Good morning, ladies and gentlemen, welcome to today's Legrand 2022 full- year results conference call. All participants are in a listen-only mode. Later, there will be a question and answer session. For your information, this conference is being recorded. At this time, I would like to hand the call over to CEO Benoît Coquart and CFO Franck Lemery. Please go ahead, sirs. Thank you. Good morning, everybody. Franck Lemery, Ronan Marc, and myself are happy to welcome you to the Legrand 2022 results conference call and webcast. As said, please note that this call is recorded. We have published today our press release, financial statements and a slideshow to which we will refer. Those documents are available on the Legrand website. After a few opening remarks, we will comment the details into more details. I begin on page four of the deck with the three key takeaways. First, Legrand reports a very solid integrated performance in 2022, i.e., both financial and extra-financial. Second, the group is actively implementing its strategic roadmap. Third takeaway, in 2023, Legrand is aiming to grow between +2% and +6% at constant exchange rate with an adjusted operating margin of about 20% before acquisition. We are also taking the opportunity of this call to review our last five years' performance, which is an industry benchmark in terms of value creation. Moving now to page six and seven I will start with an overview of sales. In 2022, we turned in another outstanding global performance, very much in line with our midterm targets, despite all the challenges linked to a continued, very unsettled environment. Sales rose a steep +19.2% to over EUR 8.3 billion, reflecting our strengthened competitive positions. Organic growth in sales was +9.7%, buoyed by our business momentum, pricing power and very active supply chain management. On top of organic growth, the scope effect was +3%. Based on acquisitions announced and their likely dates of consolidation, the full year impact should be around +1.5% in 2023. Last component regarding sales is the FX effect. It added +5.5% to sales for the year. Based on average exchange rates in the months of January 2023, the full year impact on 2023 sales should be around -2%, of course, things can change, we'll see in the months to come. You will find on page seven the key takeaways per area. Each of the three regions achieved a solid level of growth. Globally, we had many commercial successes, especially in faster expanding segments, data centers, energy efficiency, with some negative impact coming from China and Russia, notably in Q4. These were the main comments on sale. Let me now pass the mic to Franck for more color on our robust financial performance. Thank you, Benoît, and good morning to all of you. I will start on page eight with operating margin. Adjusted operating margin before acquisitions and excluding assets impairment in Russia stood at 20.7% for the year, meaning an increase of +20 basis points from 2021. This rise in profitability came despite an inflation of around +12% on raw material and components during the year. This high and front-running profitability reflects once again the group's fair management of both expenses and sales prices. After acquisitions, the adjusted operating margin for the year was 20.4%. Going now to page nine regarding the net profit attributable to the group. Excluding the effect of Russia impairments, it grew +26.8% over the year. The main driver was the strong rise recording in the operating profit. Trend in the financial results was also favorable. Group's corporate income tax is therefore increasing logically despite the tax rate being down. Moving now to page 10 with few comments on cash and balance sheet. Against a backdrop of strengthened coverage of inventory linked to supply chain pressures and also the priority we gave to customer service, the free cash flow stood above EUR 1 billion, i.e., a solid 12.4% of sales in 2022. Free cash flow was particularly high in the fourth quarter. Balance sheet remained very robust with a net debt to EBITDA ratio of 1.2. This concludes the key topics on Legrand 2022 financial performance. I'm now passing the mic back to Benoît. Thank you, Franck. Let me present our 2022 ESG achievements on page 12 to 14. As you know, Legrand launched its in 2022, sorry, its fifth CSR roadmap structured around four pillars and 15 priorities. As shown on page 12, Legrand reached a 123% overall achievement rate. With strong achievements in three pillars, diversity and inclusion, carbon footprint, and responsible business. As expected, some challenges regarding circular economy despite some first good showings. As you can see on page 13, we are particularly proud to have reduced Scope 1 and 2 CO2 emissions by 15% at current perimeter, and to have raised the share of women amongst managers to 28.5% in 2022. On page 14, Legrand ESG policy that is already well-recognized in various indexes and rankings was once again recognized by outside parties in 2022. Let's move now to the fourth part of the presentation regarding dividend and capital allocation. On page 16, Legrand will propose the payment of EUR 1.9 dividend, up 15.2%. This will place the payout ratio of nearly 50% in line with the group's midterm targets. On page 17, the very good showings over 5 years and our confidence in our value creation model enable us both to pursue an ambitious strategy of acquisitions with at least 50% of free cash flow dedicated to bolt-on acquisitions, and to announce a share buyback program up to EUR 500 million over 18 months. Going to the fifth part of this presentation with the ongoing implementation of Legrand strategic roadmap in 2022. On page 20 - 22, driven by strong R&D, Legrand is very active in terms of launches of new products with a particular focus on faster expanding segments that represent 1/3 of our sales. On page 23 and 24, a key area for of growth, M&A. Legrand is announcing two new acquisitions, Encelium in the U.S. with sales of over $20 million, and Clamper in Brazil with sales of nearly EUR 40 million. Together with the five acquisitions announced over one year, the seven companies represent annual sales of about EUR 200 million. On page 25, we are very active in terms of productivity initiatives, notably regarding industrial footprint and product platforms. On page 26, some examples of our CSR progress. I would insist on the fact that we start actively embarking our suppliers to get their commitments to reduce their own CO2 emissions and hence a large part of our Scope 3. I'm now moving to page 28 and 29. As I told at the beginning of the call, the relevance of Legrand strategic choices and successful execution have made it an industry benchmark for financial and extra financial value creation over the past five years. Since 2017, our sales grew up by a total of over 50%. The adjusted net profit grew plus 83% and the free cash flow by + 49%. On the same period, on average, our adjusted operating margin stood at around 20% of sales, despite dilution coming from acquisitions and despite inflation that clearly outpaced sales price increase. In