a software that was completely aligned with their expectations. So there was a lot of R&D going on and a lot of tailoring and, again, ensuring, complete alignment with their expectations. That took place, in our subsidiary in Holland, because we're working in that case with the Ecotap solution. But we, of course, had, a local team to ensure, again, customer proximity, and we appointed, a dedicated project manager to secure the full execution of the project and to make sure that he would act as a single point of contact. So that was, again, another key driver for decision for, that particular customer. The second, added value that the customer truly appreciated was our ability to transfer knowledge to him. So training here is absolutely key.
The way to manage the charging stations was absolutely essential, I would say, and tailoring a training module would empower the customer. So customer empowerment was really part of the value proposition to secure his knowledge, but also to secure, of course, durability and continuity of service of the installation. So after-sales service was also proposed in that particular example. As mentioned, EV charging stations cannot work without the full power infrastructure around it. So I wanted to share with you this particular example, where we actually supported a leading network provider in ultra-fast charging stations. So in that case, there was a massive deployment last year, and by the way, it is still carrying on this year. They are doubling their capacity with the deployment of 150 ultra-fast charging stations within Spain and Portugal.
We supported that particular project with the supply of electrical panels, supervision, and circuit breakers, so ACBs and MCBs. ACBs up to two thousand five hundred amps, and we did work in that case with a value chain that was slightly more complicated. We had the end user, as I mentioned, but we also had an integrator is, in smart grid solutions. So we were integrated within the smart grid connection solution, which you can see here on the left-hand side of of the screen, and we sold through the traditional distribution network to a panel builder that would assemble our panels. So the value chain being more complex, obviously, collaboration was of utmost importance. In that case, we collaborated very closely with the panel builder and the integrator to design and engineering the right configuration of the panels.
Obviously, configuration could change depending on the structure of the EV charging station that we were supplying the project with. So again, timing, design, and engineering, and in that case, we had done that completely internally because we had the local technical office sufficient to handle the collaboration with the customer. So again, a lot of technical discussions and a value proposition that would match exactly the needs of the customer. The second aspect, which was according to me one of the main key success factor, was timely and reliable delivery. You can imagine when we have such a complex value chain, and we have a deployment of a hundred and fifty ultra-fast charging stations across the country, we had to be very precise in our ability to give reliable logistic service and timely deliveries.
So in that case, we had five deliveries planned as per a set schedule, and the products couldn't arrive too early or too late on the project. So obviously, cooperation with our distribution network was very key to ensure optimal supply chain service. So those were two basically examples of what we are doing when it comes to sustainable mobility. As I said, Spain is at its very initial stage of deployment. We foresee a major acceleration. We have started to see it this year. We have an emergence of a lot of new actors, whether they are developers, whether they are integrators or operators, and we have, as you can imagine, a team dedicated to make sure that we capture these growth opportunities. I would like to move now to energy efficiency initiatives. So I will speak again about the data center industry.
It has been obviously discussed extensively by Brian and Benoît, but I thought it was important to give you some insight about what we do locally when we talk about in-country data center projects. So in that case, and as it is the case in many geographies at Legrand, we do have strong relationships with multi-tenant leading data center developers, and of course, their projects teams. So in that particular case, we've worked with that developer, but also project management companies, engineering consultants, and of course, the MEP contractors, the installers, with whom we had a very strong connection. The business case was two data centers of 20 MW and 70 MW power, which totaled 22,000 square meters IT space. So we are talking of quite a large facility.
We did supply three solutions: two in white space, cold aisle containment and cable management, and one in gray space, high-power busbars. Here, as it was mentioned, so I will go fast on it, our ability to customize the solution to provide a turnkey solution and value proposition from 3D design to installation to commissioning was a massive added value for us. Speed of execution is key. Brian talked about speed of execution, making sure that we adapt ourselves to the needs of the customer, and we adapt ourselves to the unexpected events of projects, because critical projects have unexpected events, and we must have the ability to adapt and to be resilient to that.
I will end with an example on commercial space, because we have seen that commercial buildings account for 40% of emissions, of carbon emissions, so quite a significant responsibility when it comes to energy efficiency. I would like to share with you an example, which is quite typical of what we see in Spain, with big customers with small and recurrent commercial spaces. In that case, we were discussing with a leading bank in Spain, who decided to completely redesign its offices, so we are talking about 1,800 office spaces, and decided as well to deploy a new concept, which is called a Work Café. As you know, we are really into the hybridization of commercial space at the moment.
The value chain was, again, quite short, with discussions directly held with the end user and its engineering consultant. In that particular case, three main topics. One was design. We tend to forget to talk about design, but for commercial end users, it is extremely important. It is part of the well-being that we offer to the tenants, and in that case, we had the possibility to embed our technology within wiring devices, giving full aesthetic coherence with the rest of the installation, as you can see here on the slide. The second aspect was technology, so we offered a dual technology of passive and infrared sensors, again, embedded within the wiring device, which optimized the reach within the space, hence maximizing energy efficiency.
And I would add a point here, which was key, again, was the ability to have available products at the right time, at the right place. As you can imagine, these commercial end users had offices across the countries, were using a network of small and medium installers to install the products. And of course, it was absolutely fundamental that our products would be on the shelves of our distributors to make sure that the product would be, and the project would be, installed on time. So four examples, two on electrifications, two on energy efficiency. I would end with the great excitement of going further with new innovations coming in. You have seen the video of the BMS light solution branded WeOS, for which is basically a building energy management system within commercial space.
I would like as well to talk about our new Guest Room Management System within hotels, which addresses digital lifestyle, but also energy efficiency initiatives. We definitely foresee fantastic growth opportunities in those two segments. You know pretty well that tourism is quite, quite interesting in Spain, and we look forward to many successes with those simple, efficient, and impactful innovations. Thank you very much.
Thank you, thank you. Thanks a lot, Amelie. So now we have just covered about 40% of our turnover in terms of opportunities, vision, and actions. It's now time for a thirty minutes break, so it is 10:30 A.M., and we will restart at 11:00 A.M. sharp, please. So please try to come back two or three minutes before we start.
Thank you.
Thank you.
So welcome back. So we have seen who we are, what we did, what we delivered, and the exciting opportunities from data centers and Energy Transition are bringing. So we now have the pleasure to welcome on stage Chris Dodd, the CEO of Legrand Care, and we'll talk about digital lifestyle.
Hello, Chris. Few slides of introduction on the pillar business of Legrand digital lifestyle. It's basically two set of products, everything which relates to a smart home. So it's about security, access control, connected comfort, connected energy management, and so on and so forth. First piece, and second piece, connected care and assisted living. You're probably very much familiar with a smart home.
You're probably a bit less familiar with connected care and connected home and assisted living. It's the reason why Chris will introduce you to this interesting business. In terms of sales, it's only, if I may say, 6% of our sales, EUR 500 million, mostly European. 83% of those sales are made in Europe because that's where we have made a number of acquisitions to develop into smart home and connected care. And in terms of vertical, it is the residential business, 20% connected care, even though this piece gonna grow with the acquisition of Enovation and a bit of hospitality. In terms of market trends, not a surprise, this digital lifestyle is driven by the digitalization of the home.
We have here a typical home ecosystem, and most of those functions are currently being actually digitalized for remote control for scenario building between the various functions. It is also a case for connected care. I won't comment this slide because Chris will do it in detail, but you have to understand that we are currently in Europe, but also in a number of other countries, in a big dilemma whereby there is more and more needs for care because people are getting older, because you have chronic disease, and at the same time, we have a shortage of money, budget, and workers. Technology, as for the data centers, can help solving this issue.
Our value proposition, we are proposing product and software-driven platforms for better and more independent living with the best combination, or try to have the best combination between technologies, simplicity of use, simplicity of installation, and privacy protection. So you have a few pictures of some of our product offering. We want to have products that are simple and to install and to use. For example, we have ranges of connected wiring devices, connected switches and sockets, the so-called With Netatmo ranges. Céliane with Netatmo, Living Now with Netatmo, Valena with Netatmo, so that you can build a network within your home with your light switches and and sockets. And those switches and sockets can be installed the same way as a traditional, hardwired, mechanical switch or socket. So simple to install, simple to use.
Cybersecurity and privacy by design, we believe that it's a strong competitive advantage to be named Legrand because a lot of homeowners trust us because they've been in contact with our products for a while. So we are from the design stage building some privacy protection in our product, and we leverage that as a competitive promise to our customers. We have strong app and interface content. Good example with the NOVO Go, sorry, telecare solution, and we're able to propose complete system from standalone device to complete home energy management system.
For example, the thermostat, it can be used as a standalone thermostat, and you can just increase or decrease the temperature, but it can also be part of a broader system together with load shedding, for example, measurement, so that you can manage the full temperature and energy consumption of your home. In terms of top line, just a little bit of growth. Not very impressive, I have to admit. So like-for-like growth, plus 3% between 2019 to 2023, despite the connected care part grew 10% per year. So the traditional smart home went down, especially in volume. It is obviously very much connected to the fact that we are not in the consumer electronic business. We are really-...
