Earnings call transcript: Rexel Q1 2025 sees digital sales boost

Rexel (current stock price: $43.66), a leading electrical supplies distributor with a market capitalization of $73.35 million, reported its financial results for the first quarter of 2025, highlighting a modest growth in sales and a significant boost in digital sales. According to InvestingPro, the company maintains a Fair Financial Health rating, suggesting stable operational performance despite market challenges. The company, which operates across North America, Europe, and Asia Pacific, emphasized its strategic focus on digital platforms and cost optimization efforts. Despite a challenging macroeconomic environment, Rexel confirmed its full-year guidance for 2025.

Key Takeaways

• Q1 2025 sales reached €4.8 billion, with a 2.5% increase on a reported basis.
• Digital sales accounted for 33% of total revenue, marking a significant rise.
• Rexel launched a new strategic plan, "Accelerate ’28," focusing on digital and AI tools.
• The company expects €13 million in cost savings for 2025.
• Strong performance in North America, with same-day sales growth of 3.8%.

Company Performance

Rexel’s Q1 2025 performance showed resilience amid economic pressures, with sales growth driven by strategic acquisitions and favorable currency effects. The stock has experienced a -7% return over the past year, though recent momentum shows improvement with a 5.5% gain in the past week. For deeper insights into Rexel’s performance metrics and growth potential, InvestingPro subscribers have access to extensive financial analysis and expert ProTips. The company’s focus on digital transformation and advanced logistics has positioned it well against competitors, particularly in the North American market, where it saw robust sales growth. However, performance in Europe remained challenging, with a slight decline in same-day sales.

Financial Highlights

• Revenue: €4.8 billion, up 2.5% year-over-year
• Same-day sales growth: 1.4%
• Digital sales: 33% of total revenue, up 240 basis points from the previous year
• Pricing contributed 0.8% to sales growth

Outlook & Guidance

Rexel reaffirmed its full-year 2025 guidance, anticipating stable to slightly positive same-day sales growth and an adjusted EBITA margin around 6%. The company currently offers a dividend yield of 1.23%, with a dividend per share of $0.54. InvestingPro provides comprehensive research reports with detailed analysis of Rexel’s financial outlook and growth prospects, available as part of its coverage of 1,400+ top stocks. The company expects free cash flow conversion of approximately 65% and is monitoring potential impacts of U.S. tariffs. Pricing in North America is expected to rise mid to high single digits in the second half of the year.

Executive Commentary

CEO Guillaume highlighted the company’s strategic direction: "Q1 marks a clear improvement over the end of 2024, with growth returning, pricing stabilizing, digital acceleration continuing, and backlog solid." He also emphasized the ongoing commitment to the "Accelerate ’28" plan, stating, "Our teams remain fully mobilized behind Accelerate ’28, our strategic plan, and we are executing our strategy with discipline and clarity."

Risks and Challenges

• Inflationary pressures and macroeconomic uncertainties could impact future performance.
• European markets continue to face challenges, with a slight decline in sales.
• Potential impacts from U.S. tariffs, although minimal direct effects are expected due to local manufacturing.
• Ongoing appeal of a €124 million competition authority fine presents legal and financial risks.

Rexel’s strategic initiatives and digital focus are expected to drive growth, but the company must navigate economic headwinds and regional market challenges to maintain its competitive edge. Trading at $43.66, the stock sits between its 52-week range of $38.39 to $58.73, suggesting potential room for movement in either direction. Investors seeking detailed valuation analysis and growth projections can access comprehensive insights through the Pro Research Report available on InvestingPro.

Full transcript - Rexel (RXL) Q1 2025:

Guillaume, CEO, Rexel: Good morning, everyone, and thank you for joining us today for our first quarter twenty twenty five sales presentation. I appreciate you making the time to be with us. And as always, I’m joined by Laurent de Labarre, our Group CFO, who will walk you through the detailed sales figure in just a few minutes. But first, I’d like to take a look at the key highlights of the quarter and share how our transformation continues to support our growth and performance even in a complex and evolving environment. Turning to slide three, I am pleased to say that Rexel has returned to positive growth after five consecutive quarters of same day sales decline.

In Q1 twenty twenty five, we delivered a solid plus 1.4% same day sales growth, driven by sustained strength in North America and encouraging improvements across Europe. Digital continues to be a key growth lever. In this quarter, digital sales reached 33% of total revenue, an increase of over two forty basis points year over year. This reflects the growing adoption of our digital tools across all geographies and customer types. On pricing, we saw an 80 basis point contribution to growth with improving conditions in all regions, in particular, solar pricing recovered sequentially versus the end of last year, though conduit pricing in North America remained deflationary.

Altogether, this performance highlights the resilience of our model and the engagement of our teams as we continue to execute our strategy. Let me briefly touch on tariffs. While the impact on our Q1 numbers was limited, we began to see early supplier price increases linked to new tariffs. We will come back to that at the end of the presentation. Turning now to slide four, let me take a moment to discuss our capital allocation strategy.

