LEGRAND / 2018 Registration document

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

YEAR-ON-YEAR COMPARISON: 2018 AND 2017

5.4.5 – Other operating income and expenses

In 2018, other operating income and expenses totaled €105.2 million compared with €104.5 million in the same period of 2017.

5.4.6 – Operating profit

The Group consolidated operating profit rose 11.1% to €1,139.0 million in 2018 compared with €1,025.6 million in 2017.

W a 6.8% rise in administrative, selling and research & development costs; and W an €0.7 million rise in other income and operating expenses. As a percentage of net sales, operating profit came to 19.0% in 2018 compared with 18.6% in 2017.

This increase resulted from: W an 8.6% rise in net sales; W a 9.2% rise in cost of sales;

5.4.7 – Adjusted operating profit

W Rest of Europe : a 15.6% rise to €187.8 million in 2018 compared with €162.4 million in 2017, representing 19.2% of net sales in 2018 compared to 17.8% in 2017; W North and Central America : a 20.3% rise to €431.3 million in 2018, compared with €358.5 million in 2017, representing 19.4% of net sales in 2018 compared with 19.3% in 2017; and W Rest of the World : a 2.9% decline to €183.5 million in 2018 compared with €189.0 million in 2017, representing 15.5% of net sales in 2018 compared to 15.9% in 2017. In 2018, Group adjusted operating margin before acquisitions (at 2017 scope of consolidation) stood at 20.2% of net sales, +0.2 points higher than the 2017 figure of 20.0% in line with the 2018 target (1) of 20.0% to 20.5%. Taking acquisitions into account, the Group’s adjusted operating margin came to 20.2% of net sales in 2018.

Adjusted operating profit is defined as operating profit adjusted for amortization and depreciation of revaluation of assets at the time of acquisitions and for other P&L impacts relating to acquisitions and, where applicable, for impairment of goodwill. Adjusted operating income rose 9.7% to stand at €1,212.1 million in 2018 compared with €1,104.9 million in 2017, and broke down as follows by geographical zone: (as indicated in 3.1, consolidated financial information for multi-country zones does not reflect the financial performance of each national market): W France : a 2.1% decline to €198.0 million in 2018 compared with €202.2 million in 2017, representing 19.2% of net sales in 2018 compared to 20.0% in 2017; W Italy : a 9.7% rise to €211.5 million in 2018 compared with €192.8 million in 2017, representing 36.5% of net sales in 2018 compared to 35.4% of net sales in 2017;

(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.

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LEGRAND

REGISTRATION DOCUMENT 2018