Selling systems infrastructure type of products that are mounted onto the wall, connected to a circuit breaker. As a result, our sales are very much connected to heavy renovation or new build. The fact that for three or four years the new build new residential market in Europe has been pretty depressed, so not a very impressive growth, and we are shooting to do better for the years to come. In terms of priorities, we want to grow our base of connected residential functions. You have a couple of penetration rates of some product categories. We are already 33% of our sales in door entry are already connected, but only 6% in wiring devices and 3% in panel boards.
We want the 6% and 3% to become progressively 8%, 9%, 10%, 4%, 5%, 6%. We want more and more traditional functions, traditional products to be connected. We want to embed the connectivity capabilities into an increasing number of ranges. We have more than 100 different ranges of wiring devices, of switches and sockets. In 2019, 10% of those ranges were connected. Last year it was 33%, and progressively 40%, 45%, 50% of the range will be connected. We want those functions to be embedded into a complete system, and we want to incorporate a number of new functions. We want to become the European leader in connected care and connected health. This will be a key part, and we keep looking at additional M&A.
We acquired recently Enovation to get more software capabilities into connected health. We acquired a minority stake in UIOT in China to penetrate the Chinese market of smart home. And we have, here again, as in many fields of activities, a long list of opportunities we intend to pursue. That's what I wanted to tell you as a quick introduction. Now I'm turning to Chris to talk to you a little bit more about connected care and connected health. Maybe you can introduce yourself briefly, Chris, before you start.
Yeah, sure. Thank you, Benoît, and good morning, everyone. Yes, I began my career designing. Better? I began my career designing, system-
No, not better.
Is that better?
No. Guys? Should connect. Okay, can you just go... Sorry, we have a-
Technical malfunction.
Otherwise, you'll take a mic.
Yeah, I have this one.
Uh.
Is that better? No.
Do you mind, Chris, doing it with a traditional mic?
Yeah, I don't mind.
Oh, oh, whoa!
That's okay.
Perfect.
Wow. I didn't start my career designing conference microphones. I started my career designing assisted living systems before moving on into product management, marketing, program delivery, and then on into general management. Before joining Legrand ten years ago, I held various senior positions in healthcare technology providers and within the NHS. This morning, I'm gonna tell you a little bit about Legrand Care and talk about our products, our propositions, the market, some of the challenges that the market's facing, how we fit in, and how we solve some of those, and our ambitions for the future. Here at Legrand Care, we design, we develop, we supply, we install, we maintain, we service products, services, software for healthcare and social care organizations.
In the first instance, our products and services help people to live independently at home. Many elderly people prefer to remain living in their own homes for as long as possible, avoiding or delaying a move to residential care, if possible. And then away from the home, our systems help professional caregivers in group living environments, in hospitals, in nursing homes, in hospices to deliver better care, more efficient and timely care. And then across the ever-increasingly complex healthcare ecosystem, where there's many actors, there's multiple patient journeys, our software systems support better delivery of digital care and collaboration. They provide a platform for connecting organizations, clinicians and patients together. So Legrand was quick to spot the unique challenges coming from the aging population.
And since two thousand and eleven, it is acquired a number of specialist assisted living companies, starting with Intervox, based in Le Creusot in 2011 , through to Jontek, a sole software company in 2016 . And then more recently, we brought these specialist distinct organizations together under the specialist brand of Legrand Care, with the key objective of leveraging the core competencies of the wider business to bring a consistent market-leading offer to bear. Today, two million people rely on Legrand Care technology, as part of their service to help them live independently at home. And more recently, with the increasing sales of our connected care devices, we've seen our recurring revenues increase to 25% of our total annual revenue.
Then in more recently, in 2024 , we took the decision to expand from our presence within social care and on into healthcare with the acquisition of the Netherlands based digital healthcare software specialist Enovation, with a much larger recurring revenue base. Taking our business, so all in all, to circa EUR 160 million, with half of the revenues coming from recurring sources. We're seeing increasing challenges and spending within healthcare. I'm sure you're aware of that, certainly in the press a lot. We have an aging population, people tending to live longer, people living longer with chronic illnesses, those chronic illnesses requiring more complex interventions and treatments.
And at the same time, we're seeing staff shortages across health and social care, difficulty filling vacancies, people often feeling overloaded and overworked within the environment, and this is further exacerbated by inflationary cost pressures, increasing wage costs, increasing treatment costs. So yeah, we could continue to spend more on health and healthcare, but we simply don't have the people or the hands on deck to meet the ever-increasing demand. The solution? What's the solution? Well, I don't think the solution's simple, but certainly part of the solution is to increase the uptake of digital healthcare solutions. Transforming healthcare organizations and systems requires smart solutions.
It requires solutions that improve productivity, allowing the clinician to spend more time, focus their time on the patient, delivering real care, face-to-face care when needed, digital care when possible, and certainly starting to consider digital first. Again, transforming healthcare organizations and current systems such that they can deliver sustainable, affordable high-quality care is driving the need for software to automate workflows, and we're seeing increasing in spend in IT infrastructures and the need to integrate new technologies. As we look to solve this problem, or the wider health economy looks to solve this problem, we're seeing an increasing drive towards the delivery of care in the primary care setting, in the community, in the home.
It's preferable in most cases, and certainly more cost-effective than the more expensive secondary care hospital setting. So where does digital healthcare fit into that? Well, certainly it through aging in place, helping people to remain at home, living at home, through technology-enabled care, avoiding inappropriate hospital admissions and readmissions, proactive calling to aid social inclusion and avoid loneliness, person-centered care, giving people the ability to better manage their own condition, involve them in their treatments, improve their health education, allowing them to access services online without going directly to hospital via apps, portals, and devices, and sort of moving away from always providing face-to-face care, traditional face-to-face care, to a more blended hybrid model using e-health and virtual wards.
And then, when somebody does enter the system, ensuring what can be done digitally and what is appropriate to do digitally is done digitally, telemonitoring, health coaching, video consultations, for example. And then, when treatment is required, ensuring that the right care is delivered at the right time and in the right place, and the patient's information follows them across the system seamlessly and securely. Many organizations are moving to a value-based model, i.e., quality over quantity, with preventative solutions. Again, driving the need for software that provides better insights, analysis, and aids better planning and collaboration across the system.
Assisted living. Well, Legrand Care and across assisted living in the healthcare markets, and offers, we hold a leading position in those, and there are many similarities between the assisted living and the healthcare markets. They're both business to business. They both have professional actors at their heart. They're typically publicly funded, either directly or indirectly. They're tender driven. Assisted living market is highly regulated. There's British standards, European standards for products that are put on the market. Our offer extends from the supply of product right through to full turnkey solutions, configuration, installation, software increasingly delivered as a service in the cloud, and technology these days increasingly delivered as a service.
Within the healthcare market, we're seeing incentives coming from government to help healthcare organizations bring digital solutions and improve productivity within their own systems and setups. If we drill a little bit further down into our product services and software, in the first instance, our products and services are generally bought by organizations that combine them with their own service offer to help people live independently at home. Central to this is our Legrand Care Home Hub, which is a device which is based in the home. It has multiple sensors that connect to it. You might be familiar with some of them: panic buttons, smoke detectors, fall detectors, medication compliance-type devices.
All managed and configured by our own cloud management portal, which eases the setup and the ongoing maintenance of these devices, which are installed in a vast number of people's homes. They're all digitally connected. They all use industry-standard digital protocols to connect them. And then with the acquisition of Enovation, we've then seen our software platform extend right across the care continuum, providing a unified, yet modular platform for our software. If we start by looking at, say, telemonitoring, which builds upon our own substantial presence within the UK in this area and in Southern Europe, this provides a software module that receives and manages alerts and alarms from the devices in the home.
It then helps coordinate the response, which might be as simple as providing friends or family to go and provide some help, right through to a blue light response in the event of a medical emergency, a fire or a fall, for instance, then on into healthcare information exchange, which provides secure internal and external communication and information transfer between organizations and clinicians, e.g., for video consultations and image sharing. Medication management streamlines the process from the production of a prescription by the clinician through to the pharmacy and the administration of the process. Care coordination streamlines the movement of patients from expensive secondary care hospital beds through into nursing homes and the data flow that accompanies that.
Patient engagement provides a digital front door to healthcare organizations, providing information about treatments, procedures, and the ability to complete preoperative questionnaires. We've come quite a way in recent times in Legrand Care. As Benoît said, we've grown over 10% organically in recent years. Where are we going in the future? Certainly, I don't see the challenges in health and social care going away anytime soon. We continue to foresee significant growth, growing within our core markets, in new geographies, through acquisition as appropriate. Certainly looking to be market leader in the connected care field, although I prefer to see us leading the market as well as being market leader.
We continue to invest in innovative new technologies, and particularly in intelligent analysis of data and trends, such that going forward, we would be able to predict with some degree of well, a high degree of likelihood that an event or an exacerbation is gonna happen in the near term, and then with the right intervention, this could be avoided an inappropriate hospital admission avoided, which is, you know, absolutely fantastic for the patient, great for the whole health economy, and goes some way to managing this demand-led crisis that we're seeing across health and social care at the moment. Thank you.
Okay, thank you.
Thank you.