other words, our productivity gains have helped Legrand improve its market positions while securing its long-term pricing power. At the same time, we reduced our CO2 emissions by -34% at current scope and saw a very significant rise in gender diversity, with a percentage of women amongst managers standing at 28.5%, and for key executive positions at 24.4%, up from 14.8% in 2017. The group plans to continue rolling out its strategic roadmap and thus remain on track to generate integrated value in line with the midterm targets we announced in 2021. Now the last topic of this earnings release on page 31 with our targets for 2023. Our targets for 2023 exclude impacts linked to the group's disengagement from Russia and are the following: Sales growth at constant exchange rates of between +2% and +6%, including a scope of consolidation effect of around +3%. An adjusted operating margin before acquisitions of around 20% of sales. At least 100% CSR achievement rate. This is what we wanted to highlight today. May I also underline that we have included into the deck a detailed schedule of the meetings we plan to have with investors. It's on page 34 and 35. Of course we would be, we will be pleased and delighted to meet again most of the time face to face with our investors. Thanks a lot. We are now open to questions. Thank you. Thank you. Ladies and gentlemen, pardon the interruption. I'm sorry. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll now take our first question from Andre Kukhnin at Credit Suisse. Your line is open. Please go ahead. I'll just go one at a time. firstly, can I clarify on the Russia impact vis-a-vis the guidance that you gave? Should we think about the 2%-6% FX growth as you guided and then take 1.5% out for Russia disposal from that? Or is that already in the 3%? Related to that, is there a margin mixed effect should we think about related to that exit? Was that business dramatically different versus the average group margin, please? Yeah. Hello, Andre. This is indeed a good question. Well, as you know, Russia represented last year 1.5% of our sales. Of course, the situation is a bit uncertain because we don't know yet how long it will take for us to dispose from this activity. We don't know neither what the sales evolution gonna be in the coming months until we sell this activity. The assumptions you can take. Number one, we will treat Russia into scope. It will be a negative scope for Legrand in 2023. Indeed, our guidance is excluding any impact from Russia. Number two, as far as the Russian top line is concerned, difficult to estimate, but you can estimate that we may lose, or we may have in our accounts in 2023, let's say from 1/3 to half of the 2022 Russian sales, depending how long it takes to sell the activity and depending on the drop in sales we're gonna experience in the next months. As far as the margin impact is concerned, it can range from 0 basis points if we are able to sell quickly the activity and if meanwhile we are able to retain an acceptable of level of profitability up to -20 basis points. In other words, you can take the guidance as it is +2% to +6%, which is including acquisitions but excluding Russia. You can add a negative perimeter impact, which depends on your, on your assumption, but which gonna be at worst 2/3 of the Russian sales recorded in 2022. And as far as the margin guidance is concerned, again, a negative impact ranging from 0 to -20 basis points. Clear? Crystal clear. Yes, absolutely. Thank you very much. Can I ask a question on Europe? Just looking at the run rate there, on kind of 2019 basis, trying to net out the comps effect. It seems to slow down quite meaningfully from the Q2, Q3 kind of run rate, by about 8 points, even though optically organic growth only went from 8% to 9.8%. I.e. it was on quite an easy comp. Could you just talk about if there's anything specific happening there, or is this the kind of really slowdown that's been well anticipated? Was there any particular kind of stocking moves in the quarter that we should be aware of as kind of a one-off nature? Well, it's always difficult to analyze over a period of three years, four years, five years. What I can tell you is that indeed, Europe is up 8% year-on-year on Q4, whereas it was up or it is up close to 10% on the full year. It's indeed a deceleration. Well, by the way, you have to include the fact that it include also a negative performance from Russia. Russia performance wasn't so negative in Q1 because the war started late in February, but it was indeed pretty negative in Q4. If you take Europe without Russia, the Q4 performance, instead of being +8%, it's +11%. This being said, it is true that the situation in Europe is a bit more demanding in H2 than in H1. By the way, European volumes are flat in 2022. Going into 2023, it is indeed a question mark. Even though some macroeconomists are a bit more pessimistic on Europe than on the U.S., on our side, we are not overly pessimistic. We believe that even though the economy might be demanding, there are a number of interesting trends that should support our business going forward in Europe and elsewhere, such as, for example, green products, data center, connected products, and a number of other things. Yes, the volume and the sales are lighter in H2 compared to H1. I wouldn't talk of a strong deceleration. We are cautious but not overly pessimistic going into 2023. Really helpful. Thank you. Just the last one, if I may. On pricing, could you help us with how much pricing you're carrying over into 2023 from the actions already taken, and whether you intend to raise further during 2023 or have done so far already? I have to tell you that I don't like that much the concept of pricing carry over because the truth is that it doesn't mean anything. We can have a carry over, but because the environment of raw mats and components is, you know, the prices of raw mats and components is going down, then we can give additional discount to a customer. We can give additional end of the rebates to distributor. Your total, your total performance in terms of pricing could be even is lower or stronger than the carry over. What I can tell you, maybe it will answer your question. As you saw, we are. Two things, starting with the Q4 numbers. In Q4, we had a pricing of about 10%, and we had inflation of raw mats and components of about +4%. For the total of the year, we have a pricing of again close to +10% and inflation of raw mats and components of about +12%. Of course, you have a better and more positive relationship between selling price and price of raw mats and components in Q4 than for the first nine months of the year. This was expected, and this could potentially help a bit our margin in 2023. First topic. Second topic, let me maybe clarify the guidance we are shooting today. As indicated, we are aiming to record a growth in sales excluding FX between +2% and +6%, including a +3% perimeter effect. Which means, you can do very easily the math that organically we are shooting for something between -1% and +3%. The way it was built is that it integrates a modest price