Good morning, ladies and gentlemen, and welcome to today's Legrand's 2023 full-year results conference call. For your information, this conference is being recorded. All participants are in a listen-only mode, and later there will be a question-and-answer session. At this time, I would like to hand the call over to CEO Mr. Benoît Coquart and CFO Mr. Franck Lemery. Please go ahead, sir. Thank you. Hello everybody. Good morning. Thank you for connecting. So Franck, Ronan, and myself are happy to welcome you to the Legrand 2023 full-year conference call and webcast. As you know, 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 results into more details. I begin on page 4 with the four key takeaways of this release. First, Legrand delivered outstanding 2023 results amid building markets in retreat. Second, we are actively executing a strategic roadmap. Third, we have laid out our full-year targets. And last, we will host a Capital Market Day in September 2024. So moving to pages 6 and 7, I will start with an overview of sales. In 2023, our sales grew organically and through acquisitions by +4.7%, driven by an organic rise of +2.7% and a scope from acquisitions of +1.9%. With building markets in retreat in most geographies, these figures testify to Legrand's resilience and confirm once again the relevance of our growth and value creation model driven by faster expanding segments, pricing power, and strong commercial performance. Based on acquisitions announced till now, the full-year impact in 2024 should be around +1.5% in 2024. Regarding the two other elements on sales, the negative scope effect from Russia was of -0.9% in 2023 and will be -0.6% in 2024 on the full year. The exchange rate effect was a negative -2.7% in 2023. Based on average rates of January, it would be close to -1% for the 2024 full year. On page 7, you will find the key takeaways per geographies on a like-for-like basis. Europe grew a very solid +6%, driven by strong growth in each faster expanding segment and despite a residential market that retreated in most geographies. In the U.S., sales declined -2.8% full year amid strongly declining markets. The group resisted thanks to a double-digit sales growth in data centers. Finally, in the rest of the world area, sales marked an organic rise of +5.7% in 2023, with a very robust momentum in India and an increase in China. These were the main comments I wanted to make on sales. I will now hand over to Franck for more color on our record high performance. Thank you, Benoît, and good morning to all of you. I will start on page 8 commenting the adjusted operating margin. Before acquisition and excluding Russia, we recorded a high adjusted operating margin of 21.2% in 2023, representing a remarkable +0.8 points increase versus last year. While investing in growth and spending significantly in restructuring, this very high profitability level demonstrates once again the quality of Legrand business model, our undiminished pricing power, our solid cost control, and a high level of productivity. The impact of acquisition was of -0.2 points, meaning that the adjusted operating margin all-in stood at 21%. Going now to page 9 and highlighting three main points. First, with a net profit of EUR 1.1 billion, representing 13.6% of our sales, earnings per share were up +15.6%, showing the group's very strong value creation. It benefited mostly from the favorable trends of operating profit and financial results. Second, the free cash flow came to a record high level of 18.8% of sales, meaning a conversion rate of 138% of net profit. Lastly, return on capital employed after tax stood at a high 14.7% for 2023. On page 10, three figures to illustrate the robustness of our balance sheet, with a net debt to EBITDA ratio of 1 at the end of the year, a high cash position, and a vastly fixed-rate gross debt. This concludes the key financial topics I wanted to share with you. I'm now handing back over to Benoît. Thank you, Franck. I will continue the presentation talking about our 2023 dividend and share buyback program on page 12. So for 2023, Legrand will propose a payment of a EUR 2.09 per share dividend, up +10% compared to last year. Regarding our share buyback program for cancellation of shares, EUR 400 million were completed over one year, which means that EUR 100 million are left to be done in the coming months. Let me now move to our 2023 CSR achievements on pages 14 onward. So on page 14, in 2023, Legrand reached an achievement rate of 118% on the targets set for the second year of its 2022-2024 CSR roadmap. We overall had strong showings and, as expected, some challenges regarding circular economy. As you can see on pages 15 and 16, we are particularly proud to have reduced Scope 1 and 2 CO2 emissions by 39% at current perimeter over two years, with -28% over one year, clearly outperforming our targets, while reducing our energy consumption by 17% and now using 82% of renewable electricity. Results on gender diversity are also very good, with now more than 29% management positions filled with women. On page 17, we announce our first international employee share purchase plan to recognize and promote employees' engagement. It will, of course, not be dilutive. Now, going to the second part of this presentation with the ongoing implementation on Legrand's strategic roadmap in 2023. On pages 19 and 20, driven by strong R&D, Legrand was very active in terms of new products launches, in both faster expanding segments, and core infrastructure products. On page 21, Legrand is announcing today the acquisition of MSS in New Zealand. Together with the four acquisitions already announced over one year, the five companies represent annual sales of about EUR 190 million. On page 22, faster expanding segments made up of energy efficiency, data centers, and connected products grew organically double-digit in 2023 and accounted for 36% of Legrand sales. More specifically, data centers now represent 15% of total group sales, with a unique leadership positioning as a white-room specialist, with an offering well adapted to the