Thank you, Chris. I think we will now move to the last segment of Legrand sales with essential electrical and digital infrastructure. Thank you. So, as Ronan said, the last segment, if we may say. So it's gonna be a bit frustrating because it's more than half of our sales, but I won't be able to spend the two or three hours I would love to spend on this piece. But we have assumed that it was a business which you probably knew a little bit more than the others, so we're gonna spend, what, fifteen minutes?
For 54% of our sales. So in terms of products, that's where you see all the traditional Legrand product that you know well. So starting at the top left of the slide, wiring devices, overhead cable management, audio-video to distribute the audio-visual signals within a space. All product that help channeling power and data to the point of consumption, so trunking, floor installation, floor systems, local area network products, both copper and fiber. Lighting fixtures, high-end customized, highly specified lighting fixtures in the U.S. Emergency lighting, those exit sign you have throughout commercial buildings to help exiting the business in case of an event such as a fire. A few industrial components, passive components like industrial socket, a few cabinets and so on.
And building components, products that are really in the back of the truck of the contractor, and which are used to do everyday installation, so boxes, flush mounting boxes, tubes, multi-socket outlet, and so on. In terms of sales, 54% of our sales, EUR 4.6 billion, it's quite well spread between commercial and residential. 51% commercial, 41% residential, a bit of infra and industry, but you know that we are not positioned on infra and industry. In terms of geographical breakdown, here again, good balance between North and Central America, 44%, Europe, 37%, and rest of the world, 19%.
In terms of market trends, well, there are a number of macro signs that point to a progressive recovery in the building markets. The building markets have been very depressed for two or three years. Residential throughout the world, I mean, in the U.S., in Europe, in China. Commercial space, and especially the office space in the U.S. When looking at the statistics, well, a number of specialists are pointing out that building markets should recover, not with a growth rate of 5% or 6% per year, but turning from negative to positive. We put a number of S&P data on this slide whenever available. When the granularity of S&P was not good enough, we switched to other data points.
In Europe, it is expected that the resi should turn from negative to positive, -5% to +2% CAGR. Non-resi should turn from flat to positive. North and Central America, same thing, residential should turn from negative to positive. Same for the office market. So you see that the expected growth rates are not huge. S&P is expecting an average growth rate of about 2% per year for both resi and non-resi in Europe and North and Central America, but at least it's turning from negative to positive. What we don't know, of course, is how progressive will this recovery be? Because those are statistics over quite a long period of time, 2024 to 2030. And will it be...
Will it take one or two quarters or three or four quarters? It's a question mark, but it will happen. As far as the rest of the world is concerned, you can see that most people expect quite a nice recovery, including in China, which tends to be a question mark. As we said, there is an increasing demand for housing starts and initial need for additional electrical products. So I already mentioned the French numbers. 300,000 units being built a year, and the demand is closer to, let's say, 400. Same for Germany, currently build 200, the need is estimated to be 400. Same for U.K., 340 against 200,000.
But this housing gap is also more and more documented, in the U.S., with an estimated gap of more than two million housing units. Not to mention the rest of the world, where demography and urbanization should lead to an increasing number of houses. Take, for example, India. You have a million house which are, or apartments, which are currently being built, and the need is estimated to be ten million per year. So I don't know when it will happen, but if we want everybody to have a place to live in this planet, there will be a need of additional construction to be made. On top of that, with a number of people accessing to middle class or upper-end class, you have also more need for additional functions, additional electrical products.
People want their home to be beautified, if I may say. People need to remotely work, and when you remotely work, you need to have a connectivity at your place. People are always in need for safety, so they want access control, fire protection, and so on and so forth. And you have a number of new usage, such as gaming and remote health. So those trends should, at some point, support our, let's say, traditional building market. You also have a few segments that should grow a bit faster. We put a few statistics here. I will not comment the full slide, but health, it's expected to grow 3% per year, hospitality, 5% per year, education, 3% per year. And we have some exposure to those verticals.
Again, this should help our market. What is our unique value proposition? Well, we want to enhance the comfort, performance, and safety of buildings with products that are simple to distribute, install, and use. It's really important. We claim to be, and I think we are, the world number one company in essential products for buildings. You have a few examples. We want products that are simple from distribution to usage. You have an example of a very simple, if I may say, or basic emergency lighting unit in France. It is available in a thousand or so points of sale of our distributors. The fixing system is the same as the existing base, so it's very easy for a contractor to take out the old metal slate unit and to connect it.
Super simple to network it, so that you can have from your iPad or your smartphone, status whether the battery or the lighting are working or not. So super simple to distribute, to use, to configure. For all type of customers, we took the example of India. If you take light switches, wiring devices, you have we have ten ranges in India, covering everything from basic needs to upper-end houses, with three brands, which are Legrand-owned, of course, Indo Asian, Legrand, and BTicino. So the cheapest switch is sold, what, $0.20 a unit. Approximately $0.20 a unit, and the higher BTicino Living Now switch is probably sold at about EUR 50 a switch. So we really want to cover all type of buildings and all type of segments.
We are working a lot on design and look and feel. You have an example with our U.S. Focal Point, architectural lighting and acoustic solutions, which are designed to make a really a very friendly atmosphere. And the same design touch can be seen on many of our products, including the technical ones. And we often have a number of associated service to help our customers do the right association between the products. So we have configurators, we have product finders, we have inventory finders with the example of a U.S. audio-video offering. One focus we are not talking much about wiring devices, but I remind you that we are the world leader in light switches. You have here a nice example of our last French range.
For those of you who are currently equipping their secondary house in France, I strongly encourage you to go for this nice range. By the way, rotary variator switch is a dimmer, but, you know, we like to beautify also the names of our products. So we are the world leader in wiring devices. We are number one and number two in 45 countries. We have 129 different ranges. You can imagine how complicated it is for somebody to compete against Legrand. We can be, of course, competed again in India, in China, in France, in Germany, in the U.S., but being a competitor to Legrand in all countries, you will need to develop more than 100 different ranges, which is a significant investment.
We are meeting all standards worldwide, all kind of buildings, from entry-level to premium, basic, mechanical on/off switch to a connected switch and or ranges of wiring devices include up to, I think, 200 different functions. And the beauty of that is that we are doing those ranges with only 12 product platform.
You see. It's a bit like in the automotive industry. From a market standpoint, we want to have a lot of variety, a lot of different product ranges, but on the back end, we want to have as little platform as possible to make the most of, you know, the market coverage, and at some time, the productivity and the economies of scale. The numbers are not very impressive. For those essential infrastructure products, we grew organically only 1% per year from 2019 to 2023. Over this period, we had a price effect of, what, plus 5% per year?
Four to five, yeah.
4-5% price effect. So volume-wise, if you assume that the price increase were more or less the same across our product ranges, it implies a drop in volume of about what? 4% per year. So it's a significant drop in volume from 2019 to 2023. So the market clearly wasn't supportive at all, and we hope, and we expect now the market to be a little bit more supportive. In terms of business priorities, we want to leverage market rebound, so we intend to accelerate the range renewal pace. So we have a plan.
We have identified a number of product ranges where we want to go faster, and we will finance it not through additional R&D, but we'll finance it by doing more platforming of our product offerings, the 12 platforms for the hundred, if I take the wiring device example, for the 129 ranges of products, and by doing more productivity. We intend to. And it, Brian was tasked with this job, to redeploy North America to faster-growing verticals. We believe that the office market will rebound at some point, but as I said earlier, we have identified a number of faster-growing verticals, especially health and education, and we want to sell more to those verticals. And of course, we want to fine-tune the Legrand model.
We could spend 10 slides on each of those subcategories. We don't have time for that, but you have to, you know, be reassured of the fact that we are working hard to improve all the drivers of the traditional Legrand model, so fill rate, channel saturation, e-commerce, configuration, commissioning, maintenance, brand equity, customer training, digital content and applications. All those levers are important growth levers, and we are working hard to improve their efficiency. We want to expand geographically and reinforce our retail position, so geographically, it's typically Africa. If you look at the number of offices we have in Africa, we had five offices in 2010, 11 in 2020, 14 in 2022, and we have a target of 20.
Each of the markets taken individually are small markets indeed, you know, Ivory Coast, Benin, Ethiopia, and so on, but they have some significant growth potential, and we want to have a broader coverage of the African market. In more traditional emerging market or new economies market, we want to reinforce our position in retail. You have some interesting numbers for China and for India. For China, for example, in 2023 alone, we moved from six thousand points of sale to ten thousand. The potential is obviously huge because you have tens and tens of thousand points of sale, and we have the same approach in India. We'll pursue targeted acquisitions.
Acquisitions, M&A, it's not only about buying data center companies or connected care companies, it's also about buying traditional companies, and we have put three examples. Each of them have brought or will bring Legrand some additional benefit. For example, the most recent announcement was the acquisition of APP in Australia. APP, it's a maker of tube business. So of course, tube is not the sexiest business ever for Legrand. It does not have the same growth potential as a data center, for example, but this acquisition help us to double our size in Australia, and when you are twice the size you were before the acquisition, you have huge synergy potential and a huge potential for additional economies of scale.
