Rexel Raises 2010 Sales, Profit Goals on Expansions

Dec. 2 (Bloomberg) -- Rexel SA, the world’s largest distributor of electrical equipment, raised targets for 2010 sales and profitability as the company makes acquisitions and expands in energy-saving products.

Rexel jumped to the highest in more than three years in Paris trading after saying revenue in 2010 will rise 5.3 percent to 11.9 billion euros ($15.7 billion), compared with an earlier forecast of a “slight increase.” Earnings before interest, taxes and amortization, and excluding one-time supply costs, will amount to 4.9 percent of sales instead of 4.5 percent, Rexel said today in a statement.

Over the medium term, the Paris-based company is targeting “solid sales growth” and adjusted Ebita margins of about 6.5 percent, it said, without specifying a time frame. The targets compare with earnings at 4 percent of sales in 2009. Rexel said it’s targeting annual free cash flow before interest and tax of 600 million euros to 700 million euros, investment grade debt ratings and aims to double the return on capital employed to about 14 percent in 2013 from 7 percent in 2009.

The company sells electrical products such as installation equipment, lighting and cables. Rexel, which has made about 30 acquisitions since 2005, said it’s looking at purchases to increase market share in Europe and North America, expand in emerging markets including China, India and Brazil, and add to services. The company also said it bought family-owned competitor Grossauer to grow in Switzerland.

Highest Since 2007

Rexel shares rose 5.4 percent to 15.95 euros, the highest intraday price since Aug. 3, 2007, as of the 5:30 p.m. market close. The stock has gained 56 percent this year, valuing the company at 4.15 billion euros.

Emerging-market sales should represent about 10 percent of the group’s revenue in the “medium term,” up from about 10 percent this year, the company said.

Revenue from the energy-efficiency, photovoltaic and wind- turbine markets, as well as demand from engineering companies working on large mining, petrochemicals and infrastructure projects, may rise to about 650 million euros in 2012 from 420 million euros this year.

Free cash flow excluding interest and tax should be about 450 million euros this year, compared with a previous goal of more than 400 million euros, Rexel said.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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