increase and volumes should range from slightly down to slightly up. This is the way we have built our guidance. Now, the usual caveat, you know that Legrand has no order book. You know that we have absolutely no visibility in when we will have to deliver in the coming weeks. Of course, this guidance was, as usual, based on the series of macro assumptions that can prove to be wrong. That's really, really helpful. Thank you very much for all the color. Thank you. We'll now take our next question from Daniela Costa from Goldman Sachs. Your line is open. Please go ahead. Hi. Good morning, everyone. Thanks for taking the question. I wanted to ask two, one more medium term and one more shorter term. I'll start by the shorter term one. Inventories. Can you tell us if you're sort of now comfortable with the level? Do you plan to restock a bit more next year? How shall we think about that equation? More on the medium term, I think now we've been talking about sort of green plans and stimulus for a number of years, I know there had been sort of some lack of maybe data or values for you to be able to quantify it. Now looking at the U.S. IRA, there is a quite clear timeline and several amounts tagged that specific building energy efficiency initiatives. Can you talk us through how you think that's gonna feed through? What's the cadence you expect that to feed through in your business, and which parts of your business you see the biggest impact? Thank you. Hello, Daniela. I assume that your question on inventory, it's about our inventory, right? Not our customers' inventory. Is that correct? Well, it was about your inventory, but I take the your customers. Two question at the same time. Well, as far as our inventory is concerned, you know the Legrand historical numbers. We had a level of inventory to sales historically, which was at 13%-14%. We reached a peak of more than 19% of ratio of inventory to sales in Q3 2022. as we told you at that time, it was made on purpose because we really wanted, in a context of a shortage of components, raw mats and so on, we wanted to maintain a good level of service to our customers, which was completely made on purpose. We are now back to 16.3%. To be more precise, it is 16.9% if we exclude the impairments we made on Russian inventory. The right number to have in mind is not 16.3%, it's really 16.9%. You can see it was slightly down compared to the level we recorded in Q3 2022, but not yet at our historical level. Well, our intention remains to progressively come back to our historical levels. It won't take one or two quarters. It will be longer than that. Could be a 1.5 or two years. We'll see. We will do it in a very cautious manner because we don't want that, you know, move to damage our customer service. Customer service will remain our first priority. I can confirm that in the quarters to come or the next one or two years, you should expect our level of inventory to sales to continue to decrease. As far as inventory in our channel, well, we haven't seen globally anything one way or the other in 2022. We have not seen significant destocking nor significant restocking from our distributors. Some countries destocked a bit, some others restocked a bit. If we do the total of all that, there's nothing worth mentioning that would have had an impact on our 2022 accounts. As far as, you know, the global level of inventory at our distributors' place, my feeling, even if it's difficult to have a precise, you know, color on that, my feeling is that our distributors are not carrying too much inventory. We'll see what happens in 2023, but it probably depends on the, you know, their own perception of what the year 2023 gonna be. So far, we're not expecting a massive or a very significant destocking nor restocking in the quarters to come. As far as the green plan is concerned, well, it's indeed something everybody is tracking very carefully. We have to split between, let's say, the U.S. and Europe. As far as the U.S. is concerned, there's nothing that should have a very strong impact on Legrand in the so-called IRA plan, which is dedicated to other sectors than Legrand. Still this being said, you have a number of positive moves at the states level, which could have a positive impact on our business. You have to understand that as usual in the U.S., you have different policies between the federal state and the local states. You have now more than I think 30 local states which have committed to targets in terms of CO2 emissions reduction, which are actually close to European targets. In order to reach those targets, there's no choice but for those states not only to work on transportation, not only to work on industry, but also to work on buildings, which I remind you present 40%-- close to 40% of CO2 emissions. Even if there's not a big federal plan supporting the green business, a number of states have taken some initiatives. For example, you may know that you cannot build a house anymore in California without being net zero. And this regulation will soon be applied to commercial buildings. This is coming in the U.S. clearly, but at a state level more than at the federal state. Well, as far as Europe is concerned, surprisingly, because of course the organization in Europe is quite different from the one in the U.S., it's quite similar. You have all those big Fit for 55 heat plants and so on, which we sometimes have difficulties to see how it really impacts our business. At the same time, you have a number of local initiatives that are indeed pushing our sales up. Take in Italy the so-called Superbonus, which had significant impact on the top line in Italy. We grew very nicely in Italy. You have what we call MaPrimeRénov' in France. Every time that even if some of those plans are not targeted directly at our sales, it has an indirect impact on our business. When you are installing, for example, a heat pump, we're not active in the heat pump business, but it's highly likely that you will also add some circuit breakers in your panel board. It's the same story for Europe as for the U.S. No impact of a big European plan, but a number of interesting impacts locally. Looking at the numbers, I can tell you, I can confirm that in Europe our green products did very well, grew a lot faster than the rest of our products, both in value and in volume. It includes the sales of EV charging stations, climate control products, such as a thermostat, for example, time switches, power busbars, data center cold corridors. All those products grew very nicely, and part of this growth was supported by local plans. Sorry, Daniela, I was a bit long. I hope it answered your questions. Did. Thank you very much. Thank you. We'll now move on to our next question from Lars Brorson at Barclays. Your line is open. Please go ahead. Yes. Hi. Good morning, Benoît, Franck, Ronan. Can I talk and ask to pricing, please? First of all, what was pricing in the fourth quarter that we hope we can give it? I appreciate you don't wanna give us pricing carryover. I'm gonna assume it is a couple of% or so. If I understood your views on 2023 correctly on the guidance, it