You are more relevant vis-à-vis your customers, whether the distributors or the contractors. You are onboarding more talents that will help you to develop your business. So size in a given country also matter. Second example, A. & H. Meyer. We are of course very strong in connectivity products, so sockets, but we were not as strong as we wanted to be in sockets sold to furniture makers because it is not our traditional channel. Our traditional channel is to sell the sockets through distributors, to contractors and so on. So the acquisition of A. & H. Meyer was a way to acquire the market leader in Europe for connectivity products sold to kitchen manufacturers or office furniture manufacturers. So it's a channel play, not a product play, but a channel play.
Last example, EMOS in Czech Republic. It's a maker of very traditional low voltage product, boxes and so on, sold to small retail and DIY, and EMOS was a way for us to acquire channel presence among a number of important players, retail players and DIY players in Eastern Europe, so you see that each of those acquisition has a merit, and we'll keep doing acquisitions in those traditional, more traditional, essential products. Now, we would have loved to invite our Indian colleagues to come, but it was a long travel, so we have shot a video about India, so you will see our colleagues are not only talking about essential, but also about energy and digital transition products. A word on India before we send a video.
So India, it's the fourth largest revenue contributor for Legrand. It's, what? Between 5% and 6% of our sales. And they were tasked to become the third largest country within a few years. So we are growing fast in India. We grew every single year since we entered India back in 1986, except in 2021, which was a COVID year. And we have a number of interesting positions, but I will let the Indian teams comment our market positions in India.
Over 25 years, our journey has been one of remarkable transformation. We've turned challenges into achievements- Expanded through strategic acquisitions and etched milestones.
Starting as a single product company catering to limited markets, we have transformed into a dynamic multi-product powerhouse.
From pioneering product launches to setting industry benchmarks, we've continuously pushed boundaries.
For over 25 years, we have continually evolved, innovating and adapting to meet India's diverse needs, and we have achieved remarkable success along the way.
Fueled by innovation, customer experience. Combining traditional business strengths, with cutting-edge digital innovation, we've set new standards in retail and been integral to India's most iconic projects.
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Luxurious chrome finish, attractive colors, and loaded with features from a brand you trust, Shynora from Indo Asian.
The last was a real advertising that we shot in India to advertise our new Shynora economic range for retail, actually.
Yeah.
So now we have seen all the opportunities and our actions on the four segments of Legrand in terms of top line. Sorry. In addition to this, there are a number of transversal growth enablers, some of them that you know pretty well, but on which Benoît will give some details regarding our roadmap.
I'll go fast because I have the feeling that you are really waiting for the Q&A part. So we'll cover very quickly innovation, eco-responsible sales, customer experience, digital pricing, and M&A. And to start with, with innovation, we'll start with, again, a short video showcasing a few innovations. We couldn't show everything, of course, but a few innovations that we have introduced in the past couple of months. So what I like in this video is that it shows that innovation at Legrand. It's not only about embedding new functions into products, but it's about the size of the product, ease of installation, ease of cabling, introduction of recycled materials, and so on and so forth.
Well, you know that innovation matters, and is really an important driver and important part of our business model. On average, we have spent 5% of our sales in R&D, and I confirm that this is what we intend to spend going forward. And I will not comment much. We have seen a number of products. It's really part of the DNA. And again, it's not solely about new functions, but it's about ergonomics, simplicity, competitiveness, innovation, and so on. We have a very solid offer creation process. To give you an example, we meet once a month for two days, two full days every month, except in August. We are in France. And that's where the teams present the projects of new products.
So every hour we have a new product proposal, and I have the pleasure and honor to chair this meeting, and we decide, depending on the interest of the range, depending on the payback, the appetite of the countries, whether or not we go for the new product. It's a very processed way to launch new products. You have a couple of metrics. R&D to sales, 2023 was slightly below our long-term metrics of 5%, but I confirm that going forward, we intend to spend 5% of our sales in R&D. We have 20% of our heads, which are dedicated to software or firmware. We'll progressively take that to 25%.
We have launched a number of AI initiatives, and we believe that software development productivity linked to AI, especially on the testing side and documentation side of software, can be up to 25%. So it will free some additional resources to have some additional firmware and software bandwidth. Last metrics, we are currently doing 67% of our sales with platforms, and we intend to move that up to 75%. We'll never be at 100% because every year we add new companies that are joining the group, and by definition, it takes a few years before they can be moved to a platform. So Enovation. Supporting climate change mitigation with eco-responsible sales, it's another driver which is important.
As Virginie said, we have products helping to cut the energy bill, whether in residential, commercial, or data center, represented last year 24% of our sales, so one quarter of our sales help to reduce the energy bill and to cut, to do savings, of which more than 50% in data centers. I think that Brian gave a number of examples, USystems, Minkels, Cold Corridor, and so on and so forth, but on top of that, we have a complete approach where we intend to eco-conceive our product. We have full life cycle analysis of the impact of our products for 73% of our sales. Again, it's difficult to increase because every year we are adding tens and tens of new SKUs coming from the company we acquire. We are actively deploying circular economy principles.
It has been a focus of our fifth roadmap, and I can already confirm that it will be a focus on the next one, so use of recycled materials, ban of single-use plastics, creation of eco or circular models, so eco-responsible sales. It's not only about saving energy for our customers, even though it's an important part of the story, it's also about being ourselves a responsible company. Customer satisfaction, I told you it was important. We have a very processed, as usual at Legrand, way of measuring the customer satisfaction, so we typically survey five hundred thousand customers. We have a survey which is done once a year in more than seventy countries. Last year, we got eleven thousand verbatims.
So on top of the quantitative feedback, we get a lot of qualitative feedback, and we have put in place what we call a closed-loop feedback. So every comment is analyzed by the local countries, and we bring an answer to all those verbatims. So we started with a CSAT of 78 and an NPS of 40. Last year, we were at a 78 and 44, and we are shooting for a CSAT of 80% and an NPS of 50. I remind you that above 30, as far as NPS is concerned, it is considered as great level. So we are already good, but as written in the title, we want to move from good to even greater. Another interesting enabler is the software and firmware offer.
So connected ranges represent 15% of our sales. Out of the 100 product families we have, 40 are connected. And by the way, you have the split of those 15% between the various subsegments. So of course, essential infrastructure are barely not connected, because when we connect a switch, we move it to the digital lifestyle, but the three other categories are quite connected. And we are investing in software and firmware. I told you that last year, 20% of our heads were dedicated to software and firmware. It was 15% in 2020, 5% in 2010, and we want it to be 25%, or more than 25% in 2030. This was for firmware and software. As far as the more traditional digital journey...
Sorry, I'm going fast because I have the chrono moving fast. So we are continuing our digital transformation journey. Again, we could spend half a day bringing you through all the initiatives we have. So we have more than 50 global digital initiatives. It is about CRM consolidation. So Web Factory, human resource information system deployment, ERP. We have a program going on of ERP replacement, and we want progressively those initiative to incorporate some AI capabilities. So we have 500 AI ambassadors. We have completed 100 use cases, and the objective is to do as many use cases as possible, and whenever appropriate, it's not always appropriate, to deploy them in the organization.
This is the reason why we can plan internally to do 25% saving on our software development, because we have made a number of POCs that demonstrate that it is possible. Pricing, it's a strategic, sustainable asset. Since we started to measure this KPI, we've always recorded price increase year on year. Sometimes 0.5%, sometimes 6% or 7%, but always. There has not been a single year at Legrand where prices went down. The average pricing over the past 13 years has been +2.8%, but of course, it has been a bit artificially boosted, if I may say, by the last, by the 2021, 2023 pricing was a bit exceptional. It is not by chance that we have the ability to do pricing.
It's for, I believe, two reasons. Number one, of course, price matter to our customers, and our customers are extremely price sensitive, but they're also extremely sensitive to quality, availability, ease of installation, ease of maintenance, technical support, total cost of ownership. So a number of things that are for them, as important as price, number one. And number two, we have internally the process, the tool, the skills, with many pricing managers that are able to enforce, you know, dynamic pricing policy. Well, going forward, we'll keep doing some a bit of pricing, and our guidance from now to 2030 include a bit of positive pricing. M&A, another very interesting enabler. We have completed 23 acquisitions since 2020 up to now.
2.6 billion EUR invested, 1.1 billion EUR of sales acquired. And as I said, of course, we are interested to acquire companies in the energy and digital transition segments, but we are also looking at more traditional acquisitions. And as you can see, we have acquisitions in all the fields of activities and in all geographies. We have French, Irish, Italian, US, Colombian, Chilean, Australian, Czech. So we've done a lot of acquisition throughout the world, and it is, here again, a super industrialized and disciplined process. We have an active pipeline. As I said, we have more than 5,000 players in the industry.
We have a pipeline review, and in our pipeline, we have 350 targets, and this pipeline is moving. You have approximately 10% of the 300 that are going out and coming in, either because after further qualification, they don't really fit our criteria. Sometimes they are bought by somebody else. Sometimes we have more interesting targets coming onto the list. We have quite a selective approach. We do on average five acquisitions a year, but we have more than 50 targets analyzed each year. And what we are looking for are local complementary leadership positions, good cultural fit, and reasonable price. So as far as price is concerned, most of you know the Legrand metrics.