emerging needs of the growing artificial intelligence industry. On page 23, we show our continued initiatives to enhance our operating performance and productivity, with the active deployment of Industry 4.0, the ongoing optimization of the group's industrial footprint, especially North and Central America, and our increasing innovation capabilities in software and firmware. We can now move on to page 25 regarding 2024 full-year targets. So taking into account the world's current macroeconomic outlook and with confidence in its model for creating integrated value, Legrand has set the following full-year targets for 2024: low single-digit sales growth, organic and through acquisitions; an adjusted operating margin before acquisitions between 20.0% and 20.8%; at least 100% CSR achievements rate for the third year of the 2022-2024 roadmap. Before we move to questions, you will find in pages 28 and 29 our corporate access agenda for the coming months, and we will be hosting a Capital Market Day on September 24, 2024. This is it for the key topics of this release. I suggest we now switch to Q&A. If you would like to ask a question, please press star one on your telephone keypads. Please ensure your line is unmuted locally, as you'll be advised when to ask your question. The first question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead. Hi. Good morning. Thanks for taking my questions. I have two questions. The first one is whether you can comment on sort of how you're managing your price lists for 2024. The second one is regarding your guidance, your low single-digit guide. Can you maybe help us understand a little bit by product how you see things evolving? Obviously, you have a big data center exposure. One of your competitors just talked about very high growth levels there. Sort of what's offsetting that, if you give us some color in terms of particular products or regions that you see has the major offset in 2024? Thank you. Yep. Hello, Daniela. So as far as your first question is concerned, well, it is not a secret that Legrand has been enjoying forever good pricing power. Now, as you know, we are using it carefully, this pricing power. We don't want to do too much pricing. We want to do the right pricing in order to remain competitive. So to give you numbers, in 2023, our prices were up 4.8%. But if you take a longer run, over five years, we had pricing which were up 22%, which is basically more or less 4% per year, and the cost of robots and components, which was up 24%. So 22% against 24%. So you see that we are extremely careful in not doing too much pricing, which also tells you that we have ample margin for maneuver to do additional pricing if needed. We don't believe the environment in 2024 will be for strong growth in the price of robots and components. So we are shooting for small pricing, probably +1% at maximum. But again, if needed, if for whatever reason we had a price of robots and components which was to go higher than expected or price of input overall which grew more than expected, then we keep a lot of margin for maneuver to do additional pricing. But so far for 2024, we are shooting for +1% pricing maximum. As far as the guidance is concerned, so it's a low single-digit growth of sales combining like-for-like and perimeter. As far as the perimeter impact, you could see in the press release that we have a carryover coming from the previous acquisitions or the acquisitions already completed of +1.5%. You know that Legrand has as an objective to achieve a perimeter impact of +4%. Well, +4% for 2024 would be very ambitious because you know that, of course, the additional acquisitions will not be consolidated starting January 1st. But clearly, we are shooting to deliver +2, +3% perimeter impact, which means that this low single-digit guidance translates into like-for-like sales, which would be from, let's say, slightly down to slightly up. Now, in terms of environment, we believe indeed that the data center business and market should continue to grow fast. We grew our sales in data center in 2023, double-digit. Will it grow double-digit in 2024? We don't know. But I confirm that this market segment is enjoying a nice growth and should continue to grow. As far as the two other big segments are concerned, as far as residential is concerned, which is close to 40% of our sales, it is bottoming in the US. Most people expect some sort of recovery starting somewhere in 2024. In Europe, the situation remained pretty difficult. I remind you that housing permits or building permits, housing permits were down 20% last year. Now, here again, it will depend very much on the interest rates. So you know that if the interest rates start to go down, there should be or there could be some recovery in the residential in Europe. Now, will this recovery happen end of 2024 or in 2025? We don't know. There is a strong correlation between interest rate and housing starts and housing permits. As far as the non-residential is concerned, it has been pretty flattish in Europe, down in the US. Here again, there's no reason why there wouldn't be some recovery at some point. But again, with some uncertainty on whether it will happen end of 2024 or in 2025. So we clearly have, let's say, three different dynamics: data center up, residential, which so far has been down double-digit but with some recovery, bottoming in the US and potential recovery, including in Europe, somewhere between the end of 2024 and beginning of 2025, and the office market or the non-residential market pretty flattish in Europe, down in the US, and here again, potential recovery end of 2024 and 2025. Does it answer your questions, Daniela? It does. Thank you very much. Thank you. The next question comes from the line of Nick Amicucci from Cowen. Please go ahead. Hey. Good morning, everyone. Hello. Just a couple on my end. Just wanted to get a little bit of clarity surrounding kind of the cadence throughout the year of that low single-digit growth. Is there any kind of bifurcation between the first half and the second half? Are we expecting a step