Rexel 1Q17 - North America back to organic growth, FY17 guidance reiterated

Rexel, the French distributor of electrical products, released promising Q1 results following the encouraging results seen in 4Q16. On a constant and same-day basis, sales edged up 0.6% yoy to €3.3bn, driven by the +1.2% sales growth in North America (36% of revenues), the first positive number since 4Q14. While Canada remained a drag, the US figures were solid (+2.1% yoy; 79% of region sales) thanks to the turnaround in the O&G industry and the growth plan initiated at the beginning of the year. This plan, which notably includes the opening of c. 100 outlets in the most growing areas, will help maintain the positive growth momentum in the US over the year. Regarding France (19% of revenues), one of Rexel’s most profitable markets, the group sustained its positive performance (+0.6% yoy) initiated last quarter, but at a lower rate as expected due to the negative elections impact. On a less positive note, Asia-Pacific (10% of revenues) declined sharply by 4.8% yoy mainly due the collapse of O&G in South-East Asia. Profitability was also an area of satisfaction with the adj. EBITA margin up by 20bps to 4.1%, partially reflecting the good progress in gross margin in the US.