In line with the roadmap we shared at our twenty twenty four Capital Market Day, we continue to actively manage our portfolio in Q1 through both acquisition and divestments. On April 1, we acquired Schlinc Electrical Supply, a well regarded player in The U. S. Northeast with approximately $70,000,000 in annual sales, six locations and a workforce of around 100 people. Later in the month, we also signed an agreement to divest our operations in Finland, a well run business but operating subscale and at lower profitability than our European average.

This move is aligned with our strategy to focus on markets where we can lead with scale and operational leverage. And we also continue to return capital to shareholders through our share buyback program and all these actions reflect our disciplined approach to capital deployment while keeping an eye on shareholder return. With that, let me now hand over to Laurent de Labard, who will walk you will take you through the detailed number for the first quarters. Thank you, Guillaume, and good morning to all. Let’s start on Slide six, the different building blocks of our Q1 twenty twenty five sales performance.

Our sales of €4,800,000,000 were up 2.5% on a reported basis, a positive performance achieved thanks to our acquisition strategy, which contributed for plus 1.9% net of disposals and the same day sales growth up plus 1.4. The scope impact included the positive contribution of Itesa in France, Tally And Electrical Supply Inc. In The U. S. As well as the disposal of New Zealand.

For full year 2025, we anticipate the scope effect to be close to zero, based on an already completed acquisitions and disposal on both New Zealand and Finland. The currency effects stood at plus 1% in Q1 twenty twenty five, but the euro significantly strengthened versus U. S. Dollar at the end of the quarter. And assuming unchanged spot rates until year end, we now anticipate a currency impact of minus 1.4% for the full year 2025.

On slide seven, you see the selling price impact and the breakdown of our sales evolution by geography. First on pricing. Selling prices contributed for 0.8% to the sales growth in the quarter. Non cable selling prices were flat with positive price increases in the majority of our product families, offset by the deflation mainly in piping in North America and in solar to a lesser extent. Cable pricing contributed for plus 0.9% in the quarter, benefiting from a more favorable copper price versus last year.

And by geography, we saw North America maintaining its high level of growth at plus 3.8%, Europe remaining negative but accelerating sequentially versus Q4, and APAC was positive at plus 1.4%. I will detail Europe and North America in the next slide. And more specifically for Asia Pacific, accounting for 5% of Group revenues, China returned to positive territory, up 7.5%, boosted by customer gains, particularly in distribution and chemical markets. The Industrial Automation activity that was deflationary in 2024 returned to positive territory. In Australia, sales declined by 0.7%, similar to Q4 twenty twenty four, but the quarter was impacted by the cyclone called Afreid in March.

And restated from that weather impact, sales would have been flat. The overall business was supported by industrial markets, particularly mining and manufacturing. Slide eight focused on our performance in Europe. Our Q1 twenty five same day sales were still negative down 0.7%, but with a significant sequential improvement compared to the minus 3.8% in Q4 twenty twenty four. Overall, core ED and business accelerators both contributed positively to the sequential improvement compared to Q4 twenty twenty four.

And more specifically, let me highlight the key evolutions of the quarter. In France, we continued to significantly outperform the market. Our growth was mainly driven by non residential and HVAC markets. The DACH region was back to breakeven, significantly improving compared to the minus 4% in Q4 twenty twenty four in an uncertain environment in Germany. Austria did very well in the quarter, boosted by the Solar business.

Benelux was down minus 1.7%, mainly due to Industrial and Solar segments, while we saw first sign of recovery non residential. In addition, the Dutch regulation was less favorable for heat pumps and solar activities. Lastly, The UK and Ireland were down minus 5.9%, with good momentum in Ireland. And The UK remained impacted by turnaround measures, including 24 branch closures completed end of twenty twenty four and the increased selectivity on projects. On slide nine, we turn to our performance in North America, where same day sales were up 3.8%, confirming the good trend recorded in Q4 twenty twenty four.

While project activity continued to be the main growth driver of the quarter, it was interesting to see the improvement in the Proximity business. All three markets were positive in the quarter. In the Business Accelerator Families, the strong demand in Datacom was offset by the Industrial Automation that was negative in the quarter, but sequentially improving compared to Q4 twenty twenty four. And let’s summarize the key highlights for our two countries. In The U.

S, same day sales growth stood at plus 4%, boosted by non residential and industrial markets and more specifically data centers and manufacturing. Canada saw same day sales growth of 2.9%, thanks to non residential markets and notably distribution and data comment. Let me add that, of course, the tariff in produce mid March, notably on steel and aluminum, had a limited impact on the quarter. And we are closely monitoring the various effects and notably the impact on selling prices. It’s still too early to share an aggregate number, but we currently see price increases from our supplier in The U.