We want an acquisition to be a EPS accretive from at least year three of full consolidation. Most of the time it's much earlier than that, but it's a simpler matrix, if I may say. EVA accretive within. So EPS accretive, sorry, EPS accretive within three years, not after three years, within three. EVA accretive within five years. So we have, want to have the ROCE higher than the WACC within, within five years. And we are, of course, shooting for multiples, which are lower than our own multiples to give you an order of magnitude. Even though some acquisitions were paid probably a bit, a bit expensive price in 2024, on average, the multiples we paid for the acquisition we announced in 2024 was 12x EBIT.
bit expensive, probably a bit higher than the average multiples we paid, but still within, you know, our framework. And of course, we have a very disciplined docking process. Here again, highly industrialized. Every time we acquire a company, we have processes, methods to dock them within Legrand, so that within two years, they can be fully integrated, and they can, of course, continue their story of high growth and profitability increase.
Okay, so thank you, Benoît. So now it's time to move to the third part of the event. We've seen who we are, what we did, what will drive our growth till 2030. So now let's see what are precisely our ambitions for 2030, and invite again, Franck and Virginie to join us on stage, please.
Okay, so, speaking about 2030 ambitions, I will start with sales and Adjusted EBIT. And I will distinguish the organic effect and the M&A effect, because that's two moving pieces that are necessary to explain. But first, as for the last five years, some heads-up about the next six years. What are the market conditions we are envisioning? And here we expect two clear trends. One, about essentials and digital lifestyle, as Benoît said, turning progressively from negative to positive. And the second is about sustaining the good pace of Energy T ransition and data centers, with respectively mid-single digit, high single-digit growth for them.
In that backdrop, we are shooting for organic growth comprised between 3% and 5%, and still on the organic perimeter, an improvement of our adjusted EBIT margin comprised between 30 and 50 basis points every year, leveraging the recipes I explained at the very beginning: pricing power, productivity, dedicated, and targeted resolute investment in digital, in new product, and so on. So it's a little bit, of course, theoretical, but it means that if we were to stop M&A, our excluding acquisition, our adjusted EBIT margin would be above 22%, reaching 2030. So that's it for the organic impact. Now, talking about M&A impact.
Our ambition for 2030 is to grow 3-5%, thanks to the acquisitions in terms of top line, which means some acceleration versus the most recent years, where we are among 3%. And as Legrand is more profitable than the average of the market, naturally, mechanically, there would be a dilution that we can measure by our historical metrics, between 30-50 basis points every year on the margin. The last point is that with this ambition, we would add by 2030 €2.5 billion of sales of top line to the group. So now the math is easy.
If we combine M&A and organic impacts, group top line should be between 12 to 15 billion EUR by 2030, and adjusted EBIT margin would be at around 20% of our sales. Last type of metrics is about cash generation. We want to keep a lean working capital requirement with three characteristics, three specificities: always being a low credit risk business, always improving inventory. We have to normalize. Benoît mentioned the investment we made to accompany our customers during those bumpy time, but it will progressively normalize, and we will also keep continuous improvement on that front in the supply chain, and the third item that is important to keep in mind is that our acquisitions are dilutive also on the working capital requirement.
It is dilutive on the EBIT margin. It's also obviously dilutive on the working cap. We will keep being a low CapEx business, CapEx comprised between 3-3.5%. All that embedding all investment we will do in digital transition, in data centers. As a result, free cash flow to sales should be between 13-15% during the period. Interestingly, it means a cash flow generation of around EUR 10 billion in the next six years. What would be the capital allocation during that period? As always, clear priority dedicated to M&A. We can allocate 50, slightly more than 50% of the free cash flow to external growth.
We intend to serve attractive dividend at roughly a 50% payout, and share buyback would be limited to avoid the dilution of free shares for for employee. Two considerations concluding this part. The first one is about finally the magnitude of the dry powder we would be able to invest in M&A. We are talking about EUR 5 billion of dry powder that we can invest in M&A over the last six years. And the second point I want to make about this capital allocation policy is that it is very clear, as you can see on the slide, very straightforward. It is very predictable, and it's also geared to growth. And now I'm turning to Virginie for the CSR ambitions.
Thank you, Franck. For 2030, we will definitely continue our ambition on CSR. We want to continue having a positive impact on our customers, of course, on our employees, on the whole value chain. As I already mentioned, we are currently in our fifth CSR roadmap, which will finish at the end of this year. We will be moving to our sixth CSR roadmap in early 2025. Some of our key ambitions for 2030 to pursue our work on our eco-responsible sales. We target to have 80% of our sales by 2030 to be made with eco-responsible products. That's either energy-efficient products or products covered by a product sustainability profile. We have just reinforced a few months back our climate ambitions.
We aim to be a net zero at Legrand by 2050. This ambition has been validated by the Science Based Targets initiative. A net zero ambition means that we have to reduce by 99.0% our CO2 emissions by 2050 across our whole value chain, so Scope 1, 2, and 3 against a 2022 baseline. We have new intermediate targets for 2030 to reduce by 42% our Scope 1 and 2 emissions, and by 25% our Scope 3 emissions against a 2022 baseline. Big ambitions, but we know we have the right plans in place to carry them out and succeed.
Thank you. Thank you very much, Franck and Virginie. A few words to conclude. So we believe we are on the right markets at the right time, and that our industry is structurally sound, and boosted by powerful mega trends. We also believe that we have a transparent business model and effective strategy. You may like or not, as an investor, the Legrand business model, but we open the door of the kitchen, and you can look the way we are cooking. And we hope that we were transparent enough so that you can really understand the model of Legrand. And we strongly believe we have a clear roadmap to performance in terms of top-line growth, profitability, cash flow, and CSR. So thanks a lot.
We'll now turn to questions, and right before, I know, Ronan, right before the questions, we have a short video showcasing the Céliane range of wiring device, which I showed a bit earlier.
So now it's time for the Q&A session. And so all the speakers are back on stage to answer to answer any question you would have. We'll give priority to the live questions from from the room here, but we also have more than 200 people connected on the webcast that are also that also have the ability to to ask questions, and I have them here with me. So please raise your hand so that someone can - It's okay, can give you the mic. And please stand up ask your question, present yourself, where you're working, and and then you you might have the right to one follow-up, but not more. Okay? Please.
Highly processed, as usual at Legrand. And that's it. So let's start. So maybe we'll take the question from James here.
Hi, I need to stand up. Hi, I'm James Moore. I work at Redburn Atlantic. The first question would be really, thanks for the new segmentation and the Energy Transition piece of the business. Very helpful, 25% of the business. To what degree have you just repackaged the company to orient yourself towards the splits that other electrical players have, versus what I hope is more the case, you've actually seen the growth potential of electrification, and you're taking, I don't know, a pre-existing transformer business in Italy-
Yeah.
A French circuit breaker business, and you're trying to actually push it more globally, and to really expand the growth with a more dedicated selling go-to-market proposition?
No, we are not reshuffling our strategy or, you know, updating our strategy depending on what other players are doing. I have to say that we are in a business where we are all different animals. So I don't believe there's anybody comparable to Legrand. But I also believe that most of my competitors are also unique in a sense. No, the reason why we have reshuffled our market segmentation was really because I think we are missing something, not by putting transformers, UPS, and circuit breakers as a top priority for growth.
We really wanted our country to understand that Energy Transition was not solely about EV charging station or about lighting controls, but that what we call for our business, the infrastructure-related products, was also as important as pushing EVCS take. You know, the example shown by Amelie are interesting. For EUR 1 of EVCS, you could potentially sell EUR 5 or EUR 10 of circuit breakers. So since we are a significant player in this field, since there are a number of mega trends pulling the demand, we thought it was important, vis-à-vis our own teams, to tell them now it's time to run on those products also, as you are currently running on EV charging station or running on lighting controls.
Yeah. If a follow-up means a second question-
Sure.
Could I ask about?
Yeah
... cooling? If we go to a world where direct to chip and immersion happen in the next decade People talk about liquid cooling growing at 80% and air cooling growing at 10%. Where does rear door heat exchanger really fit into that? It feels like it is quite linked to that speeding up, but how does it play out if we move to CDUs and liquid?
No, you know, our rear door cooling, as said by Brian, can cool up to 200 kilowatt. Frankly speaking, if you look at the next 4 or 5 years, I don't believe that there will be higher density than that. So above 100 kilowatt, you will probably have a mix of technologies. Direct to chip could be one of them. Rear door cooling could be one of them. Now, each of those technologies have their pros and their cons. In terms of direct to chip, it's a bit of a more complex system, maybe not as adapted to a renovation or refurbishment as a rear door. The good thing with rear door is that you have an existing rack.
Provided you have a bit of space, you can take out the old door and put a new one, including the cooling system. So no, we don't see that as a threat. And if it becomes a prominent technology, and if we feel that there is that it is a missing piece in our catalog, well, we'll move either organically or through acquisitions. But we believe that with rear door cooling, plus all the rear, the cold corridor, hot corridor concept, we already have a number of cooling solutions to cool up to, again, 200 kW. Gael?
