LEGRAND / 2018 Registration document

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MANAGEMENT REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2018

YEAR-ON-YEAR COMPARISON: 2018 AND 2017

5.4.1 – Net sales

acquisitions consolidated for 12 months in 2018, including OCL (USA) consolidation for 11 months in 2017; AFCO Systems (USA) consolidation for 8 months in 2017; Finelite (USA) consolidation for 7 months in 2017; Milestone (USA) consolidation for 5 months in 2017; and to the first-time consolidation in 2018 of Modulan (Germany) for 9 months, Gemnet (United Arab Emirates) for 7 months and Shenzen Clever Electronic (China) for 6 months; W -3.9% due to exchange-rate effects over the period.

Consolidated net sales rose 8.6% to €5,997.2 million in 2018, compared with €5,520.8 million in 2017, reflecting the combined impact of: W a +4.9% organic rise (at constant scope of consolidation and exchange rates), which is higher than the 2018 target (1) for organic growth sales; W +7.8% due to the broader scope of consolidation that resulted from acquisitions. This relates to the carry-over effect of 2017

R 5.4.1.1 ANALYSIS OF CHANGES IN NET SALES BY DESTINATION FROM 2017 TO 2018 The table below shows a breakdown of changes in net sales to third parties as reported by zone of destination (market where sales are recorded) between 2017 and 2018:

12 months ended December 31,

Exchange-rate effect

Change in scope of consolidation

Organic growth (1)

Net sales (in € million, except %)

2018

2017 Total change

5

France

912.6

900.9

1.3%

0.2%

1.1%

0.0%

Italy

545.8

513.5

6.3%

0.1%

6.2%

0.0%

Rest of Europe

1,007.9

936.7

7.6%

3.4%

9.2%

(4.7)%

North and Central America

2,175.1

1,820.0

19.5%

20.2%

4.2%

(4.6)%

Rest of the World

1,355.8

1,349.7

0.5%

2.0%

4.9%

(6.1)%

CONSOLIDATED TOTAL

5,997.2

5,520.8

8.6%

7.8%

4.9% (3.9)%

(1) At constant scope of consolidation and exchange rates.

Italy . Net sales in Italy for 2018 came to €545.8 million compared with €513.5 million in 2017, an increase of +6.3%. This reflects: W a +0.1% change in scope of consolidation; W a +6.2% organic evolution. These very good showings were driven by the continued success of connected offerings – including the Classe 300X connected door entry system and the Smarther intelligent thermostat – as well as an inventory build-up for the new Living Now user-interface range, whose functionalities and design, with a choice of different materials, are particularly appreciated by end customers. In this respect, 2018 represents a demanding basis of comparison for 2019.

Comments below concern sales by destination: France . Sales in France for 2018 came to €912.6 million compared with €900.9 million in 2017, an increase of +1.3%. This reflects: W an +0.2% change in scope of consolidation; W a +1.1% organic rise over the period. In a market that has remained lackluster overall since the beginning of the year and marked in particular by clear destocking by distribution in the third quarter, Legrand’s good 2018 performance resulted from healthy momentum in energy distribution and digital infrastructures, along with sustained activity in user interfaces, linked more particularly to the very favorable response to its Céliane with Netatmo and dooxie ranges. These favorable trends were partially offset by a decline in sales of bulkhead lights, installation components, and cable management.

(1) 2018 confirmed and specified targets: “organic growth in sales of close to +4%” and “adjusted operating margin before acquisitions (at 2017 scope of consolidation) of between 20.0% and 20.5%”. For the exact wording of Legrand’s confirmed and specified 2018 targets, readers are invited to consult the press release issued on November 8, 2018

165

LEGRAND

REGISTRATION DOCUMENT 2018