up in the second half, or is it pretty even keel throughout the year? And then just wanted to dig in a little bit deeper just on the U.S. in particular or the North and Central America segment in particular. Saw a little bit more pressure from an Adjusted Operating Margin perspective in the quarter. Just wanted to see, was that strictly just because of the deterioration in the markets that you guys had touched on before, or was there any kind of mixed impact that we should be aware of? Well, I'll take the first question. Hello Nick, I will take the first question, and Franck will take the second one. As far as the potential seasonality in 2024 between H1 and H2, well, it's not a secret that we have a stronger basis for comparison for the beginning of the year than for the end of the year. So in this respect, Q1 should be more demanding than H2 typically. Now, so this is, let's say, an expected seasonality. Now, the question mark is whether some rebound will occur, happen at the end of 2024 or not. If you take the low end of our guidance, i.e., sales slightly down like-for-like, it doesn't imply some market recovery in H2. It implies a market which will remain difficult throughout 2024 and some overperformance from Legrand due to its specific positioning on data centers, on electrification, and on other fast expanding segments. The higher end, if I may say, of the guidance, i.e., like-for-like slightly up in 2024, indeed implies some of the markets recovering or starting again to grow at the end of 2024. But the pure mechanical seasonality, let's say, it's a more demanding start because of the basis for comparison and to a lesser extent because of the number of trading days. Let maybe Franck answer the second question. Yes. Hello, Nick. So talking about the profitability of North and Central America and our ability to protect margin in that difficult environment, first, we have to recognize that 2023 was good profitability for North and Central America. 19.4%, it's exactly the average of what we experienced last year and the year before. So considering the top-line challenge, it's a good result. This 19.4% embeds a lot of restructuring actions, so a lot of one-timer preparing for the future. So globally speaking, good results in 2023 and no reason why we shouldn't be able to hold margin also in North and Central America in the future. Perfect. Thank you guys so much. The next question comes from the line of Gael Debray from Deutsche Bank. Please go ahead. Well, thanks very much. I have two questions, please. Can I take them one at a time? So the first question would be around your growth initiatives. Could you help us quantify, perhaps, the impact of these investments on EBIT in 2023 and any color on what the magnitude of these investments could be this year as well, and specifically on restructuring? EUR 60 million spent in 2023. So what's embedded in the margin guidance for 2024? Okay. So as far as growth initiatives, indeed, you remember that mid of last year, we launched a series of initiatives in order to boost as much as we could top-line growth in H2. So we did it, even though the results were not the same everywhere. To give you numbers, as you know, we had like-for-like sales up +1% in H2 last year. And we had like-for-like SG&A growing +9%. So +9% in SG&A, +1% in top-line growth. And I have to say that amongst the values SG&A, we had a number of discretionary SG&A which grew a lot more than that. If you take, for example, sales network and advertising, it was close to +30% in H2. So we launched a number of initiatives in the values zones. Results are overall positive, but not everywhere. It was a clear success in Europe. Europe is positive in volume in H2 when it was negative in H1, even though the markets are down in Europe. So we, for example, we dedicated more budget to some product launches. We accelerated the deployment of some product offering. We increased some production capabilities and so on and so forth. The results were more disappointing, I have to admit, in the U.S. or in North America. We have launched a number of initiatives, but the market conditions are such that those initiatives haven't really delivered on expectations. And as a result, volumes in H2 were negative and very similar between, let's say, Q4, Q3, and H1. The outcome of that is that when you are facing difficult market situations, the market doesn't always support you in launching those initiatives. Going into 2024, we will indeed continue some of those programs. We are not giving up a strategy to accelerate the growth in market shares. But again, it will depend on the market conditions. If the market conditions are very bad, not all those initiatives will be successful. It's a bit early to tell you. As far as restructuring is concerned, indeed, we spent more than EUR 60 million in 2023 in restructuring. You know that the average, well, except exceptional years such as 2020, but the normal, let's say, run rate of restructuring at Legrand, it's about EUR 30 million per year. So with EUR 60 million last year, it demonstrated that we have launched a number of productivity initiatives in order to support 2024 margin guidance as well as the margin profile in the coming years. As far as 2024 is concerned, it's always super complicated to give you a precise forecast for restructuring because we may have good ideas coming along the year. Acquisitions are bringing also additional opportunities. But for the model, you can assume that it should be at least the normal EUR 30 million. And then if it is more, it will rather be a good news for the group. But let's say EUR 60 million in 2023 and as a starting point, EUR 30 million for 2024. Can I perhaps follow up on the growth initiatives? I mean, I can see you launched many new products last year, invested a lot in SG&A, and the traction was actually relatively limited. Do you think that you need perhaps more integration capabilities, more digital capabilities, which currently appear relatively limited compared to some of your peers? Do you think that would be required to grow in the