S. And on most product category ranging from 4% to 20%. On slide 10, as in previous quarter, we continue to enjoy a strong level of backlogs. One more time, high backlogs result from the combination of a strong backlog execution driving the growth in our Project business, but also a robust order intake during the quarter, as illustrated by the backlog in The U. S.

At the March, which stood 6% higher than December 2024. Before leaving the floor to Guillaume, let me finish with a slide that we usually use during our half of full year results. But as we have received many questions related to the refinancing needs in the current uncertain credit environment, and even though credit market seems to reopen recently for our credit rating names, we wanted to remind you the flexibility that we have and the absence of short term refinancing needs. First, our bonds have a ’28 and 2030 maturity and second, part of our accounts receivable securitization financing has a ’25 maturity and we are talking about an asset backed financing covered by our receivable. We have renewed similar lines during the GFC in 2019 during COVID, and we will finalize the agreement to extend the line by three years in the coming months.

With that, let me hand back to Guillaume to discuss our outlook. Thank you, Laurent. So as you saw in the figures, had a very solid first quarter. Now one of the big questions obviously is discussed on Slide 13, which outlines the possible implications of the evolving U. S.

Tariff environment for Rexel. So as we are all aware, new tariffs have been introduced since mid March with the potential for more to follow. It’s clearly too early to tell you precisely what the impact of this unexpected development is going to be for us, But we can say a few things on a qualitative basis. First of all, tariffs are not a major direct topic as what we sell in North America is almost entirely manufactured within North America. And beyond that, tariffs can be both a tailwind and a headwind, which we try to clarify on this slide.

On the sales front, tariffs could obviously lead to incremental price increases, which may support top line growth in certain categories. Reassuring trends and domestic investment initiatives may also strengthen demand in segments like Data Centers, Infrastructure and Industrial projects. However, we are also mindful of broader macroeconomic risks, such as potential slowdowns in US trade partners and reduced investment appetite that could weigh on demand and confidence level. There are also risks and upsides in terms of margin. If we are able to pass through cost inflation, especially on imported goods, we could see a positive one off impact on margins.

This of course depends on market conditions and our ability to adjust pricing effectively. At the same time, there is a risk of margin pressure if pass through proves difficult or if demand becomes more volatile in response to higher prices. Prices. In terms of operating costs, there could be some relief through better fixed cost absorptions, obviously, if we are able to maintain volumes at higher prices. And overall, while the situation remains fluid, Rexel’s diversified portfolio and strong execution capabilities position us well to manage its complexity.

We are monitoring development closely and we remain agile in our response to both risks and opportunities as they emerge. Now one of the tools we will rely upon on the next slide, Slide 14, to make the most of this fast evolving situation is our new strategic plan, Accelerate ’28. This new plan is designed to support the delivery of Rexel’s mid term ambitions, succeeding and complementing our previous plan PowerUp ’25. Accelerate 2028 builds on the foundations laid over the past several years and introduces a clear structure for how we will scale value creation over the coming cycle. Plan is built around two key pillars: amplifying our clients’ impact and striving for operational excellence.

On the customer side, we are evolving beyond product distribution to deliver a more comprehensive value added service experience. It includes tailored solutions, advanced logistics, data driven insights and sustainable energy services. We are also scaling up innovative money disable services with an increasing focus on digital platforms, automation and AI tools to deliver smarter and more efficient outcomes for our clients. And operationally, on the other side, we are deepening our investments in technology driven supply chain enhancements and strengthening our omni channel capabilities, allowing customers to engage with us seamlessly across digital, in person and hybrid channels. We are also putting significant emphasis on data and AI deployment, will help improve forecasting, optimize pricing and streamline internal processes.

Together, these initiatives from a disciplined, agile framework for growth. And even in a low visibility environment, Accelerate 2028 will provide us with the tools to enhance resilience, sharpen execution and deliver against our mid term financial targets. And so finally on slide 15, let me conclude with our outlook and a few closing remarks. In a context that remains uncertain, marked by a soft macroeconomic backdrop inflation and the recent changes in U. S.

Tariff policy, We are confirming our 2025 full year guidance. As you saw in the figures, we had a solid first quarter. We also have talked at length that for us, the new macroeconomic situation is both a tailwind and a headwind, so there is no reason scale down or up our ambition. We continue to expect stable to slightly positive same day sales growth with stronger growth in North America than in Europe, an adjusted EBITA margin of around 6% and free cash flow conversion of approximately 65%, excluding the €124,000,000 fine that we paid in April related to the French Competition Authority ruling. What is clear is that the world has become more uncertain and we will continue to monitor developments carefully.