implied volumes down at low single-digit to up single-digit. That would imply pricing at flat to maybe small up. I'm assuming you're starting the year at high single-digits. I'm trying to understand the pricing cadence as we go through the year and whether there's a risk to negative pricing as we get into the back half. We've seen some of your, particularly U.S. distributors, come under a bit of pricing and gross margin pressure. Keen to try and understand how to think about pricing as we go through the course of this year, to the extent you can give some color on that. Thank you. Well, again, pricing is a very dynamic topic, so that's why I don't want to give you a carryover which will be read as a forecast, as a target, but you can compute it yourself. I can remind you the number quarter by quarter of pricing. Q1 8%, Q2 10, Q3 11, Q4 10. You can do your own math and compute the carryover itself. I can confirm that we are shooting for a modest price increase. I can also confirm that there's no way prices will go down. It is clearly a very important part of the Legrand equity story and business model to be able to increase prices year-on-year, and I confirm that prices will go up in 2023. Now, we assume that even though the energy price will remain high, the price of raw mats and components will be more under control than it was in 2022. As a result, our pricing, instead of being +10 in 2022, will be modestly up in 2023 indeed. Your assumption that our guidance include volume slightly down on the low end and volume slightly up in the high end is indeed the right one. Two more comments on pricing, where number one, pricing should be higher in H1 2023 than in H2 2023. The mechanical impact, if I may say, of the carryover. You should embed that into your model. Second comment, the U.S. situation is somehow a bit specific. Reading at the releases from a number of U.S. listed companies, prices have gone up 13%, 15%, sometimes 17%. I can confirm that our level of price increase in the U.S. was not at this level. We've been very cautious in not increasing prices too much, neither actually in the U.S. nor elsewhere. Even though we are not communicating on a precise pricing by region, our price increase in the U.S. was closer to the group's average than to the 15% price increase that I can hear here and there. We don't believe that we have made too much pricing, and I'm not aware of any margin squeeze at our distributors level. I still believe that we have retained some pricing capability, should we need it. Now, it may be the opportunity also to give you a bit of color on what happened over the last five years. Over the last five years, prices increased by 19% over a period of five years, which is less than the price increase we recorded on raw mats and components, and which is 10 points higher, and which is also less than the slightly less than the wage increase. What does it mean? It means, number one, that we've been able to, you know, hold this 20% margin plus or minus with other means, productivity, footprint, innovation and so on and so forth, number one. Number two, it means that we haven't made too much pricing once again, and that we have retained our ability to do pricing year-over-year, should we need it. That's helpful. It's just that I'm struggling there with pricing for the full year. If you are starting at 7%, 8% year-over-year in the 1st quarter, and the guide implies, should we say, 1%-2% pricing for the full year, how is the pricing positive as we get into the back half? Maybe we can get there, take that offline. If I can secondly- No, I mean, I can answer this question because the way so-called carryover is understood, it's usually okay. There's a carryover of 1%, 2%, 3%, 4%. If you are doing further price increase, the total price effect on 2023 become 2%, 3%, 4%, 5%. It can go one way or the other. You have a carryover of plus of, let's say, 100. If you feel that because the price of raw mats and components is going down, because you want to be a bit price aggressive, even though in our, in our trade it doesn't have such a good payback in this product family, you can decide to decrease or to have less price increase than your, than your carryover. It can be done almost overnight. You are giving more discount on a certain number of projects. You are increasing a little bit at the end of the rebate, you're granting to your customers. That's why a carryover is very theoretical. I can tell you I have a carryover of 1%, 2%, 3%, but at the end, it doesn't mean much about the price impact it will have, the price effect will record in 2023. What I can tell you with that is to tell you, number one, prices will go up. Number two, we will do what it takes to at the same time preserve our competitiveness and meet our profitability targets, i.e. 20%. Clear. Thank you. Very briefly, if I can, just on a volume outlook for 2023, any color around resi, non-resi, and data centers will be helpful. I think you've been calling out data centers still as an area of volume growth. At least that appears to be the expectation. I wonder where we are on the channel D stocking in resi, particularly in Europe, and how you see the sort of volume cadence. I appreciate that's difficult to call at this stage, but wonder what the thinking is around the key segments for the year. That's it. Thank you. Well, I can tell you what it was in 2022. It's always a bit more difficult to give you forecast, you know. In 2022, clearly the residential piece was less supportive both in the U.S. and in Europe than commercial. This being said, if we look at the level of our sales compared to the pre-crisis level, compared to 2019, actually we had a significant growth starting from mid-2020 and throughout 2021. And a more difficult situation in 2022. It's not a very tough situation. This is more the result of sort of one-off booming sales starting mid of the year 2022. As a result, residential was not as supportive as commercial. Commercial was better oriented, both in the U.S. and Europe, and data center continued to experience very strong growth. Take, for example, the U.S., we grew double-digit in data centers this year. We grew double-digit last year. We grew double-digit year before. We grew double-digit five years in a row organically in the U.S. on data centers. Data centers represent today 14% of group sales. If I had to put a, let's say a ranking, the slowest vertical was residential. Then commercial was pretty good and sometimes supported by green products, and data center was booming. Well, going into 2023, it's a big question mark. It's a bit difficult to answer. There are pros and cons. If you look at residential, some of the local statistics of housing starts, permits, and so on are not very positively oriented. We are not entirely dependent upon housing starts. We have a large part of our sales which are renovation driven. There's clearly a need for refurbishing residential buildings, and the various green plans will help. I remind you that 70% of buildings in Europe are not energy efficient. If we want to meet our 2050 targets, we should triple the