systems business and perhaps be in a position to serve the more technical buildings out there, which appear to be more dynamic? Well, you know the software building, the building industry is not at all software-intensive. Industrial automation is, but not building. None of our peers is doing a significant business in software in the building piece of their business. So unfortunately, it's not very software-intensive. As far as the building management systems are concerned, so the complete systems, the market share in BMS has been very flattish. It has a market share of 6% worldwide, BMS. And it used to have, 10 years back, a market share of 6%. So this is not where the growth should come from. We believe that the growth should come from integrating more firmware into the product, which is different from software. And we are doing a lot of that. I remind you that 20% of our R&D efforts are geared toward firmware. It's about launching advanced functions. It's about launching connected products. Connected products now represent 15% of our sales. I don't believe that in the building industry, software, pure software, matter much. We have not seen any player developing a significant part of business in the software industry. Again, it's different in data center, different in industrial automation. But for building industry, no, it doesn't matter much. No, the key point, Gael, is that we have to admit that the building industry was down last year. Again, -9% in housing starts in the U.S., -20% in residential permits in Europe, the office market in the U.S. being down, Chinese real estate market being extremely difficult with a lot of real estate companies going down and being even bankrupted. We have to admit that the building market has been very difficult, will remain difficult in 2024. In this context, the performance we are doing demonstrates a very good showing in terms of market share. Okay. Thank you very much. I'll get back in the queue for the other questions. Thank you. The next question comes from the line of Alasdair Leslie from Société Générale. Please go ahead. Hi. Good morning. Maybe just a follow-up on the North American growth initiatives. I guess some quite cautious comments there, but I'm just trying to kind of parse that between maybe the underlying market environment and then your own sort of action plans because I thought that kind of the onboarding of new agents and distributors in the US was going relatively well. I guess there's no change there to that focus. If there isn't, maybe you can help us a little bit with that process in terms of next steps, timeline towards the launch or scaling up of Legrand products into some of those new adjacencies. I'm just wondering, do the associated investments and costs ramp up from here? Thinking particularly about the level of training, etc., also the potential for higher level of rebates and incentives, perhaps in the initial phases of the launches. Thank you. So focusing on North America, the very first thing that you have to bear in mind as far as North America is concerned is that it is a market with a lot of differences between the value segments. If you take, for example, the NEMA association, which is the official Electro Industry Association, giving out some official numbers, looking at those numbers, for example, private manufacturing construction in the U.S. was up last year 62%. Well, unfortunately, we are not very, very small on private manufacturing construction. At the same time, commercial construction was flat. And amongst commercial construction, you had the office market, especially in big metros, which was down. So the first thing to have in mind when looking at the numbers in North America is that indeed, you had segments of the market which grew very, very much like private manufacturing construction. Now, if we zoom on our market, I remind you our market exposure in the U.S. or in North America, resi 20%, non-resi slightly less than 55%, something like 53%, as much as we can measure it, and data center slightly more than 25%, something like 26% or 27%. On the non-resi piece, we are clearly overexposed, and we've said that very clearly for a while, to the office market, which is a big business for us. And within the office market, two big metros, Chicago, New York, Atlanta, and so on and so forth. And this specific market was down. Now, we are continuing clearly our strategy to bring new products to the market. In the list of products that you have in the PPT, you have a number of products which are dedicated to the North American market, such as some lighting products, such as some connected camera, and so on. We are continuing to expand our customer reach by getting into lighting agents and into new channels. We are trying to convert customers both from the pro channel and for the DIY channel. So we do have a lot of initiatives, and we will continue. Now, again, when you, for example, want to give a lot more power to a product launch, but when the market is down, it's a bit more difficult than when the market is up. So we will continue. Will it translate into a lot of growth in SG&A in the U.S. in 2024? We don't know yet. It will depend also on the underlying economy. But I confirm that there is no change in strategy in North America, that we continue, of course, to expect the market to rebound at some point, and that we keep pushing hard in order to overperform our underlying market, which is not very, very supportive. The second question was on ramp-up for AI. Is that correct? Oh, no. It was actually just whether, sorry, just again, it's still on the growth initiatives. But it's just perhaps whether there would be sort of higher investment, perhaps, as those launches come through, if they do come through in 2024 in North America. No, we will. Just whether we should. Well, we'll continue to do those investments. Now, again, I cannot give you a precise number in terms of SG&A growth. It will depend on many factors, including, of course, how supportive the markets are. But I confirm that we are not in a cascading mode. We will keep