To conclude, Q1 marks a clear improvement over the end of twenty twenty four, with growth returning, pricing stabilizing, digital acceleration continuing and backlog solid. Our teams remain fully mobilized behind Accelerate ’28, our strategic plan, and we are executing our strategy with discipline and clarity. Rexel is well positioned to meet its short term and mid term objectives and continue creating value regardless of the near term environment. And with that, Laurent and I are happy to take your questions. Thank you.

Conference Operator: Thank you. This is the conference operator. We will now begin the question and answer The first question is from Martin The

Martin, Analyst: first question I had was just on tariffs. Could you remind us what portion of your products are coming from overseas in The U. S? And just to clarify that comment on 4% to 20% pricing, presumably that’s just on categories that are bought in from other countries and perhaps would expect domestically so that would be 0%?

Guillaume, CEO, Rexel: Yes, yes, Martin. Basically, is a very minimal amount which is imported from outside North America. So most of the products that we sell in The U. S. Are either manufactured in The U.

S. Or in Canada or in Mexico. And when they are manufactured in Canada and in Mexico, they are under the USMCA. So there is no particular tariffs between those countries. Now, that being said, those products include steel, aluminum and they include also components which are sometimes imported from China.

So because of that, our suppliers are seeing increase in their costs, which they obviously are hoping and very decisively pushing to the market. So that’s a little bit the situation. But to answer your questions very clearly, there is a very minimal amount which is directly imported from outside of North America.

Martin, Analyst: Thank you. That’s very clear. And if I can ask on the timing of this, we’ve heard some companies mention that they’ve taken enough inventory to last through the summer, for example, and therefore, the price increases would only really kick in, in the second half. I mean, I realize it’s very early days. But when you talk about these price increase effects, is this something that would happen much later in the year?

Is this something that could happen already in April? How should we think about the timing of that?

Guillaume, CEO, Rexel: So the price increases that we have seen are applicable between April and June basically from manufacturers. So they are not for after the summer, they are relatively quick and our policy is to obviously pass through those price increases as soon as possible to the rest of the supply chain. So, think you’re going to see price appreciation a little bit earlier than the summer. As far as inventory situation, we have our normal level of inventories, no more, no less, which means that we are not particularly betting on price increases. That’s not our business model, first of all.

And then also there is a little bit of an uncertainty around what’s going to be the end picture of all of that. So we felt it was cautious to keep exactly our inventory level where it is, which is the right level to ensure service to our customers. But so as the two messages are, it’s going to come a little bit earlier than after the old inventory is exhausted and the pass through is going to be very quick.

Martin, Analyst: Great. Thank you very much.

Conference Operator: The next question is from Daniela Costa, Goldman Sachs. Please go ahead. Hi, good morning. I have two questions. The first one is regarding sort of what have you seen since the April.

I remember during the pandemic, you had really helpful data about like weekly trends. Just wondering if you have any comments from that. And then I’ll ask the second one.

Guillaume, CEO, Rexel: Okay. So April is a good month. It’s in line with the end of the first quarter, which was showing decent figures, especially in North America. We see good volumes in North America, which as far as we can see are not triggered by pre buys or anything like that, but are real activity because it’s mostly linked to project execution. So that’s what I can give you as a global trend.

So good figures in April with solid growth in North America.

Conference Operator: Thank you. And my second question was to clarify just on your comments before and on the guidance. You’ve kept the guidance, but in the beginning of the year, you had included very little pricing on it and you hadn’t incorporated tariffs. Now we have had the tariffs and we are seeing some suppliers doing the 4% to 20% price increases. So does that underlying imply that you’re assuming lower volumes for the rest of the year?

Or how should we think about it? Or has it not incorporated tariffs?

Guillaume, CEO, Rexel: Okay. So that’s a smart question. Confirmation of the guidance is not a reforecast of the guidance, let me be clear on that, because we still live in a quite uncertain environment. I gave you the picture of what the price increases are today, but you know very well that even the tariffs themselves are subject to a high level of uncertainty of what’s going to happen in forty five days, in ninety days, etcetera. On the other side, as we try to put in the sensitivity analysis, there are other moving parts, which means that, okay, we know what the mechanical effect of tariffs could be in terms of pricing, in terms of top line evolution, in terms of margin evolution, but what about the subsequent volume effect, which many analysts have pointed out as a potential downside if something happens to the worldwide economy or to The U.

S. Economy. And so at the end of the day, qualitatively, we think that there is going to be a little bit more upside on the pricing side and probably a little bit more downside on the volume side. Now we are not sure about that. And so the best we can do is confirm our guidance at this stage when we see upside and downside, but we don’t have figures in mind on that.

More a risk analysis than a reforecast, Guanilla.

Conference Operator: Understood. Thank you. The next question is from Alexander Virgo of Bank of America. Please go ahead.

Alexander Virgo, Analyst, Bank of America: Yes, thanks. Good morning, everybody. Thanks for taking the question. I wondered if you could just talk a little bit more on this, the 4% to 20%. That’s obviously to do with the pricing on raw materials.

