Rexel – 2010 to 2012 Growth Plans

Last Thursday, Rexel held an Investor Day in Lyon, France. During this meeting, Rexel updated analysts, and probably other investors on its 2010-2012 growth strategy.

The report can be found, and downloaded, here.

And coincidentally, Rexel announced today that it is holding a 500 million euro (about $735 million U.S.) bond offering to retire certain other debt, providing additional financial flexibility, and possibly supporting its growth strategy.

In reviewing the overview of the company, its span is impressive. The first 15 pages of the report are devoted to Rexel France, which is the clear market leader in France. The roadmap that was outlined for this division of the company focuses on a robust, multi-channel (distribution) strategy coupled with additional focus on renewables, datacom and energy efficiency product categories and the institutional customer market.

Observations include:

• North America (U.S. and Canada) represents about 35% of the company’s revenues
• Rexel, globally, sees significant growth opportunities in the energy efficiency arena.
• Observation: Based upon what we’ve seen from announced energy
  efficiency plans from a number of distributors, those who don’t actively
  participate in this market will only be able to compete on price (and that is if manufacturers support them.)
• Rexel Canada is partnering with selected contractors to support installations and utilizing telemarketing to grow its energy efficiency business. We wouldn’t be a surprise to see them do this selectively in the U.S. where they have strong operations.
• From a U.S. acquisition viewpoint, Rexel perceives the need to “bulk-up” in the Northeast (PA and NJ to the Canadian border), Great Lakes / Minnesota area, Pacific Northwest, West Coast and Rockies. Presumably much of this will be acquisition, but in some areas it will probably be share-taking strategies.
• Rexel desires for e-commerce to represent between 10-30% of revenues. E-commerce is defined as web, e-procurement and EDI.
• Observation: to achieve this, Rexel will need to increase its e-relationships
  (and revenues) with industrial, institutional and large contractors as those are
  the audiences that to date have embraced e-commerce. It also requires a good
  e-catalog and other systems. They could be targeting companies like WESCO and Graybar while also emulating Grainger (from a services and e-commerce
  capability aspect).
• They see to gain back office synergies through ERP integration and shared services (up to 38% in some areas).
• Market segments that the U.S. expects to focus on from 2010-2012 include energy / lighting, oil and gas, the public sector and project houses.
• They are looking for organic growth of 1% over GDP.

The presentation provides an overview of the company’s growth plan. The challenge, as it is for every company, is focus and execution.