chasing growth opportunities, but we will do it as usual, carefully, making sure at the same time that we meet our margin commitments. Fantastic. And then just a quick follow-up question. Thanks for the updated kind of mix on North and Central America. I think you sort of said 20% RESI, still slightly less than 55% non-RESI, 53%, I think you said. Within that, is offices still around about half of that? So sort of, I guess, sort of 25%, 26% of North America's sales. Is that correct? Well, of office, you mean? Well, take those numbers with a pinch of salt because the same products are sold into office building, universities, schools, and so on and so forth. So it's really a very, very rough estimate. But indeed, probably more than half of our commercial building exposure is dedicated to offices. But again, those are not, as we say in French, hard scientific numbers. Right. Got it. Thank you very much, Ben. Thank you. Yes. Bye. The next question comes from the line of Aurelio Calderon from Morgan Stanley. Please go ahead. Hi. Good morning. Thanks for taking my question. I've got two, please. The first one is a bit of a follow-up on kind of those or that strategy to try and rebalance the portfolio in the US. Are you thinking about doing this organically, or would you be able to do this inorganically, something like, I don't know, larger acquisitions, something similar to Milestone? I'm just asking because obviously, your balance sheet position is in good shape. And as you said, it's difficult to grow in shrinking markets. So how are you thinking about rebalancing that exposure? And I'll take the second one after this one. Yeah, yeah. Sure. We will do it both organically and inorganically. So organically, for example, each of our businesses in the US do have some clear targets to get more into adjacent markets or non-office markets, such as, for example, health, which is set to grow, logistics, or a number of other markets. And we'll do it inorganically. That's what we've been doing. If you look at the past 2 acquisitions we made in the US, ZPE Systems, which we announced a couple of months back, was in data center. Encelium, the small acquisitions we did about 6 months ago, were in the lighting controls, so highly correlated to energy efficiency. So it could be inorganically and organically. Does it mean that we will make a big acquisition, i.e., somebody amounting EUR 500 million or EUR 600 million or EUR 700 million and EUR 1.something billion in terms of EV? Big question mark. I would personally be delighted to have such a nice opportunity because it will help us to accelerate indeed the rebalancing. But you don't have a lot of interesting candidates of this size. So we will continue organically and inorganically. We are looking at a number of opportunities, but the likelihood to see a big, let's say, acquisition is more limited than the likelihood to see a small one. As far as our balance sheet position is concerned, you are completely right. We have a leverage of 1, which is not a high leverage. You know that our target leverage for us is between, let's say, 1.5-2. So we have ample margin for maneuver to do additional acquisitions. We have a lot of good ideas to do so. If for whatever reason we cannot find the right candidates, of course, we would have to make our mind about the use of the cash we have and how to re-leverage a little bit. This is what we did last year. We look at the, let's say, 6 to 12 months acquisition opportunities, at the dividends we were to remit. We came to the conclusion that given the high level of cash, it was a good idea to give some of this back to our shareholders. So this is the reason why we launched this share buyback program. Again, we have EUR 100 million to spend out of this program. If in the months to come, we come to the conclusion that beyond, let's say, the 2% or 3% perimeter impact, we don't have the best use of this big cash that we had last year, we might consider launching another share buyback program. To make a long story short, I confirm that we don't have a high leverage, 1.0, that we would love to be closer to, let's say, 1.5-2, and that the priority is to actively look at acquisitions. If we don't have enough good ideas, we could always consider buying back some additional shares. You had a second question. Yes. Thank you. That was very clear. The second question is, you're obviously guiding slightly above your usual 20% margins. We've also seen some of your peers in Europe and in the US coming out with very strong margins. The question is, do you think that something has changed structurally in the market and the industry is more profitable because of, I don't know, electrification, higher demand structurally? Or just trying to think about that 20% anchor that we have for Legrand, is that the right level, or should we be thinking about something slightly higher given industry dynamics? Well, indeed, we've been consistently, three years in a row, delivering more than 20% adjusted EBIT: 20.5% in 2021, 20.4%, sorry, in 2022, 21% in 2023. And we are, again, guiding before acquisition to 20%-20.8%. Interesting point, this has been done financing every single year 20-30 bps dilution of acquisition. If we had stopped doing acquisitions in 2020, our margin wouldn't be 21%. Our margin would be closer to 22%. So indeed, it's significantly higher than what we were able to achieve a couple of years back. We haven't changed yet our midterm guidance. I think this will be a discussion that we will need to have at the next CMD. Well, now, I think that we have indeed, we have shown at least in 2021, 2022, 2023 that we had a margin profile which was slightly higher than the historical one. Interestingly, it doesn't come much from gross margin. It's a very important topic to have in mind. It comes a lot from SG&A. If you compare 2023 numbers with 2018 numbers, we have, let's say, 80 bps additional EBIT, 21% instead of 20.2%. But we have approximately the same gross margin at 52%. We have a little bit more operating expenses because we are spending more in restructuring. And we