And I wondered if we look at what if you could talk a little bit to what suppliers are doing in terms of the current tariffs and the indications you’ve had from that. And then secondly, as a follow-up, you talked about France being up slightly or I beg your pardon, you reported France being up slightly. I wondered if you could talk about the underlying market, maybe ex the market share gains, especially given one of your suppliers last night missed on European growth, citing weakness in residential markets. And you’ve obviously called out strength in non resi and HVAC. And I’d appreciate if you could talk a little bit about the color of what you’re seeing in Europe.

Thank you.

Guillaume, CEO, Rexel: Thank you. Can you just repeat the first part of the question, which was about tariffs from suppliers, but just for me to be sure that I understand well what your question is.

Alexander Virgo, Analyst, Bank of America: Yes. I guess my interpretation of what you said on the 4% to 20% is that that’s to do with the steel and aluminum price tariffs that were introduced in mid March. So I’m just wondering if you could talk about what your suppliers are saying with respect to the current tariffs, the reciprocal tariffs or the state of play as it is today.

Guillaume, CEO, Rexel: Okay, okay, okay. So I think our suppliers are moving in terms of pricing and adapting their position to the fast evolving environment, which means that at this stage, are seeing the first batch of price increases, which probably includes real price increases on steel and aluminum and probably Chinese components. And don’t include at this stage reciprocal tariffs because nothing is completely certain on this one. If this was confirmed in the future, they would probably do other price increases, but the question would be better asked to the supplier. I think they are adapting the situation, they are adapting the price policy to the situation as it evolves.

Now, maybe additional point, which is to say that at this stage, steel and aluminum and components coming from China are probably the big hitters for them. I don’t know if reciprocal tariffs are going to be as big as an impact for them, but you will have to look at that on a supplier by supplier basis, on a category by category basis. Now talking about France, I would say you’re right, in France we have good figures in the first quarter like we had last year. The real market is probably mid single digit negative. And the fact is that for several reasons, we are gaining market share since a few quarters in France.

So, are very happy with that obviously. But the market itself is not very bright. It’s quite soft, including on the residential side. And at this stage, it’s a little bit early to tell anything else about the recovery of the residential market. As you remember, when we did the guidance for the at the beginning of the year, we talked about the fact that potentially in the second part of the year, because of the lowering of the interest rates by the European Central Bank, we could see an impact on some market linked to residential, especially renovation in European countries.

We are not there yet. I cannot point at any green shoots in terms of residential in France, but we are compensating that by self help obviously.

Alexander Virgo, Analyst, Bank of America: That’s very helpful. Thanks, Kim.

Conference Operator: The next question is from William Mackie, Kepler. Please go ahead.

William Mackie, Analyst, Kepler: Yeah, good morning. Thank you for taking the questions. Two really. The first one on pricing, again, coming back to North America and The USA, just to clarify, obviously, 4% to 20% is a range across the product categories you’re talking about. But what sort of average or mean do you expect we might see for the second half of the year, I guess as these kick in?

Are we talking sort of more like five or 6% on average across your North American business in the second half on pricing?

Guillaume, CEO, Rexel: Yes. I’m not sure I want to give figures on that, but I guess if you do the blended average, you would see pricing in the second half mid to high single digits as compared to last year, I think. Frankly, there are still many moving parts in Europe, but in the current situation, that’s probably what you would see because most of our categories are impacted. And so because of that, yeah, I would say mid single digit to high single digit. That’s what you should see.

William Mackie, Analyst, Kepler: Thank you. And maybe just based on how you see the risks or opportunities evolving in the second half of the year. I mean, when you look across the portfolio, where would you anticipate the greatest elasticity of demand related to pricing or the economic uncertainty as it involves either in North America or in Europe, please?

Guillaume, CEO, Rexel: That’s a very I’m not sure I have a good answer to that. I mean, historically, what we have seen is that typically investment in the industry is very much linked to consumer confidence and to industry confidence and renovation on the other side of the spectrum is very much linked to customer confidence. But that being said, I don’t know how it’s going to play out this time because as we mentioned on the slide, which tries to summarize that, when you’re talking about industry in The U. S, for example, you may have and I’m speculating here, you may have an effect linked to the fact that inflation is going to weigh on industry confidence and visibility for the future.

But on the other hand, you may have a positive effect of reassuring, which is what the intent of the tariffs is about also. So, all in all, being able to tell you, okay, industry is going to suffer from that is a little bit difficult in reality. In each segment, there are positives and negatives and that’s what makes the forecast exercise at this stage a little bit difficult. I’m not sure this non answer is helping you, but that’s what I can give you at this stage. Understood.

Cheers.

Conference Operator: The next question is from Max Yates, Morgan Stanley. Please go ahead.