Thanks very much. Gael de-Bray from Deutsche Bank.
Yeah.
Can I ask perhaps two questions on the growth side? Too, because obviously your business model is obviously half organic and half M&A. So the first one is, on organic growth, you're talking about 3%-5% by 2030. Just to make it clear, it seems that you don't really expect any catch-up in the markets after the declines we've experienced over the past couple of years. So no, let's say, no real solution to the housing shortages it seems that we have in various markets on a global basis. And can you also confirm that you don't really intend to, or you don't assume that you will outgrow the market within this 3%-5% organic growth?
Well, you saw the numbers. According to industry specialists, the traditional building market shouldn't grow more than 2% per year. So we have based our 3%-5% organic growth assumption, that's what Frank said, exactly on that. So building market turning from negative to slightly positive, and then a few boosters coming from data center energy, Energy Transition. Now these 3%-5%, so assume very moderate growth for the building market and Legrand slightly over-performing.
It also assumes a bit of pricing. It's difficult to say, but if you are putting in your model a 1% price effect per year, you will probably be not too far from the reality, assuming, of course, that you don't have another crisis of you know raw material and components. So no, it assumes a small underperformance on the market, which is gonna be slightly growing for the building market, not indeed catching up strongly, and a more sustained growth for Energy Transition and for data centers. Is it clear?
Yes, it is. It's not obvious when I look at the weighted average of the growth rates you've indicated for the essential electrical infrastructures segment, and then the growth rates expected in data centers and digital lifestyle. But anyway, I still see the 3%-5% as a bit conservative. But maybe you're rightly so, at least in the short term.
Let's see.
And then on M&A, the-- I think I remember from the previous CMD that you had talked about maybe three thousand small and mid-sized companies in your market. Now you're talking about five thousand, so I'm not so sure what happened. If you've fine-tuned the analysis or if there has been any new entrant to the market. So that, that's, I mean, that's question number one on the M&A side. And the second one is, I also remember you had talked about potentially thirty billion of new complementary markets, and today it seems that you've maybe made some acquisitions allowing you to access ten billion of the thirty billion. So is the remaining 20 billion market opportunity still a valid number or not?
The two questions are actually tied. Every time we enter into a new adjacency, we are adding potentially hundreds of new competitors to the list. Before we bought Enovation, none of the connected health companies were seen as competitors because we are not yet active in connected health. The day we bought Enovation, all of a sudden, we have hundreds of competitors and tens of potential targets added to the pipeline. The move from 3,000 to 5,000 is coming mainly from the fact that we have added 10 billion EUR of adjacencies, so hundreds and hundreds and hundreds of new competitors, and also to the fact that every year we are discovering new competitors. Not in France or in Italy, which are...
and in wiring devices, which are markets which we know for decades. But when it comes to AV, when it comes to data center, when it comes to cooling, well, every year we identify new potential competitors. Now, as far as the 10 compared to the 30, indeed, we identified EUR 30 billion in adjacencies, and we entered only into 10. The reason being that we will enter in an adjacency if and only if we find the right candidate. So in the 20 billion remaining, which is now a bit larger because we have added new adjacencies, we consider them as being super interesting, but we have not yet been able to secure a deal with the one player that is of interest. Take liquid cooling and rear door capabilities.
If we hadn't had a US ystem, we would not have bought a remote player. I would have preferred not be present in this sector rather than buying a company which did not have the technology or the market presence. So in other words, we will enter into those 20 or 30 billion of additional adjacencies, provided there is a player which is good enough to meet Legrand criteria.
Maybe I'll leave it to someone else to ask who are the remaining opportunities.
But actually, I have the list. It's a bit confidential, yeah, as you know.
It is here, the first one.
Thank you. Good afternoon, it's Martin Wilkie from Citi. The first question was going back to the essential electrical infrastructure. You've got low single-digit growth, but obviously electrification is becoming a bigger part of buildings. So taking third-party forecast for the building market, are you sort of underestimating the content per building boost you get? And then related to that, there are things like the Buildings Directive in Europe, Energy Performance of Buildings Directive, that could, during this planning period, give quite some boost to renovation. Just to understand, has that been factored in, or is that some upside surprise if, if it-
It depends where the money goes. Electrification does not mean that all of our products will be positively impacted. Take, I'll take a very simple example. If you take a house in France, which is probably one of the most electrified countries in the world, the consumption is 6 kW per house, right? If you add a heat pump, which is probably 4 to 7 kW, and you add an EV charging station, which is seven point three kilowatt. So just by adding to classical electrical installation, an 80-square meter house, you are adding heat pump and EV charging station, it more or less triples the electrical consumption from six kilowatt, let's say, to 20 kilowatt. You will need to have a little bit more circuit breakers.
You will need to have some measurement and load shedding so that you can really manage the load, and because you shouldn't charge your electric vehicle at the same time you're cooking your chicken, typically. So it adds to the so-called Energy Transition category, but it doesn't add any single light switch. Not a single one, right? It does not add any floor boxes. So, the money spent to renovation to Energy Transition goes straight into our Energy Transition category, but not necessarily into the other categories.
The only caveat to that is that if you are going through a heavy restructuring of your home, so if you decide to change the windows, if you decide to add a couple of circuit breakers, if you decide to add a heat pump, it is possible that at the same time, you will ask the contractor to change a few switches, or maybe to equip a new place for remotely working. So there is a side consequence or a side, let's say, possibility that some more traditional product offering are embedded into the total work, but it's not a direct impact. We can take a very simple example to that. Take, I was discussing with all of you the super bonus concept in Italy.
Super bonus was a tax incentive, whereby if you were spending EUR 100 to do energy efficiency work at your place, you were getting EUR 110 credit. So it's a kind of very substantial tax scheme. Well, it had a lot of impact on the heat pump, a lot of impact on the solar panels, very little impact on our trade. Yes, we added a few circuit breakers, but we didn't add a single switch or a single box due to... So don't get me wrong, all those incentives are good for Legrand. They are impacted, and they will impact part of our sales, but not 100%. I don't know if it addresses your question.
Thank you. If I could have a separate question as a follow-up.
Yep.
You obviously bought, Enovation in the assisted living market. That was a sort of software deal. It looks like that would be unusual compared to what you're now guiding for. What was the rationale behind that particular deal, and why it's not applicable in the rest of the portfolio?
Yep. It is indeed not a typical company because it is a pure software company, having a profitability which is much higher than the Legrand profitability. And we paid healthy multiples, even though it fits completely into our financial metrics. I can confirm that Enovation will be EVA accretive within five years of full consolidation. It is a bit non-typical in terms of business model, but in terms of financial metrics, it fits completely into the Legrand criteria. We have identified with Chris and the strategic team for quite a while the fact that we wanted to complement our assisted living offering with some software capabilities. And what we liked at Enovation was that it has quite a broad software offering. It's not solely focusing on patient engagement, for example.
It has all the suite of software that Chris described. And number two, it was available for sale, which is also a good reason. So, we bought it. It's not out of question that we continue to do a few acquisition in this trade. We'll not spend another the same amount that we spent. We spent quite a big money because we wanted to acquire a platform and because Enovation, it's quite a sizable player.
Most of the players in this software business are three, four, five, six, EUR 10 million company and not 60. So we'll continue to do some build-up, and we believe that the addition of Enovation and the assisted living traditional product offering is quite a powerful play. We are the only one, from what I know, in this industry, to have one foot in the software for health system and one foot in the home.
Thank you.
Maybe your neighbor. Yeah.
Thank you. It's George Featherstone from Barclays. Just want to come back on data center. You've said market's gonna be growing high single digit for Legrand. That's a bit lower than what your peers are talking to, so I just wonder if you could explain the difference there.
I don't know how to comment my competitors. I can only comment that this guy also in Q1 had a 60% increase in book. Does it mean that the market is growing 60%? It doesn't. So we have strong evidence that the IT load will increase by that number we gave, about 18% until 2027, I think. And it's not because you double the IT load, that you double the electrical equipment.
It's a little bit like what I said for the home. It's not because you are moving from 20 kilowatt to 40 kilowatt rack, that the content is doubling or tripling. So no, I believe we have strong evidence that the market will grow high single digit. It already grew high single digit, but it was a bit helped by pricing. So volume-wise, we think it's gonna go a bit faster than it used to go. Now, we'll see. We'll see when the number is gonna be reported.
Thank you.
What I can confirm loudly, straight in my foot, as we say in French, is that we're not losing share. Clearly, with 13% like for like growth between 2019 and 2023, we gain share. You know, market shares, especially amongst the big guys, it's super easy to measure. If you take the big accounts, the Meta, the Google, the Microsoft, we know exactly who is supplying what for which product category? There's no secret. It's completely open book. So I can confirm that we have gained market share in a lot of our product categories and overall in the data center space.
Thanks, and maybe just a quick follow-up on it. In terms of capacity that you have to service this market, how booked out are you in terms of, you know, the visibility you have from an order book perspective?
