Legrand Surges Ahead: Data Center Demand Fuels Strong Q1 Results

France-based electrical solutions giant Legrand delivered a standout performance in Q1 2025, with revenue growth of 7.6% organically outpacing market expectations. The surge was driven by surging demand for data center infrastructure, a segment now accounting for 20% of Legrand’s total sales in 2024, with ambitions to expand to 20-25% by 2025. This strategic focus on data centers positions Legrand to capitalize on the global tech infrastructure boom, particularly as companies ramp up investments in AI and cloud computing.

Q1 Highlights: Data Centers Lead the Charge

Legrand’s Q1 results were bolstered by its North and Central America division, which reported a 18.7% revenue increase, with the U.S. market alone surging 20.2%. CEO Benoit Coquart emphasized that data center demand was the sole driver of this growth, highlighting the segment’s critical role in the company’s strategy. In Europe, where construction markets remain sluggish, Legrand’s broader business faced a 0.3% decline, underscoring the importance of its U.S. and Asia-Pacific growth engines.

Why Data Centers Matter

The global data center market is projected to grow at a CAGR of 9.5% through 2030, fueled by rising data storage needs and AI adoption. Legrand’s tailored solutions—ranging from power distribution units to cooling systems—position it as a key supplier to hyperscalers like Amazon and Google, as well as enterprise data centers.

• Strategic Acquisitions: Two recent purchases—Computer Room Solutions (CRS) in Australia and Performation in the Netherlands—are directly expanding Legrand’s data center capabilities. CRS, with €30 million in annual revenue, adds expertise in white-space infrastructure, while Performation’s connected health software complements data-driven healthcare infrastructure.
• Order Book Strength: Legrand noted a “vibrant” order pipeline, with demand expected to remain robust throughout 2025. This bodes well for hitting its full-year sales growth target of 6-10%, despite macroeconomic headwinds.

Regional Breakdown: North America Leads, Europe Lags

• North and Central America: Generated 40.8% of Legrand’s revenue in Q1, with the U.S. contributing 37.7% of total sales. The region’s 18.7% growth was entirely driven by data center sales, reflecting strong demand from U.S. tech companies.
• Asia-Pacific: Grew 7.1%, with India leading the charge. However, China’s sales dipped slightly, likely due to trade uncertainties.
• Europe: Lagged with a 0.3% decline, though mature markets like Spain and Germany held steady. Legrand expects a rebound in the residential sector by late 2025.

Financial Fortitude Amid Challenges

Despite a 6.3% net profit miss due to currency fluctuations, Legrand maintained a strong margin profile:
- Adjusted Operating Margin: Rose to 20.7%, exceeding both estimates and prior-year levels.
- Free Cash Flow: Increased 29% YoY, though below forecasts due to working capital reinvestment.

The company also outlined plans to mitigate risks from potential U.S. tariffs on Chinese imports, which could cost up to €200 million annually. Strategies include supply chain reconfigurations, price adjustments, and cost-saving initiatives.

The Road Ahead

Legrand’s long-term ambitions hinge on its ability to scale data center sales while navigating regional volatility. Its 2030 goals—including leadership in global infrastructure and sustainability—align with its recent CSR roadmap, which prioritizes circular economy practices and climate resilience.

Conclusion

Legrand’s Q1 results underscore its transformation into a tech infrastructure powerhouse, with data centers now its growth engine. With acquisitions, a robust order book, and a margin structure that defies macroeconomic headwinds, the company is well-positioned to capitalize on the data center boom. While European challenges and trade risks remain, the 20-25% data center revenue target by 2025—backed by 20.2% U.S. growth and strategic M&A—suggests investors should take note. For those betting on the digital revolution, Legrand’s mix of innovation and execution makes it a compelling play in a sector with 9.5% annual growth potential ahead.

In short, Legrand’s data center bet isn’t just paying off—it’s powering the next phase of its growth.