Alexander Virgo, Analyst, Bank of America: Thank you. Just to maybe ask a question around margins. And I guess just zooming in on your comments where you said the setup for this year might be more on price and a bit less on volumes. I mean in a scenario where your North America price was up mid single digits and your volumes were down low single digit, that would obviously be quite different to a sort of small price increase and a bit of volume growth. How should we think about the margins evolving in that scenario where it’s quite positive price and maybe some negative volume?

How would that differ? How would that impact differ on margins, yes?

Guillaume, CEO, Rexel: No, I said to Laurent that I would try not to answer any questions on margins on this sales call. But nevertheless, you’ve seen the slide that I commented about the upsides and downsides. What you would see qualitatively is on margin in a scenario like this one. Obviously, on the volume side, you would have the typical drop through. And what we say, Laurent, usually in terms of drop through is that adding 1% of volume of Vrexel, bps brings approximately five bps.

So you can do the math, that’s a typical rule of thumb that we give for drop through. Now on the price side, you have two effects. I mean, you have one effect, which is the difference between the margin squeeze or un squeeze between the margin inflation and the cost inflation. And so that would be a positive effect, if there was inflation. And then you would have the one off effect, which is linked to the fact when it’s possible that we sell inventory both at a lower price, at the new price, when it’s possible.

And obviously, it goes the other direction when the market deflates. And so that is a one off effect, which is linked to the quantity of inventories that we have, which in The U. S. Is approximately less than what? The term is approximately sixty days at Matrixyl and so you would have a one off effect.

So if I summarize, you would have a drop through effect in your scenario, a negative drop through effect. You would have a positive effect linked to the fact that gross margin would inflate than the cost base, And then you would probably have some kind of a one off effect, which is linked to the fact, to inventory situation and to the basically value of the inventory. Now, what you would probably have also, because we have experienced that in the past, is that any price increase requires heavy lifting in terms of passing through. So, you may have a little bit of loss there. It’s not going to be a perfect pass through because the market is tense, it’s competitive and so because of that, not everything is going to be 100%.

So here are the moving parts: drop through, squeeze between cost and margin, one off effect and maybe a little bit of margin pressure. So that’s how the equation works. Now I’m not going to give figures within the equation.

Alexander Virgo, Analyst, Bank of America: Okay. And maybe just a quick follow-up on acquisitions. How does the kind of current uncertainty make you think at all about or at all differently about the rates of acquisitions and maybe the kind of leverage the balance sheet leverage that you’re prepared to have in this environment. I mean should we expect I think your acquisitions have been running at sort of 3% of sale adding three percent of sales a Would we expect that to slow down in the short term as you maybe take a bit more of defensive approach?

Guillaume, CEO, Rexel: No, look, mean, first of all, in terms of balance sheet, are relatively comfortable. I don’t think that we have any concern about either liquidity or cost of financing. So we are good on that. So it’s not a balance sheet constraint. Now, what’s happening also is that sellers are a little bit concerned about selling in current environment.

It’s true. So you may see a slowdown of the pipeline naturally. But that being said, when it comes to our willingness to make acquisitions, we make acquisitions for the long run and very often we buy companies which for family evolution reasons, they are family owned and for family evolution reasons, they sell at a certain moment. And it’s a once in a lifetime opportunity to buy those companies. So we are not going to shy away from that because of short term downturn.

And so I think it’s a little bit our mindset. We continue the growth in terms of acquisition. We continue to think and we have shown that in the past. We continue to think that it’s a very value creative way of adding to the organic growth of Rexel. So we continue to do it at the same reason, but it’s going to depend very much on the availability of companies to buy.

Alexander Virgo, Analyst, Bank of America: Understood. Very helpful. Thank you.

Conference Operator: The next question is from Andre Kukhnin, UBS. Please go ahead.

Andre Kukhnin, Analyst, UBS: Great. Good morning. Thank you very much for taking my questions. Can I just follow-up on the current trading color that you very helpfully gave for April? In North America, does that good environment diverge at all between low voltage and industrial automation?

And could you give just a bit more color on Europe and Asia as well?

Guillaume, CEO, Rexel: Okay. So Industrial Automation in the first quarter was overall at retail level and also in North America slightly negative compared to last year. It was one of the markets which remained difficult with a mix probably of a difficult base effect. Last year, we had a relatively high first quarter even if it doesn’t show in the figures, but it is linked to the fact that 2023 in reality had been very strong in the first quarter. So overall, the first quarter was a difficult comparison base, plus probably wait and see and hesitation at the OEM level.

So I think we are seeing that, but we had a negative quarter in North America, both in The U. S. And Canada in Industrial Automation, which is different from the industry end market, which for us was positive in North America in North America in general. So that’s the first thing I would like to say. Now that being said, between Q4 of last year and Q1 of this year, despite the fact that in Q1 we have year over year negative figures, we saw sequential improvement between Q4 and Q1.