It is one of the very few markets where we have order book. For the traditional building market, we don't, and I've been telling you consistently for decades, almost, that we have to deliver out of our stock the orders we get on a daily basis. For data center, it's a bit special since there is rush for products, rush for capacity, everybody is getting a lot of orders. Now, the difficulty is that it does not give you a precise sense of what your sales will be in six months, because those orders can be delivered over a period of two or three years... those orders can be modified, they can be canceled.
So it's not because you have order book growing 50% or 60%, that you will have any single month where your sales will grow 50% or 60%. So you know, of course, we are fighting hard to build up these order book. But, but, moving from order book to forecast is quite a difficult exercise. This being said, I still confirm that we are confident that the data center market will continue to grow, not at a 50-60% pace per year.
Upstairs.
Thank you. It's Max from Morgan Stanley. Could you just-
Yeah.
Could you talk a little bit about your ambitions to expand into gray space? I think you've said you sort of want to be number one and number two in everything that you do. So obviously, there's some pretty large incumbent players there. So specifically in the power side, switchgears, UPSs. Where do you think you could potentially move into?
Well, we have already quite a nice product offering, but indeed, we are not doing a lot of sales in data centers. And you could see our circuit breakers, switchgear, transformers, UPS are mostly sold to commercial buildings, not yet enough to data centers. So there are a number of things we can do, both organically and inorganically. Inorganically, we can keep buying companies that are specialized in selling gray space products to data center operators. And for example, six months ago, we announced the acquisition of a nice Irish company called Davenham, which is doing switchgear specifically for data centers. So 98% of their sales are made to data center guys.
Buying components, circuit breakers, and so on, from X, Y, or Z, putting them into a very solid switchgear and selling that to data center customers. Davenham is. I hope you will see in the coming quarters a lot of growth coming from Davenham. We are currently expanding capacity at Davenham, and we intend. Davenham, it's mostly today a European player, and we intend to expand it to other geographies. You will see other acquisitions in this field in the coming quarters, hopefully. Organic, this is for inorganic growth. Organically, it's about organizing ourselves to meet the requirements of data center specialists.
Data center specialists, they want to have better support in the conceiving their electrical installation. We need to put experts that will help them work with them on their specs. They want to have somebody sometimes installing the products, but supervising the installation. They want to have service teams able to go on site within a few hours to fix a problem, should a problem happen, and so on and so forth. We are currently organizing ourselves in a number of geographies in order to provide this three hundred and sixty degree service, in order to better serve our data center customers.
So yes, there are a lot of big guys in this gray space area, but we have already secured a number of projects in France, in Switzerland, in Italy, and elsewhere. We believe that we have and we are building the capabilities to grow. I can bet with you that in three years' time, when we will meet, it will no longer be ninety-five five, but it will be. I don't know, it's not an official forecast, but it will be maybe seventy-thirty or sixty-forty. We have a lot of ambitions in the gray space, and I'm convinced we will succeed.
And, and maybe just a quic follow-up. You've talked previously about trying to diversify your North America business away from office into some of these other segments, like education. I think you talked about kind of using pricing to do... or not cutting prices, but maybe stimulating demand in the second half of last year, g iven how kind of protected your markets are, how, how do you actually do that in practice? And have you actually had some success? 'Cause I guess that's your own barrier to entry that someone else-
Well, we'll never use price-
Reprice
... price level to enter into a new segment, and we believe it is not a winning game. When you have a strong incumbent player, your customers are not switching from this player to you because you are cutting price by 10%. They are switching to you because you are providing better service, better product, and so on and so forth, so price will never be a lever. Now, if we want to enter into the K-12 and all those verticals, it's about developing products that are really adapted to the needs of those verticals, and sometimes the products may be slightly different. It's about entering into the specs, but maybe you can, we just can say a word about the strategy we are putting in place-
Sure
... in order to you know grow faster into the education, hospitality, and so on.
So it's really focusing on the specific applications. If we think about the reality of where we work versus where we learn and, or where we live in the case of healthcare, technology's becoming more prevalent. Technology is used in the classroom. It's certainly used as part of healthcare. We already have AV solutions. We have network solutions that have been optimized around the commercial office applications because that's where the growth was. We had strong market position. So now it's putting the effort into looking at what's slightly different about moving a flat panel mount from a boardroom into a surgical studio or a surgical suite, or thinking about, you know, how a teacher's gonna interact with remote and other learning capabilities, and then developing the go-to-market for it. And that's probably where we've optimized our go-to-market, our sales teams for serving particular end markets.
But we can pivot them. We can shift from a commercial office to a healthcare, to an education. And again, those adaptations of the product will allow them to migrate because things are looking more and more similar. And then, you know, even within commercial, out of office into to retail spaces, where digital signage continues to be, you know, very, very prominent. And that's, we've already really built out the plans for all those, you know, all of the, the business leaders, division leaders within LNCA are highly motivated to reduce their concentration on commercial office.
But I do think, you know, Benoît shared a bit, we're not gonna abandon it. You know, we're sort of at the bottom of the market now, and there is a movement back to the office. There is a demand for giving people a reason to commute. So think about that. You gotta earn your commute now. You've got to have spaces that are more enticing and more productive. So we have to be able to do all of those things. But there's plenty of opportunity, and the trends around healthcare and education are very favorable for the types of products we have.
Thank you.
Okay?
Yeah, yeah.
Thank you. It's Andre Kukhnin from UBS. I want to ask a question on portfolio. Are you entirely happy with what you've got right now, and are you considering any pruning and hence, maybe disposals going forward.
We are asking ourselves the question every year. It's part of the strategic review we do, including with our board, actually, whether there are pieces of businesses which are structurally underperforming or which we believe would not make sense as part of the Legrand portfolio. We haven't found any significant piece of business. So we think that there are many things we can add to the portfolio, hence the EUR 30 billion or EUR 20 billion of additional adjacencies. But we haven't found, let's say, distressed assets, neither in terms of top line nor in terms of profitability, that would be a good candidate for portfolio pruning. The reason being that, you know, compared to a lot of the companies active in this trade, we remain a small player and a pure play.
We are eight-point something billion EUR in a world where you have many players which are 20, 30, 40 billion. So we are not as diversified as other companies, and the result of that is that we don't have side assets that we could get rid of. Now, it's not a taboo. If we were to find, I don't know, a couple of hundred million EUR where we believe there's absolutely no synergies with the rest of the group and that could be divested, because it would underperform structurally, we would divest.
Thank you. If I may, so that performance in essential infrastructure, electrical infrastructure products, of minus three to four volumes or four volumes that you mentioned, that's entirely in line with the market?
It's entirely, sorry?
In line with the market.
In line with the market. Yeah, it's in line with the market. It depends on the geographies. There are a number of geographies where we think we did better than the market. But you know, if your point is, will you get rid of 54% of your sales, it's a nonsense. You know, we are well not only because it's half of our sales, because it's our historical business, but also because if you don't have this presence, you are not selling in Energy Tansition or in digital lifestyle.
You're also selling in those businesses because you are distributed everywhere. You are part of the game with all contractors in this planet, thanks to your wiring device piece of business and so on and so forth. But again, no taboo on that. If part of essential or part of the transition piece, we were to identify a distressed asset, we would sell it without any you know, problem or a philosophy issue, if I.
That's clear. Thank you. If I may, just the last one on the office, and particularly that U.S. example that you gave, where I think 30% of the existing stock is grade A, but future construction is 85. Is there a content argument there for you in terms of what's your kind of value per square meter in grade A versus grade B, C?
No, we, we've not been able to put together a number which would be reliable enough to share with you. We believe that, yes, there is a content, just qualitatively, you cannot imagine qualitative office space without having high-quality lighting, without having lighting controls, without having sustainable, you know, product inside, without having bandwidth to connect yourself and to get access to the network, without having hybrid AV systems, so that you can, at the same time, you can hold meetings which are mixed meetings, presence meeting and remote meetings. So qualitatively, we believe that nobody will tomorrow be back to the office if you're not able to bring this kind of added value. But we don't have a precise content to share.
Got it. Thank you.
Delphine, maybe? Yeah.
Thank you. Hello, Delphine Brault, Oddo BHF. One clarification first: Does your guidance include 2024, or is it from 2025 onward?
No, it doesn't include 2024. It's from 2025 onward, and of course, it is a guidance which should be seen as an average, by the way. So on average, in 2030, when we will look at the KPIs, if we are doing our job well, we should have recorded organic growth between 3%-5%, perimeter growth between 3%-5%, and so on and so forth. But no, we of course are not commenting the 2024 and the 2024 guidance.
And thank you. Second question: if we assume 17% of sales in data center this year, and let's say double-digit growth and 1% of pricing, you get close to 3% of organic sales growth already, which is the low end of your range. And you have 80% of remaining sales still, which we have close to zero volume growth. So how do you reconcile this with the fact that we are at a trough in the construction market?
First of all, if we were to grow double-digit in data center, we'd be happy. We think that the market is gonna go high single-digit, not necessarily double-digit. Second, the 1% price to be mechanical should be times 83% by definition, because the high single-digit growth doesn't include some price. And then, of course, the low end of our guidance implies a very slow recovery in the building market. The higher end of the guidance implies a more dynamic building market. So, our guidance is not 3% organic. Our guidance is 3% to 5% organic. But you're right, the low end of the guidance implies a very small flat plus growth in the building market, indeed.