pace of renovation in Europe, moving from 1% per year to 2%, 3%. There are a number of new products that should fuel growth. You know, 2022 residential was not very supportive. I believe that even though some of the statistics, especially in Europe, are not very impressive for 2023, we could have a number of opportunities. I'm not, again, overly pessimistic on residential in Europe. Thank you. Thank you. We'll now move on to our next question from Aurelio Calderon at Morgan Stanley. Your line is open. Please go ahead. Hi. Good morning, Benoît, Franck. Thanks for taking my questions. The first one is kind of touching on some of your points on data centers. I think you've been flagging, or I think you were flagging, throughout this year that you have been impacted by supply chain constraints and not being able to ship as much as you would have liked to. I wonder if that supply chain situation has improved or has remained stable. How do you see that developing into 2023? Kind of attached to that question, do you feel like you have had any market share shift? That will be the first one. It's not specific to data centers, but indeed, we had faced two supply chain issues. One was on electronic components, and it has impacted, you know, all products incorporating electronic components. By definition, connected products, data center and some of the green products. These constraint should continue a couple of quarters. That's the feedback we are getting from our suppliers. It does not prevent us from growing. That's what we showed in 2022. Clearly, we could have done more growth, especially on data centers and connected products, if we had more electronic components. How long will it take for the situation to smoothen, if I may say? Probably a couple of quarters, we expect to have no longer any issues by the end of 2023. Depending on how fast the problem is solved, it could have, of course, a positive impact on our top line in 2023. The second constraint we faced were supply chain issues coming from China. We have, you know, quite a significant flow of products between China and the U.S. The zero COVID policy in Q2 was an issue. The change in policy end of the year was also a short-term issue because all of a sudden we had 60%, 70%, 80% of our people being contaminated. I guess it was also the same in a number of suppliers. All these changes in policies created some, you know, issues, and we couldn't serve our customers as well as we wanted to in the U.S., not only on data centers, but on also simpler products, such as, for example, presence detectors or light switches. Well, we expect this issue to be solved within a few weeks once people will come back, and they're actually coming back from the Chinese New Year. From what we understand, a lot of Chinese people have been infected. We don't expect a significant disruption at the factory level coming from this COVID policy. The electronic component issue will remain for a couple of quarters. The, you know, Chinese supply chain issues are currently being cleared. Market shares are concerned. Well, I can answer broadly your question. I think that we have done well in Europe in most geographies. I'm not commenting specifically on data centers, but as a whole, we have done very well in Italy. We have done very well in Spain, in Eastern Europe, in Germany, even though we are a small German player. We have been able to hold market share without significant gains or losses in France, which is, as you know, an important country for us. We have a couple of countries where it has been more difficult. Of course, Russia, since we complied with the sanctions, we couldn't sell any electronic components or products containing electronic components in Russia in 2022. We lost share clearly on some product families that we couldn't sell anymore. Our market shares were also under pressure in the Netherlands. If we make the total of all that, I think our market shares did increase in Europe in 2022. As far as the U.S. is concerned, clear gains in market share in data centers. When we look at. You remember, in the U.S., we are mostly active on white space in data center. We are not active at all on gray space, so we're not selling any circuit breaker, power busbar, UPS in data centers, but we are selling, you know, busbar for the white space, PDUs, cabinets, jacks, fiber optic solutions, and so on. On all those product families, we have significantly gained market share, and we have clear evidence of that compared to our competitors. As far as the rest of our products are concerned, the situation is more balanced. You have some gains and you have some losses. As far the rest of the world is concerned, where the situation has been difficult in Brazil, we are still convinced that Brazil is a very interesting geography to operate, and that you can find niches which are high growth, high profitability niches. It's the reason why we bought Clamper, a specialist in surge protection devices, especially for photovoltaic installations. On the traditional product offering, the situation has been a bit more difficult, and we have sometimes accepted deliberately not to be active on some product families as a result to lose market share in order to hold or to increase our profitability. The other way, the situation has been very, very positive in terms of market shares in India, where we are growing very, very fast, and in Africa, where we are also gaining shares. As a whole, and even though it's always difficult because, you know, the analysis has to be done on a product by product family, and we have 100 different product families on a country by country basis, we feel that 2022 was a pretty solid year as far as market shares are concerned. That's incredibly helpful. Thank you very much. If I can squeeze one last question. I was just wondering why you've announced now the buyback. Why do you think now is the right time to announce this? Why is it in this format and not something like a special dividend? Is it to give you more flexibility in terms of potential M&A, or what's the rationale behind that? That's exactly the you have already the answer. Why now? Well, you know, it's a very simple math. If you look at the past five years, we have generated EUR 4.8 billion of cash. We have done what we committed to do as far as M&A is concerned, i.e., over the past five years, we have spent more or less half of this free cash flow in acquisitions. We have done more or less what we had to do in terms of dividend. We increased the dividend per share by 50%. We have done what we wanted to do as far as employees are concerned. We have increased above inflation in most geographies, the wages of our people. We've done what we wanted to do as far as customers are concerned, by doing not too much pricing and by delivering a good customer experience, new products, and so on. At the end of the year, we have a leverage which is 1.2, i.e., a leverage which is not low, but reasonable. We thought it was a good idea to give part of this cash back to our shareholders. Why share buyback rather than extra dividend? Indeed, it's more flexible. To make