Legrand’s Record Growth Driven by Data Centers With >50% Growth in US

Legrand announced full year 2025 earnings on February 12. As many know, this is a very diversified company specializing in electrical and digital building infrastructures through a range of high value-added products and solutions including lighting, controls, power management and transmission for commercial, industrial and residential applications which, at the close of business, further expanded with their acquisition of Kratos, which gets them into the switchgear business (although Kratos sells direct for mission critical / data centers … or at least for now!)

Overall sales for the full year 2025 for the global group grew 13%, with 7.7% organic and 5.1% from acquisitions. Legrand’s North and Central America region represents 42.2% of group sales, dominated by the US. With total group sales at €9.5 billion, this equates to about €4 billion for the North and Central America region, or about $4.8 billion. A major driver was the 17% sales increase specifically in the US driven by strong data center demand and resilient building activity. North America sales rose +16.0% organically in 2025, outpacing Europe (+1.9%).

Net sales in the North and Central America region during 4Q 2025 totaled €1.025 billion, growing at 5.8%. With the strong growth of data centers, this implies other categories were not as strong – namely Infrastructure products. Legrand’s Essential Infrastructure segment, which covers core electrical and digital building infrastructure (e.g., wiring devices, cable management), performed resiliently in North and Central America in 2025 despite softer residential and traditional non-residential markets.

Management highlighted that, despite muted building markets overall, Legrand “resisted very well” in residential, commercial, and industrial buildings thanks to its positioning in higher-value electrical and digital infrastructure.

Legrand quantified US tariffs’ impact at approximately $100 million that added to the group’s cost base for 2025, up from an initial $30 million estimate embedded in early guidance. CFO Franck Lemery noted despite the volatile US customs environment, Legrand maintained a 20.7% adjusted operating margin (+20 bps YoY) through pricing actions, supply chain optimizations (e.g., USMCA eligibility), and mix benefits. CEO Benoît Coquart recalled starting the year with only $30M tariff assumption but ultimately absorbing $140M total, offsetting $40M via supply chain shifts and the remaining $100M through pricing/value.

Management highlighted pricing discipline (1-2% increases group-wide), production relocation from China to Vietnam/India/Mexico, and cost controls like hiring freezes, enabling full compensation without margin erosion. They drew parallels to raw material volatility, emphasizing adaptability as core to execution.

Legrand’s data center sales break down into two primary product categories:

1. White Space Solutions – This category includes products for the part of the data center housing active IT components such as server racks, compute, in-room cooling, and power distribution. Legrand is the largest global player in white space equipment, which accounts for over 80% of their data center sales.
2. Gray Space Solutions – This includes infrastructure that supports electrical power provision and protection, such as electrical switchgear, transformers, backup generators, power supply, and cooling systems. Gray space equipment is typically installed early in the data center construction cycle and represents about 20% or less of Legrand’s data center sales.

Data centers, the main growth engine, had sales reaching about €2.4 billion, or $2.9 billion, roughly 26% of Group sales (vs. €0.7 billion in 2020), with close to 40% organic growth in 2025. US data center growth was around 50%.

Energy and digital‑transition offerings (including data centers and energy efficiency) rose to about 53% of Group sales, versus 47% for more traditional infrastructure.

Analyst Concerns

Analyst questions on North and Central America focused on Q4 organic growth reconciliation (+7% reported), margin softness despite data center strength, and tariff volatility’s ongoing drag.

A key concern was how Q4’s +7% regional growth aligned with data centers at ~40% of US sales (up ~50% organically full-year but +10% in Q4 due to tough comps); with non-residential seen as slightly down, and residential flat/negative (15% of US sales), prompting clarity on building vs. data center split.

There were concerns over North America Q4 adjusted operating margin dip (low teens vs. group 20.7% FY), attributed to seasonal mix, tariffs (~$100M cost hit), and investments, though management dismissed as non-structural.

Follow-up on questions on US customs policy uncertainty beyond 2025’s $140M total impact (offset via pricing/supply chain); residential caution (no short-term pickup) and non-residential downside risks questioned outlook confidence amid policy shifts.

Management affirmed that robust Q4 orders sustain 2026’s +4-7% organic guide, with data centers offsetting building weakness, that no contraction is expected and emphasized pricing agility in 2026.

Guidance

The 2026 outlook and guidance for the total company are for 10–15% sales growth excluding currencies, including 4–7% organic growth, with an adjusted operating margin between 20.5% and 21%. ​

By 2030, Legrand targets around €15 billion of sales (average annual growth close to 10%) and an average adjusted operating margin above 20%, reflecting continued focus on data centers and energy/digital transition offerings.

Will data center momentum continue into 2026? How sustainable is Legrand’s strong organic growth, especially considering challenges in residential and non-residential building markets? What are the risks associated with a slowdown in certain end markets, and when will the US residential sector recover?