Yeah, good afternoon. Kulwinder Rajpal from Alpha Value. So first, just a clarification. So now when we look at the new segmentation of faster expanding the 50/50 midterm goal kind of seems moot. So should we now look at it more as a 60/40 goal?
It's a fair question because indeed, we gave a couple of years back a target. We are not shooting for a target anymore. Yes, indeed, the transition piece should theoretically grow faster, but we could see in the past four years that, for example, the smart home piece didn't grow faster than the rest because it's highly linked to new construction, so theoretically, you are right. The 54-46 conceptually should rebalance, but we are not shooting for an official target. What is important to have in mind is that long term, we believe that those 46% indeed should be supported and driven by mega trends. That should definitely help the 46 to become 48 to 50.
It will also depend on acquisitions. If we acquire a lot of traditional businesses, of course, it will impact the mix. So without shooting a number, yeah, I mean, the trend should be that the 46% become progressively 48%, 50%, and so on. Yeah.
Okay. And then just zooming in on Energy Transition, a re there any particular pockets in there that make up more than 5% of that particular segment, or is it too distributed for you to break out?
No, it's well, I don't want to give a too precise breakdown. The biggest piece is definitely the circuit breaker piece because it's also the bigger market. So the switchgear, the big cabinets, including air circuit breakers, molded case, miniature circuit breakers, measurement. This is the biggest piece.
And lastly, so connecting this to the grid problem that we are currently having with the renewables. So when we look at just Legrand in the grid value chain, obviously, it would be mostly low voltage plus maybe a little bit of medium voltage. So how would you classify the grid opportunity for you going forward?
The grid opportunity, you mean the related sales we can make in a renewable installation, for example?
Uh, yes. Because I mean, the grids need huge upgrade across developed economies, so.
We are not in the grid business, clearly, so all the capacity that we need to be built, in order to cope with the increase in demand, generation, transmission, solar installation, wind turbine, we are not in this business at all. The only thing we can tell you is that every time there is a capacity which is built somewhere, down the chain, somewhere there will be an initial circuit breaker, somewhere there will be the initial transformer, somewhere there will, so we have a side impact of this grid building, but we are not in the core infrastructure, piece of the market. And we don't intend to be, because we believe it's out of reach.
It's already occupied by a number of players, you know, doing their job pretty well, and it's not the natural playground of Legrand. The natural playground of Legrand, it's really the building, and the data center, not what is before the building, if I may say.
Thank you.
Yeah.
Thank you. Alasdair from Bernstein. So I think we're gonna see a lot more kind of architectural design changes within the white space. I was just wondering if we see a kind of, I was wondering whether you could talk a little bit more about the respective growth rates across that product portfolio. And, you know, do you expect it to be a kinda market of more extremes, sort of much stronger growth in kind of intelligent PDUs and bus bars? And do we expect to see kinda cannibalization in cable management? I was wondering whether you could let us know a little bit more about which way your portfolio leans now. You've done a lot of M&A in the in the last couple of years.
All products which are related to higher density racks will grow faster than the rest, just because this is a hot topic today. So we expect cooling probably to grow a bit more, a bit faster than more traditional products. But we don't have a product family which we believe will grow 30%-40% a year, and other which will grow 5%. So overall, even though there's a bit of a hype and probably higher fast growth in cooling for a couple of quarters, midterm, we believe that we should have consistent growth all across our portfolio of product. I don't believe, Brian, if you can add to that, but-
The same. No, yeah, no, very much the same. It, it'll average out.
Mm-hmm.
So average out. Maybe if I could pick up on slide 53, I think it was as well. You talked about the Legrand offering for...
Yeah
-for AI racks.
Yep, yep, yep, yep.
I think $50,000-$150,000. So I was just wondering if you could put that in the context of perhaps a standard rack today, and that's a broad spread between, if I've interpreted this correctly-
Yeah
... between 50 and 150 .
Yeah.
So is that just does that just scale up in terms of kilowatt per rack, or are there different sort of architectural influences here as well?
So that those numbers are dependent on effectively what you're selling into the rack. So, the power levels are much higher. There's connectivity in there as well. But, if we were to say, what's a typical general compute? It's 15,000-20,000 on a comparable. So the AI is giving you more value, typically for the rack or cabinet, for reasons that I talked about. You know, there's a bit more specialization. Right now, there's an element of price sensitivity, 'cause everybody's in a rush, so they're paying more. You're gonna bring cooling into that, where you might not have rear door cooling today, and then we wouldn't be participating because we don't do traditional air cooling.
The busway and tap boxes, they move pretty proportional to the power levels, so you're gonna have to, you know, up the size of the busbar. So it could be 200 amp to 800 amp or even a 1000 amp. That will increase the value of that. And then the tap boxes themselves are gonna have, you know, higher-cost, higher-end components. Now, the PDUs, it won't be one-to-one, but generally, you need more robust internals, where you're talking about an AI application, and the ones that we've designed specifically for AI applications. It was one of the other examples I gave you, about the. You know, there were some special features that they wanted. They wanted more monitoring capabilities to track. Again, because the AI, especially training, it's just a very different use profiles.
They go from 100% to zero, so power consumption, power monitoring, temperature becomes a big deal, because it's not like the general compute, which is a little bit more stable, so there's value add in a lot of different dimensions. The power piece is the most obvious, and you bring cooling and heating, but then the electronics or the features in the racks and cabinets, which again, they're not one to one, but they could be 20%, 30% type premiums, and when you package it all together, that's where those multiples come in.
Great. Thank you.
Yep.
Thank you. Now-
Hi, Eric, from CIC. I got one question. On this 46% of sales in transition-related product, is it not already 48%? Because you explained that with the last acquisition in data centers, data centers represent already 70% of the sales.
It's just, you know, it was 46% last year. We'll see in 2024, depending on the acquisition. Don't forget that we've also bought APP, which is a EUR 100 million business in traditional businesses. So we'll see. But indeed, if this piece is growing faster organically than the essentials, and if we keep doing 60% of the sales acquired in transition against 40% in essential, again, mechanically, yes, so 46 will become 48 or 50 pretty soon.
Right. Thank you. I got another question. Could you maybe tell us more about Omajin, your new, if I'm not wrong your new brand in residential connected product?
Yeah, well, you live in France?
Yes.
Yeah, well, so you're a potential customer, so I should be very careful. No, you know that we bought back in December 2018 , a very interesting company in France called Netatmo, and doing smart home products. You know, air quality, connected cameras, indoor and outdoor, connected thermostat, and so on and so forth. And the products are highly engineered. For example, the indoor camera or the outdoor camera, they have embedded some face recognition. If you register your face, it recognize you, or your wife's face, and it doesn't signal anything. But if it is somebody the camera doesn't know, it send a signal to your phone and. So it's highly engineered product.
The Netatmo teams thought that they needed to have a more access type of product offering in order to expand their accessible market. So now, Netatmo is selling. So, the launch of Omajin was. It's a new brand dedicated to really access type of smart home products. So now Netatmo, we have actually three set of products with Omajin, which is a simple out-of-the-box access type of cameras and devices. Then we have Netatmo, which are highly engineered product for the smartphone, and then you have the Legrand with Netatmo ranges, which are which is a complete system, where you put together a full home energy management system with thermostat, cabinets, wiring devices, and so on. So it's a bit like what I said about wiring devices.
It's a better way to cover the whole market. It's difficult to cover a market with only one brand, because you're always at risk of damaging the image of your brand if your brand start to sell accessory type of products. So that's it.
Thank you. Maybe a last one-
Yep.
If I may. You mentioned for Spain, if I'm not wrong, a regional and a national team organization? I was wondering if this kind of organization was similar in other countries at Legrand?
The commercial organization depends very much on the customer setting in a given country. You have all types of organization. We want to have a commercial organization which reflect more or less the organization of our customers. Some of our customers are organized regionally. Take the distributors, for example. Some others are organized regionally, especially the big accounts. Yes, in a number of countries you will have similar type of organization, but again, we want to mirror our customers' organization. It's really part of the model of Legrand, highly processed back office, purchase, manufacturing, finance, acquisition, and so on. In terms of sales organization, we give a lot of leeway to the countries because we really want the organization to, again, mirror the organization for customers.
Thank you.
Okay, thank you. Thank you, everyone. I think it's the end of this Q&A session. Before I hand over to you, Benoît, for a few words of conclusion, for the ones attending the event here live, you will have a light lunch served right here, and we have a very small present also for each of you that is coming from France, and don't forget to get it when you will walk up the stairs before leaving the place. Thank you.
Thank you very much. Compliant, gift, so- Don't forget, it will not breach. I hope it will not breach the compliant rules of your organization. If it does, don't take the gift. We won't be hurt. No, I just wanted to thank you a lot because I know that it's dedicating half of a day to Legrand, it's a big investment, so thanks very much for coming. We hope it clarifies the Legrand strategy and way forward. Should you have more questions, the whole team, Ronan, Sonia, Franck, Virginie, of course, the operational team and myself are at your disposal to answer any additional questions you may have. Thanks a lot.