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Rexel CFO Says Getting Payment in Spain Is a Daily Struggle

May 29, 2012

Rexel SA (RXL) Chief Financial Officer Michel Favre said getting paid in Spain is a daily struggle for the distributor of electrical equipment as the financial crisis exacerbates a construction slump in Southern Europe.

“We are focused on the cash to have a balanced cash flow in all the countries of the region,” Favre said on a call with journalists today. “We are very keen, mainly in Spain, to be paid. It’s a daily fight, a monthly fight. We are in line with last year, but things must be reworked every day.”

Rexel sales in Italy, Spain and Portugal amount to about 400 million euros ($503 million), or about 3 percent of revenue, which is “close to immateriality,” the CFO said. “We have already downsized our operations” in these countries and have no exposure to Greece, he said. Favre reiterated 2012 and 2013 targets for the Paris-based company.

Rexel, the world’s largest distributor of electrical equipment, said today that the margin for adjusted earnings before interest, taxes and amortization should exceed 6.5 percent of sales in 2015 as it raises prices and sells more valuable products, and reduces costs and working capital requirements. That margin was 5.7 percent in 2011.

Acquisition Strategy

The company, which sells electrical products such as installation equipment, lighting and cables, expects 2012 Ebita to reach at least 5.7 percent of sales regardless of the “challenging economic environment,” and is on schedule to be close to 6.5 percent in 2013, Favre said.

Organic growth excluding the effect of copper prices between 2011 and 2015 should exceed “the weighted average” economic growth of the regions in which the group operates by about 2 percentage points, Rexel said today. The company may spend about 500 million euros a year on acquisitions, which should contribute 3 percent to 5 percent of additional annual sales on average over the period, the company said.

“Acquisitions could be a little dilutive as a first point,” the CFO said. “But within 18 months, we have demonstrated the capacity to drive acquisitions into the standards of the group.”

Acquisitions “should generate synergies of about 1.5 percent to 2 percent of sales of the acquired companies,” Favre said. Rexel forecasts its net-debt-to-Ebitda ratio to remain around 2.5, “assuming no transformational acquisition opportunities,” the CFO said.

Rexel also confirmed its dividend policy of paying at least 40 percent of its “recurring net result.”

Rexel shares rose as much as 2.3 percent to 14.35 euros, and were up 1.7 percent at 14.26 euros as of 10:20 a.m. in Paris, taking this year’s gain to 8 percent.

To contact the reporter on this story: Francois de Beaupuy in Paris at

To contact the editor responsible for this story: Benedikt Kammel at

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