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Legrand Shares Jump Over 7% After Raising 2030 Targets on AI Data Center Demand
Summary
French electrical equipment maker Legrand SA lifted its long-term growth and profitability targets, citing surging demand from the AI data center sector, which sent its shares to the top of the CAC 40 index.
Shares of French electrical equipment manufacturer Legrand SA (EPA:LEGD) jumped 7.1% on Tuesday after the company raised its long-term sales and margin targets. The firm attributed the upgraded outlook to sustained, high-growth demand for power and cooling infrastructure driven by the expansion of artificial intelligence data centers.
Upgraded Financial Outlook
Legrand announced it is now targeting annual organic sales growth of 6% to 8% for the 2027-2030 period, an increase from previous guidance. The company stated that acquisitions are expected to contribute an additional 5% to growth annually on average.
Key financial targets for the 2027-2030 period include:
- Adjusted operating margin: An average of 21% to 22% of sales.
- Free cash flow: An average of 13% to 15% of sales, with cash conversion expected to remain above 100%.
- Divestitures: Plans to divest businesses generating between €500 million and €1 billion in sales.
Legrand also outlined its capital allocation strategy, planning to use approximately 60% of free cash flow for acquisitions. The company aims for a dividend payout ratio of around 50% of net income, supplemented by selective share buybacks, while maintaining a net debt-to-EBITDA ratio between 1.5 and 2.5.
AdStrategic Focus on Data Centers
The revised targets underscore Legrand's increasing emphasis on the data center market, which the company said accounted for 32% of group sales in the first half of the year. Legrand projects that sales to this segment will surpass €3 billion in 2026.
The company noted that the proliferation of AI workloads and rising rack densities are driving significant demand for higher-capacity power and cooling infrastructure. To meet this demand, Legrand is developing low-voltage direct-current architectures specifically for next-generation AI data centers, a market it expects to grow in importance.
Market Reaction
Investors reacted favorably to the updated strategy and financial targets, pushing Legrand's stock up 7.1% in Tuesday trading. The move made it one of the top-performing stocks on France’s benchmark CAC 40 index. The company stated that the new targets were issued after it exceeded the growth and profitability commitments set during its 2024 Capital Markets Day.
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