have 1 point less in SG&A. And all that has been doing while at the same time financing 130 bps dilution coming from acquisition. So very long answer to a short question. I cannot tell you if structurally, we have improved the margin profile of Legrand. I can tell you that three years in a row and potentially four years, if we deliver our 2024 guidance, our margin would be in excess of 20% indeed. That's very clear. Thank you very much. The next question comes from the line of William Mackie from Kepler Cheuvreux. Please go ahead. Good morning, gentlemen. Thank you for the time. My first question would come back to pricing, Benoît. You gave a guidance about almost maybe 0%-1% pricing in aggregate for the group. But could you throw a little color onto where you see the strongest pricing power, a feature of your company that you highlighted, across the product segments or regions, or conversely, where it is very difficult to achieve much price traction? Well, there's a strong correlation between leadership positions and pricing power. So it's not a matter of geographies. It's not a matter of product families. It's when you have a strong leadership on a given product family and when you are 2x higher or 2 x bigger, sorry, or 3x bigger than the number two, then you enjoy pricing power because your customers are used to do repeat sales and are not asking for discount every time they contact you because you are well distributed and your products are everywhere in a given territory and so on and so forth. So I cannot give you a precise geography or a precise product family. We don't have, to my knowledge, a product family which wouldn't follow this rule. Whether traditional or fast expanding, the stronger the leadership, the higher the pricing power. Super. Thank you. The second is a bit more structural relating to the group's supply chains and balances. We've seen in the past this impact of trade tariffs in North America and how you rebalance the flows from China. And the threat of an administration change seems to come with a new threat of tax measures that may impact imports into America. It may happen in other markets. To what extent do you think the group's supply chains have been adequately rebalanced, or is there still more need for local sourcing? Well, it's an interesting question. We remain, of course, dependent in terms of sourcing upon China. So you know that in terms of sales, China is a small market for us. It's about 3% of our sales. But in terms of COGS, it used to be close to 25% of our COGS coming from China. We have reduced that a little bit. So it's no longer 25%. It's probably something like 22%-23% of our COGS is coming from China. We will continue this move. Now, you shouldn't expect that to come down to 15% or 10% within two or three years. Those moves are moves that take a long time because you have to move factories. You have to appoint new suppliers. A number of suppliers or Chinese suppliers remain the best suppliers in terms of technology and cost. So you cannot move out of China all your supplies. So you should expect this 22%-23% coming progressively down to 20%-19%, but not 10%, and over a certain period of time. Now, to be a bit candid, were the tariffs between China and the U.S. bad news for Legrand? I'm not sure because we had the ability to do additional pricing in order to compensate for the additional cost of those tariffs. Since product by product, most of our competitors do have the same exposure to China, increasing prices wasn't a competitive issue for us. So it translated into higher sales. So it's not always bad news when you have the cost of input increasing, whether because the price of raw material components are going up or because you have tariffs or because salaries are increasing and so on. When you have some pricing power, it's not necessarily bad news. So to make a long story short, yes, we are rebalancing. But those are moves that take a bit of time. And this 25 will become 20 progressively or 18. But it will take a few years. Very helpful. Thank you. The next question comes from the line of Andre Kukhnin from UBS. Please go ahead. Hi. Good morning. Thank you very much for taking my questions. Could we talk about input costs, please? Could you give us some idea what you expect for raw materials and components inflation for 2024 and also for labor? And then I've got a couple of follow-ups as well, please. Yeah. So let's start with 2023. So in 2023, our purchase cost of raw materials and components was flat. So I told you that we had a pricing of 4.8%, but the cost of raw materials and components was flat. It was, as expected, slightly up in Q4. Well, as far as 2024 is concerned, from what we can see today, it could be slightly positive or slightly negative depending on the macro. We don't expect prices to go down significantly nor to go up significantly. If the price goes up significantly, it would be a good news for Legrand because it would imply a strong economic recovery, which we would benefit from on the top line. If it was to be strongly down, it wouldn't be a bad news in terms of profitability because since we will hold the prices, it will have a good impact on margin. So we are, of course, tracking that carefully. But the impact on margin is not huge because of the counterparty we have in top line or because of our ability to hold the prices. As far as labor cost is concerned, it was up close to +6% in 2023, which is, we believe, a pretty good performance in this context of high inflation. Still difficult to forecast for 2024 because it will somehow also depend on the economic environment and on the inflationary pressure. But if you take as an assumption between +4% to +5%, i.e., coming back to the level we had two years back, I think it would be a reasonable assumption. But don't forget that on top of doing salary increase, we have a lot of labor productivity. So close to +6% in 2023 and between +4% to +5% in 2024. Thank you. Thank you. Very useful. Can I also just follow up on a question that Gael asked at the end about the potential need to build out wider