things clear, our first priorities as far as cash allocation is concerned, is number one, acquisition, number two, dividend. We intend to keep spending half of our free cash flow into acquisitions, and we intend to have a payout ratio for dividends, which should be at about 50% for net earnings. Those are the two clear priorities, and we'll continue along those lines. Since we have a bit of extra cash, we are giving the cash back to our shareholders. The share buyback structure was meant to give us enough flexibility so that it can be stopped or postponed if we had, for example, a big acquisition opportunity or series of many different acquisitions. We plan to do the share buyback program, but as clearly stated in the press release, should we have a big acquisition, we will of course freeze it and give the priority to acquisitions. We'll now take our next question from Gael De Bray of Deutsche Bank. Your line is open. Please go ahead. Good morning, everyone. Can I ask about margins? Q4 is usually a seasonally weak quarter for you from a margin perspective, you know, a bit above 21%. The momentum here looks pretty positive. I guess, you know, Q1 2023 margin will probably now be around 22%. The guidance being only 20% or around 20%, can you just elaborate on the driving forces that could actually lead the margins to gradually decline to around 20% for the full year? Is it a question of mix? Is it a question of more investments coming in or wage inflation? Thank you very much. Maybe give the mic to Franck to answer this question again. Hello, Gael. Thanks for the question. Well, you notice that, of course, Q4 was quite positive in terms of profitability. You have in mind what Benoît reminded about the dynamic of pricing, sales prices and raw mat and component pricing, which were very unfavorable at the beginning of the year and more favorable at the end of the year. Having saying that, of course, this dynamic could be the same last year, meaning better start on the front of pricings versus purchase prices, and which will progressively or mechanically fade a little bit out. What matters, of course, is the full year target. We will manage our 20% with all the traditional levers of the group, which is adjusting pricing, of course, to cost inflation, but also productivity, accelerating on some dedicated commercial or digital initiatives as we do usually. The dynamic of pricing could be the one you have mentioned. Again, to elaborate on what Franck said, we're not guiding on a quarter, we are guiding on a full year. You know, be careful on not extrapolating your assumptions on a given quarter throughout the year. Just to, o kay. Then a question on growth. Within the organic growth guidance of between -1% and +3%, I'm sure you have some, you know, assumptions regarding resi, non-resi, and data centers. Can we just get a bit of color on this? Well, actually, Gael, the question was asked, you know, we have assumptions when it comes to countries and geographies, but the way we manage the business is not, you know, we are not managing worldwide residential or worldwide commercial business units. It's really country-based. The assumptions on which this guidance was based is what the macroeconomists are telling us, i.e., that the situation should be a bit more difficult in Europe than in the U.S. and the rest of the world. The IMF GDP forecast, if I'm correct, is a +2.9% for 2023, with a tougher Europe. As far as Europe is concerned or Euro area, if I may say, the GDP was, I mean, grew 3.5% in 2022 and is supposed to grow only 0.7% in 2023. Our guidance is based on the fact that the European situation should be a bit tougher than in the U.S., in Europe than in the U.S. As far as the rest of the world is concerned, we are super optimistic for India, super optimistic for Africa. A question mark for Latin America and a big question mark for China because it depends a lot on any measure or stimulus plan that could be implemented in order to boost the building industry. You know that we are highly dependent upon building in China. Well, so that's it. A bit more optimistic in the U.S. than in Europe for 2023. Again, with the usual caveat, if for whatever reason the economy is a lot more supportive in Europe than expected, then of course, it will have a direct impact on our top line and the other way. This is the way we look at our business. This is the way our budgets are built country by country and regions by regions. We are not building a budget for resi, non-resi and so on. Last comment, of course, our sales throughout our geographies, U.S., Europe, rest of the world, should be pulled by the fast expanding segments. We expect data center to continue to grow everywhere. We expect green products to continue to grow, especially in Europe. We expect connected products, also to continue to grow, because this is our strategy and those products should record higher than average growth. Okay. Thank you very much. Thank you. Ladies and gentlemen, if you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll now move on to our next question from Eric Lemarié at CIC Market Solutions. Your line is open. Please go ahead. Yes. Yes. Good morning. Thank you very much. I've got two question, if I may. The first one regarding the U.S. I was wondering if you would consider adapting your offer there in order to maybe better catch some current positive trends, like, for instance, infrastructures in the U.S. Could you make maybe some acquisition, for instance, to extend your offer beyond your current exposure to building and data centers, there in the U.S.? It's my first question. I got a second question on this antitrust investigation in France. Did you try to measure or to calculate the financial risk linked with this investigation and what could be, for instance, the maximum cost for you? Or... Do you see any changes on that front recently on the front of this, on this antitrust investigation? Thank you. As far as the first question is concerned, we are always looking at adjacencies in the U.S. and elsewhere, and we have identified a number of adjacencies in which we'll be happy to enter. Without even talking about adjacencies, there are a number of product families in which we are not in the U.S., but in which we are elsewhere, and where we could decide to enter. Take, for example, EV charging station. We are a solid and well-known player in Europe for EV charging stations. We are not active yet in the U.S. for those products, but this is typically something we could consider. You know, you are not doing a move into a new field of activity in order to have an answer to a plan such as IRA, if this was your question. Infrastructure, no. Industrial automation, no. Industrial software, no. Medium voltage, no. We will remain within our playground, but within this playground, which is a market of about 120 billion EUR worldwide and a couple of tens of billion EUR of adjacencies. Yes, of course, we will keep looking at potential adjacencies. As far as the French investigation is concerned, well, we've made two press releases on that this year. We could mention, I mean, the