Rexel Raises Dividend, Plans Cutbacks in Flagging Spain, Italy

Rexel SA (RXL), the world’s largest distributor of electrical equipment, introduced a more-generous dividend policy and said it will scale back operations in Spain and Italy as it seeks to hold profit steady through the financial crisis.

The company, which sells products from switches to surveillance gear, will pay out at least 40 percent of its recurring net income, up from as much as 35 percent previously, it said today in a statement. It proposed a dividend of 65 euro cents on 2011 earnings, up from 40 cents. Rexel shares climbed as much as 4.6 percent.

Chief Executive Officer-designate Rudy Provoost is extending cost cuts as he budgets for stagnant sales in European markets this year while keeping investors on board. Nations in southern Europe will hinder sales the most, countering growth in Asia and North America, he said. Rexel boosted net income by 39 percent last year.

“We introduced a restructuring plan in Spain and Italy at the beginning of the year in order to make sure that these countries are well equipped to deal with the reality they are facing from an economic standpoint,” Provoost said on a call.

Cutting costs will help Rexel meet a goal for maintaining margins at at least the same level as the 5.7 percent achieved in 2011, he said.

Rexel shares rose as much as 70 cents to 15.95 euros at in Paris trading, and were up 3.1 percent at 12:26 p.m., valuing the Paris-based company at 4.1 billion euros.

“It is a clear message of the confidence we have” in the “capacity for company to generate higher figures year after year,” Chief Financial Officer Michel Favre said at a conference today.

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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