capabilities and maybe software? What you said on data centers is quite interesting that you said it matters there, but it doesn't matter in the rest of buildings. And I wonder if you could elaborate a bit more on why that matters in data centers and whether other buildings will become more like that as edge devices proliferate to implement connectivity and energy management optimization and, I don't know, as we'll have more office buildings with photovoltaic panels and, again, those IoT solutions. Isn't that where it's heading for construction from understandably very low base right now? Yeah. Well, there's many differences between a typical building and a data center. I can name two, but there are others. And otherwise, we could spend an hour discussing this topic. The first difference is that you have a huge existing park of buildings, whether raised or non-raised, whereas most data centers are new or they are a couple of years old. But you don't have a lot of data centers which are 20, 30 years old. So when you want to do a fully automated building, it's a lot easier on a new building than on an existing building. Existing building costs just too much money to do a traditional BMS system. First difference. Second difference, a data center, it's an industrial type of environment. It's highly designed, highly protected, highly energy efficient. So it's an industrial type of environment, whereas a building well, you've been all your life into residential building or non-residential building. You have many other topics which come into play. You have comfort. You have ease of use, ability to easily reconfigure it, and so on and so on and so forth. That's why the penetration rate of data center information management system is quite high, whereas the penetration rate of building management system is very low and has remained very low for the past 10 years. Now, interestingly, is it a problem for Legrand that data centers are more software-intensive than buildings? No, it's not because we have many solutions that can be connected to a DCIM. When you want to manage your data center, you want to manage the assets. You want to control the heating. You want to cool the entire data center. You want to improve efficiency. You want to make sure that you don't have ghost servers that are consuming electricity without having any computing power, and so on and so forth. In order to do that, you need sensors such as, for example, power distribution units where your servers are connected and which are sending back to the DCIM system information about the heat, temperature, data consumption by server, and so on and so forth. So in order to operate with a software data center, you need to have a lot of products which you are selling in white space. Hence, the reason why we strongly believe that our positioning on data centers and especially on white space is very much on par with the future needs of AI-compatible data centers. AI-compatible data centers with high server density, high power consumption will be better managed with the software. But in order to operate this software, you need to have a busway. You need to have solid cabinets. You need to have PDUs. You need to have fiber optics connectivity, and so on and so forth, which Legrand is providing. That's very helpful. Thank you. And you kind of preempted my second part of follow-up on the kind of AI implications from the high-performance compute switch. So maybe I'll just use that for something else and ask. On the U.S. non-resi exposure, it's been going down for you for quite a while. I just wanted to check. Are you seeing any signs of kind of bottoming out there from your customer activity? We obviously track the components of ABI and Dodge Component Index and. Yeah. You mean the residential? Non-raising. Non-residential? No. On the non-residential, because it started going down quite early for you, given that you are naturally early cycle with office exposure there. I just wanted to check if from your kind of channel, from your salespeople, are you seeing anything that points to green shoots rather than looking at ABI and stuff like that? No. There's no clear signal yet that it is bottoming. Looking indeed at ABI, at statistics on commercial construction, commercial renovation, and so on, there's no obvious signs that it's bottoming. Now, I believe that it will at some point. Will it be H2 2024 or H2 2025? We don't know. It will because there are strong needs for refurbishing a number of these buildings, making them compatible with the commitments 25 or 30 states took to be carbon neutral by 2050, that some of them will be converted into residential, that you need to accommodate them to have a better AV system or more bandwidth. So there are structural reasons for the market to rebound. Now, we don't see any sign of that yet. Hopefully, we will see some in a couple of quarters. Very clear. Thank you very much for your time. Thank you. The next question comes from the line of Kulwinder Rajpal from AlphaValue. Please go ahead. Hello. Good morning, everyone. I had two questions. First one is on the faster expanding segments. Could you talk about how they developed in Q4 and then what are you expecting there in 2024? The second one is broadly on how renovation developed for Legrand in 2023 and then what sort of growth do you see from it in 2024 and a little bit beyond that? Thank you. I understand that your first question is about the faster expanding segments, right? Yes. Yes. Okay. Well, as far as fast expanding segments are concerned, so I said, sorry, during the call that they grew in 2024 organically by slightly more than 10%, actually +11%. And all three subsegments, if I may say, grew double digit. So both data centers, energy efficiency-related products, and connected products. So no significant difference between any of the three segments on fast expanding. Well, we are not giving quarterly numbers, which I believe are not very relevant anyway for this kind of pivot toward faster expanding. So I cannot give you specific numbers on Q4. What we expect and what