theoretical fine from the competition authorities is well known. It's up to 10% of the sales. Nobody expect this amount to be paid and has never been paid by anybody. If you want to have my feedback, I'm myself pretty confident on the fact that we will demonstrate that our practices in France, as elsewhere, are perfectly compliant with the law. That all this derogated price concept and mechanism is by nature and by definition bringing prices down, not prices up, and that it is made in perfect compliance with applicable laws. That's it. We will continue to do what it takes to demonstrate that in front of the authorities and we'll see. Thank you, that was very good. Thank you very much. Thank you. We'll now move on to our next question from Alasdair Leslie at Societe Generale. Your line is open. Please go ahead. Yeah. Hi, good morning. a follow-up on component availability subjects in relation to the faster expanding segments. That was, that was flat as a share of sales, 33% of the group compared with last year, obviously impacted by component availability. I'm just wondering, can you say what the organic growth was in 2022 in that area overall? Was it lower than the group average? As it stands right now, do you expect that to kind of play a strong catch-up in 2023? Then you've sort of implied the faster expanding segments have grown around 6% organic historically, certainly in the kind of five years to 2020, 2021, but that was off a lower base. You know, given the strengthening secular tailwinds, are you now more confident that that's really the kind of growth rate that this area can deliver over the next five years as well? Indeed, the fast expanding segment represented 33% in 2023. They grew organically only marginally more than the traditional core infrastructure products, like-for-like. By a few percentage points, and not the 5, 6, 7 or 8 percentage points you could think of. Only a few percentage points. You have two main reasons. Number one, the big reason, the main reasons is a shortage of electronic components, and those products include electronic components. Number two, and this is common especially in connected products, connected products at Legrand are slightly more geared at the residentials than non-residential. Again, the lack and the shortage in of electronic components was responsible for the slight or small over-performance of those products in terms of like-for-like sales compared to the more traditional one. Am I happy with this result? No. I'm a bit disappointed by the fact that we had to stop selling some of those products. Sometimes four weeks, sometimes even for a month or two, because we didn't have the components. We have a lead time that have gone up very significantly. Again, will it be completely solved in 20-2023? I'm not sure it will be solved from Q1 or Q2, it should hopefully be solved by the end of the year. I'm very optimistic on our ability to significantly overperform our average like-for-like growth with those fast expanding segments. You know, we have and on top of that to keep delivering acquisitions and M&A on fast expanding growth. We have given the market a long-term objective that we wanted those fast expanding segments to represent 50% of our sales. It will not take a year or two. It will take more than that, but this is still the target, the targets that we have. As far as the past is concerned, we have grown the percentage of our sales of those fast expanding segments from 18% in 2015 to 33% in 2022, which is a CAGR of 17.5%. Growth per year of 17.5%. Half of that was scope, half of that was like for like. Will we be able to register the same CAGR in the years to come? I don't know. I confirm that we still have the ambition for those products to represent half of our sales over the midterm. Okay. Very clear. Thank you very much. Thank you. We'll now take our next question from Alexander Virgo at Bank of America. Your line is open. Please go ahead. Thanks very much. Good morning to you both, and thanks for squeezing me in. I wondered if you could just clarify your comments on data centers there in terms of growth you're expecting in 2022. Second question would be, if I understand correctly, you'd still expect to see 20-40 basis points of margin dilution from M&A as you've typically guided for in 2023. Is that fair? Last thing, last point, if I may, I just wanna kind of come back to this point on Russia. If you're guiding slightly down to slightly up, volume-wise, that includes Russia declining 30%-50% I think you mentioned. When you talk about the guidance, excluding any impact of Russia, what you mean is, we shouldn't be adjusting for 1.5% anywhere. We basically take everything as it stands until such time as you tell us that we should be taking Russia out. Is that the right way to understand it? Well, I didn't get your first question. Could you repeat, please? Just the clarification on data center growth, sorry. Okay. In 2022. I just I think you said you expect it to grow everywhere, and I wasn't sure whether that meant now in 2023 or whether it, t hat was a sort of a more of a midterm comment. Starting with the first question, I told you that the fast expanding segment grew marginally faster than the rest of the product offering. If we look at the various segments, the highest growth was on data center and green products, and the lower growth on connected products. Data center, like for like sales, overperformed significantly the rest of our product offering. The issue, if I may say on fast expanding segment, which I can hardly qualify as an issue, but as a sort of a short-term difficulty we had to face, was clearly coming from connected products. Very nice growth in 2022 in data centers, and we expect this growth to continue in 2023. I'm sure that you have read a number of analysis about the fact that the GAFAM were laying off people, sometimes, you know, improving their margin or cutting some investments. We don't believe that this will have a meaningful impact on the data center business in 2023 or 2024. There are still huge investments which are planned. If you take something like ChatGPT, for example, you know, it cannot work and being operated without huge data center capability. Every time there is an innovation, call it metaverse, call it ChatGPT, it requires additional capacity and additional bandwidth. We remain very optimistic on data center. Number two, as far as margin dilution, it really depends on how much acquisitions we do. If we are doing the +3% perimeter impact, which we are guiding for, yes, indeed, the dilution could be -20 basis points, -30 basis points. While -40 basis points would be quite a high dilution, but I think it should be probably closer to 20 to 30. With the current scope we have, the dilution would be -10 basis points, with a 1.5% scope impact, which is already secured, if I may say. Assuming that the go get of 1.5 could add an additional 10 basis points or 20 basis points of dilution, I think is the right assumption. As far as Russia is concerned, to make things clear, we are guiding for like-for-like sales between -1% and +3%. To that, you should