So that’s one thing. And the second thing which is interesting to know is that when we look at our backlog, I mean, we disclose our backlog in terms of overall backlog in North America. But when we look specifically at the content in Industrial Automation in the backlog, it has increased slightly between the end of Q4 and the end of Q1. So we are seeing positive evolution, but that being said, are still in negative territory. So that’s what I can say about what’s happening on the Industrial Automation market in North America.

So improvement sequentially, but still year over year negative linked to mostly the base effects and maybe also a little bit of a wait and see situation. Now, when it comes to other geographies, and I’m sure that your question was about Industrial Automation mostly, so the other geographies for us would be Canada. I mean, Canada, you commented a little bit on Canada within North America, and it would be China and India. Laurent, do you want to say a word about China? Yes.

China, we had a good Q1 and the April is in line with the March, so still in good territory. But yes, there is uncertainty around this tariff, which should impact in the short term the volume. So we don’t see it yet, but we expect that to come gradually across Q2.

Andre Kukhnin, Analyst, UBS: Great. Thank you. And sorry, on that question, I was wondering about April, specifically the current trading and what you said about North America. Is that sort of the same picture for low voltage versus industrial automation as you described for Q1?

Guillaume, CEO, Rexel: Look, I mean, unfortunately, Andre, our reporting systems within the months are not that precise. Sorry. So I wish they would be.

Andre Kukhnin, Analyst, UBS: We have to try. If I just may ask, question I had also is on self help and the cost actions that you’re taking. I think we’re carrying about €30,000,000 of savings from twenty twenty four actions. Could you comment on whether you’ve been taking more actions in Q1 and planning on

Guillaume, CEO, Rexel: any further absolutely. We continue to take actions because despite the fact that we are slightly positive, it’s still a soft environment and we need to continue to take actions. And also, I have to say, we are also taking the opportunity to clean up our cost base and so we continue to take aggressive actions there in several countries and mostly in European countries and there are actions that are being prepared. There are some actions which are launched. It’s difficult for me to give details because in many cases, it’s also submitted to union discussions, etcetera.

But in order of magnitude is that we expect, I mean, you’re right to mention the EUR13 million carryover from actions from last year. I think we expect almost the same or around the same at this stage for this year. I’m not going to be more precise than that, but you can expect to see at least the equivalent for this year.

Andre Kukhnin, Analyst, UBS: Great, very helpful. Thank you.

Conference Operator: The next question is from Please go ahead.

Eric, Analyst: Yes, thanks. Good morning. I’ve got two questions, please. The first one, Germany, it’s a small country for XL, small I don’t know, it’s 1,000,000,000 sales anymore.

Guillaume, CEO, Rexel: It’s decent country. We care about it.

Eric, Analyst: Okay. I was wondering whether XL could benefit from this expected German stimulus plan. And I got some question on this sign of EUR124 million. I was wondering if there is any chance that this sign could be maybe canceled in the future, if there is any chance that you could succeed to cancel that?

Guillaume, CEO, Rexel: Eric, the answer is yes and yes. So let me elaborate a little bit on that. In Germany, obviously, we are not a different company. But that being said, there is a big spending plan which is decided and which is being right now organized in Germany and obviously it’s going to have a trickle effect on all activities. We are exposed to the different sector like to many other sectors.

You know that in Germany, One of our most important end markets is industry. We are more exposed to industry in Germany than in other European countries. So we will benefit in general from that. We are obviously looking precisely at how the spending is organized and trying to target those customers who are the most likely to spend in the earlier. So I think we’re going to see effects of that at some point, not right now.

First of all, it has to be completely voted and ironed, it has to be organized, so it’s not going to be immediate. What I think could be the most immediate effect would be an effect on overall industry confidence and customer confidence. That’s usually the fastest to happen, which means that if either consumers or industry managers regain confidence in the future of the German economy, they may decide to unlock investments, which would have a beneficial effect on us. But at this stage, it’s not in our figures and frankly, I’m not even sure it’s going to be in our figures in Q2, but we’re going to see each other at the end of H1 to discuss that again. But yes, obviously, we will benefit from that.

The €124,000,000 fine, as we said at the time when we got fined, we disagree with the ruling. We have appealed last year like I think the other three companies which were involved in that, Sonepar, Schneider and Legrand. So we have all appealed. We all think that we have good chances for many reasons that I could discuss individually with you because it’s going to take too much time, But we really think that we have good chances. Now, if there is a reversal or reduction, it’s not going to happen this year.

It’s probably going to be next year or the year after. So I hope before my retirement, but

Eric, Analyst: Thank you. That’s helpful.

Conference Operator: The next question is from Miguel Borrega, BNP Paribas Exane. Please go ahead.