we are pushing hard for is the overperformance compared to the historical numbers, to the numbers of the historical perimeter to continue. If we look at the 2019-2023 CAGR, the group went up like-for-like 4%, of which, let's say, 1%-2% on traditional circular products and more than 9% on fast expanding. So we are shooting to have, maybe not every year, but regularly, an overperformance of seven, eight, nine, 10 points between the historical perimeter, what we call essential infrastructure, and those fast expanding. As far as the second question is concerned, I understand that it is on innovation, right? Renovation. Renovation. Renovation. Renovation. Sorry. Well, again, unfortunately, we don't have a lot of visibility. The residential renovation was pretty depressed in 2023, both actually in the U.S. and in Europe, one of the reasons being that with the high inflation that people experienced on food, energy, and a lot of different topics, they had to do trade-off between doing some electrical work and keeping their standard of living in terms of food. So sometimes, the trade-offs were against electrical products. And actually, the sales on consumer-related channels, like DIY, for example, were quite a lot under pressure in 2023. Will it change in 2024? Well, question mark. We start to see some statistics in the U.S., for example, implying or showing that maybe the DIY, maybe the small contractor business in residential will progressively bottom and catch up. But again, it's still a big question mark. And if it happens, it's more geared toward the end of the year rather than the beginning of the year. This was for R&D. As far as non-R&D is concerned, well, it depends very much on what I've said about the general market. If the office market rebounds in the U.S., it will be not solely on new. It will likely be more on renovation. I don't believe that there will be a lot of new office space being built in the U.S. But again, the needs for energy-efficient buildings, more bandwidth and network capacity, and so on and so forth, should progressively impact the renovation. As far as Europe is concerned, the whole topic of greenification of buildings, you know that 80% of the buildings are not efficient energetically in Europe. And we have tough and stringent 2050 targets to be carbon neutral. So at some point, this renovation wave indeed should support and help the non-residential building. So not a clear-cut answer to your question. Well, we expect to see some improvement during 2024 or end of 2025, but still a big question mark. Okay. Thank you so much. Very helpful. Thank you. The next question, it comes from the line of Martin Wilkie from Citi. Please go ahead. Yeah. Thank you. Good morning. It's Martin from Citi. Just a question on the M&A environment. You obviously talked about continuing to expand the group through acquisitions. Obviously, some of the areas that are fastest growing, particularly around data centers and these kind of areas, presumably, acquisitions in those areas are getting quite expensive, even for some of the small bolt-ons. Can you still find deals that make sense from a return on capital perspective? You touched earlier on potentially doing buybacks if you couldn't find M&A. So just to understand a bit more about how you're seeing the environment for acquisitions. Thank you. I wouldn't say that acquisitions for data centers are a lot more expensive in terms of multiples than acquisitions for traditional businesses because we are not acquiring startups that are loss-making and that are claiming they can grow 50% per year. We are buying companies with significant market shares in a given market segment, like a ZPE Systems with a market leader for consoles in the U.S., or Raritan Server Technology, which were market leaders for PDU, or Starline, which was market leader for continuous-powered busway. All those acquisitions were made in line with Legrand practices, i.e., to have acquisitions which are EPS-neutral from year one of full consolidation and acquisitions which are EVA-neutral at worst, let's say, from year five of full consolidation and at multiples, which on average are below Legrand multiples. So there's no structural differences in terms of price between data center acquisitions and the other ones. You can see that, actually, because consistently, for the past five or six years, we've been on average buying companies at a multiple of 2x sales. In the last two years, it was closer, actually, to 1.5, including many acquisitions in faster expanding segments, including data centers. Not a change in multiples. As far as the environment is concerned, well, we believe it is an environment where we can find opportunities. We have a bit less competition from private equity, still a lot of contacts going on, 350 companies on our pipeline, many dialogues. We are seen as an attractive company. We pay the fair prices. We entertain a relationship with some people for 10 or 15 years. Not all acquisitions are EUR 100 million and EUR 150 million in terms of sales. Some of them are small ones. If you take MSS, it's EUR 10 million of sales. So it's quite small. But I can tell you with a pretty high level of confidence that we will do additional acquisitions in the coming quarters. Will there be in data center? A question mark. But we'll do some other acquisitions indeed. Great. Thank you very much. There are no further questions in the queue. I will now hand the call back over to your hosts for some closing remarks. Well, thanks a lot for connecting. I know that those are very busy days for you with a lot of our peers and ourselves communicating. So thanks a lot for your time. As you know, we will be roadshowing starting tomorrow morning. We'll be pleased to meet some of you during those roadshows or at some conferences. Thanks a lot. Should you have any more questions, by the way, do not hesitate to give a call this afternoon to Ronan and to Antonia and ourselves if needed. We'll be pleased to answer as much as we can. Thank you. Thank you for joining today's call. You may now disconnect your line.