add, so excluding Russia, excluding all numbers from Russia. To that, you should add +3% of perimeter impact, of which 1.5% already secured, 1.5% as we will get. To that, you should deduct the activity we will have in Russia in 2023. It won't be -1.5% because we will still have some activity until we sell this business, and it could take as long as 6 months to be sold. What I don't know is how long it will take to be sold and how will the business be meanwhile. It will not be -1.5% of negative scope. It could be -1%, it could be -0.5%. Those are the orders of magnitude. -1% to +3%. An additional +3% of scope and a negative, -0.5% to -1% coming from the exit from Russia. That's very helpful. Thank you very much. To be complete in terms of margin, we are shooting for the 20% EBIT margin. You can have, of course, -10, -20 bips, sorry, coming from, or even -30 bips coming from acquisitions. From 0 to -20 bips coming from Russia. Thank you. We move on to our next question from James Moore at Redburn. Your line is open. Please go ahead. Good morning, everyone, and thanks for the time. I wondered if I could follow up on the growth segments. You mentioned 14% data center, but we're still 33% for the faster expanding segments. Can I assume that Eliot was the one that dropped from 15% to 14% and green stayed at 21%? Also on the growth segments, you mentioned a bit better. Could we think about 12% or more 11% for the organic growth in 2022 from the growth segments? The third question is regarding the sequential Q-on-Q volume, excluding working day and price developments in Europe and the U.S. On my math, both Europe and the U.S. last quarter, in the third quarter, fell 7% Q-on-Q on pure volumes, adjusted for working days and stripping out price versus the second, was quite a big drop. I think Europe bounced back up 3% this quarter and the Americas up 6%. I just noticed that that's much more than the normal seasonality over the last 10 years. I wondered whether you noticed what was really driving that cadence in volumes. As far as, maybe Franck, we'll let Franck to answer the question, too. As far as the first question is concerned, don't forget that there is an overlap between the three sub-product categories within the fast expanding segment. A product can, at the same time, be connected, green and be sold into data center. Let me maybe give you the breakdown of the 33%. Green products represent 22% of our sales. Connected products represent 14% of our sales, and data centers represent 14% of our sales. You have an overlap. If my computation is correct, you have an overlap of minus 17%. This is the breakdown. If you look back in 2015, compared to 2015, green products have doubled in our sales. Connected products have slightly more than doubled in our sales. Data centers have almost been multiplied by four as a percentage of our sales. Of course, you have the overlap. This is a way that the breakdown is made. Well, as far as the organic growth of fast expanding segments are concerned, it's actually between the two numbers you shot. Between the +11 and +12, as compared to the average group of +9.7%, i.e., less than 9% for traditional products. This is the order of magnitude indeed. I'll let maybe Franck to answer the seasonality question. Yes, if I understood properly your question, James, it's about a softer Q4 for Europe and a stronger Q4 for the U.S. As far as Europe is concerned, as we said at the. If I could just clarify, and maybe my math is wrong, but the way I work is to remove price at the group level in all geographies. I take away a working day effect, which I calculate, and I come back to a year-over-year pure volumes excluding working day. I index that and look at what's the sequential quarter-over-quarter. I'm really talking about quarter-over-quarter pure volumes on a daily basis. I just noticed both Europe and the U.S. were down 7% in the third versus the second, and now they've bounced back up. Both of them have come back up. It's just Europe's come up 3%, which is good, and the Americas has come up 6%, which is even better. That's just certainly better than you would have thought, looking at all the construction data and confidence indicators. I just wondered what was behind that positive rebound. Transatlantically. Okay, okay. I understand. I'm afraid that your math doesn't work globally. The main message is the same, is why stronger Q4 in U.S. versus Q3, and why softer for Europe? First, starting with your methodology, a number of days on the quarter for us doesn't work very much. Applying the average pricing of the group is also a shortcut. And third, if I understand properly, you are trying to combine year-over-year computation with a sequential view. For me, it's a lot of caveat in your computation. Having saying that, looking at Q4 versus Q3 in Europe, if you exclude Russia, the behavior of Europe is slightly the same. You're right, slightly better than at Q3. No meaningful changes. Second, as far as LNCA is concerned, Legrand and Central America is concerned, Q4 is, you're right, slightly stronger than Q3. Remember that we said when we disclose our Q3 numbers that we had some supply chain challenges as in the U.S. It was on behalf of components availability. It was also about the dependency to China. As Benoît said earlier in the call, we have quite a meaningful flow of product between China and the U.S. Q3 was particularly challenged in terms of zero COVID policy in China. impairing slightly our sales with a slight recovery on Q4. That's the two main messages that would explain what you have seen. In other words, we're not seeing a strong, sequential, growth in the U.S., nor a strong-. Yeah. -sequential drop in Europe. Volumes are indeed a bit under pressure which was expected. Again, for 2023, assuming that we will record from a slight volume slightly down to slightly up, I think is a reasonable assumptions, both based on what we can see from the macro specialist and from what we recorded in our accounts in Q3 and Q4. That's very helpful. If you ever want to help with the caveat and give regional working day effects and pricing, please feel free. You know, working days has an impact on our trade over one month. When you have 20 or 21 or 22 days on a given month. Well, you can do the math better than I do. One day, more or less, can have an impact of 4%-5%. Yeah. -on, on your top line. Out of total number of days, of working days of 240 or 245 in a year, it has almost no impact. Yeah. We can from time to time mention it on a given quarter, but frankly speaking, it is not a meaningful input to analyze yearly sales. Thank you. I think, I'm turning to the operator. For Q&A? Yes, that's all the time. You may go ahead and conclude today's conference. Thank you. Well, thanks, everybody, for taking the time to look at our numbers and for the discussion. I'm very happy, to tell you the truth, to meet some of you during the roadshows to come. Should you have any more questions, you have Ronan, Sammy, Antonia, and Franck and myself, of course, at your disposal. Thanks a lot. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.