Miguel Borrega, Analyst, BNP Paribas Exane: Hi, good morning, everyone. Thanks for taking my questions. Just in terms of non table pricing, which was still negative this quarter, how do you expect that to evolve through the rest of the year considering what you just said about potentially mid to high single digit pricing in North America in the second half, but also wanted your views on whether deflation in Europe could persist for the remainder of 2025. I ask because solar panels, for example, will see big tariffs in The U. S.

So wondering if there could be some supply being redirected into Europe from that segment, which would then lead to further deflation. Any comments here would be Yes, sure,

Guillaume, CEO, Rexel: sure. So first of all, obviously, I mean, pricing is going to overall increase between now and the rest of the year on non cable. Now, what we have seen in the first quarter is that most categories were positive except for one which is facing a high comparison effect, which is conduits in The U. S. And so on this one, we had relatively strong negative pricing.

This pricing gap, this strong negative pricing is improving because it’s one of the categories which is obviously heavily impacted by tariffs on Aluminum and Steel. But nevertheless, it continues to be negative. Now coming to your question about possible deflationary effect on Europe, I’m not sure about that because if you take the example of solar panels, which is a good example, anywhere in The U. S. The regulation was such that Chinese solar panels were not allowed.

So it was already not an end market for the Chinese panels. So I’m not sure that you’re going to see a big difference on this one. Can we see the same kind of effect in other categories where you would redirect a proportion of the Chinese production to Europe. That’s a possibility. But in our industry, I don’t identify apart from solar panels, is really the situation I’m talking about, where it was already not a market for China, I don’t see any of the category on which those kind of things would happen.

Maybe I’m wrong, but it’s an interesting question, but I have not identified any category where we could see such an effect. And specifically on solar, also our exposure now is very low. We are at 3% of group level. Yes. Even if there is an impact, it will be very low.

Yes. So that’s what I can tell you, Miguel.

Miguel Borrega, Analyst, BNP Paribas Exane: Thank you very much.

Guillaume, CEO, Rexel: Thank you.

Conference Operator: The next question is from Delphine Breaux, ODDO. Please go ahead.

Delphine Breaux, Analyst, ODDO: Yes. Good morning, everyone. Thanks for taking my questions. First, can you be a bit more specific on France, the market share gain? Any specific segments?

And what are the drivers now that it’s more than several quarters that you’re gaining shares? Probably have a bit more visibility on where it’s coming from exactly. And second, looking at your Electrification business,

Alexander Virgo, Analyst, Bank of America: can

Delphine Breaux, Analyst, ODDO: you detail the trends of the different segments, so solar, HVAC, EV?

Martin, Analyst: And how

Conference Operator: do you see

Delphine Breaux, Analyst, ODDO: the evolution going forward?

Guillaume, CEO, Rexel: So why are we gaining market share in France? I think, first, it doesn’t come from one place, Delphine. It’s very homogeneous between all end markets and all regions, which means that it’s not a specific one off effect. It’s linked to the fact that in France, which is one of our most mature countries, we have the various elements of the right value proposition for distributors probably right. It’s difficult to say more than that, but at the end of the day, we are not buying market share to be very clear.

And it probably has to do and I would like to link that with the slide I was showing on our midterm strategic plan. I would like to link that to what really the value proposition is for customers. Mean, they obviously want a fair price from us and we are offering that, but they also interested in everything which can gain them time, open for them new horizon, additional services, and that’s including is the case in more and more countries. And I think France is one of the countries where we have that right in terms of logistic services, in terms of expertise services, in terms of helping our customers enter into new segments. We are doing that quite well, I think, in France.

And I think this is the reason why we are gaining market share all across the board. So, for the second question about Electrification businesses, I think overall we are not seeing a very good time for Electrification businesses. As I commented at the end of the year, we are absolutely convinced that mid term those are going to be fast growing markets. But right now I have to say that solar is recovering now in some countries, notably Germany and other countries, but from just because the base effect is starting to be better, so that’s one thing. In terms of HVAC, it’s a little bit the same situation.

It’s flattish compared to last year, but because the base effect becoming easier, it’s not a very strong recovery. And it has to do with the fact that in the countries where we are exposed, Netherlands and France, the public incentives are not there anymore because of budget topics, especially in France. I should have said that on solar, the volume is flattish, but the price, we continue to have a carryover negative price. And the rest, EV is a small category for us, so I’m not going to comment on that. But on those two categories, solar and HVAC, I would say that the mid term prospects remain very good.

But at this stage, it’s not something I’m betting as a guidance of 2025 on. Our assumption is that it’s going to be flattish.

Conference Operator: Thank Mr. Takshi, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Guillaume, CEO, Rexel: No, thank you for your time today. We had a good first quarter, and we are happy with what we delivered in an environment which is not that easy. And as we commented, the future is full of both opportunities and also headwinds which will require us to be agile and to rely a little bit more on self help, which we are doing. So overall, happy with our delivery and see you in July for the H1 results. Thank you very much.

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