Throughout 2020 and up to the present day, the world has been experiencing the most cataclysmic peacetime event in over a century. Rexel has met the challenge of this full-scale “stress test” with agility and resilience, thus demonstrating the strength of its business model.
01. A SUCCESSFUL TRANSFORMATION
Agility and mobilization in the face of the health crisis
The Covid-19 pandemic had barely been declared a health emergency when Rexel took rapid measures to maintain operational continuity while making the health and safety of its employees and customers the top priority. Faced with this unprecedented disruption affecting supply as much as demand, the entire Group mobilized to meet the challenge head-on, whether on-site or at home, in order to continue to serve customers. This swift reaction was made possible by a strategy based not only on the Group’s digital transformation, which had been underway for several years, but also on an efficient service-oriented approach, as well as a momentum of growth, value creation and ESG (environmental, social, governance) goals.
An organic growth strategy
“More customers, more SKUs & more digital”
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A DIGITAL OFFERINGthat strengthens Rexel's value proposition, with the goal of achieving more than one-third of sales via the digital channel by 2023.
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THE DEPLOYMENT OF ITS URBAN MODELwith automated Autostore-type solutions, at city's entrance.
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A "RESPONSIBLE" OFFERthat includes energy audits and CO2 emissions measurement, the promotion of e-mobility and smart building offerings.
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EXPANSION OF REXEL'S ADDRESSABLE MARKETthrough new services and customer support offerings.
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x20The number of Groupwide electronic signature uses, from late February to late May 2020.x8The number of messages per day on the Group's collaboration tools, from late February to early April 2020.
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Reorganization in record time
Almost overnight, the entire work structure was reorganized. In two days, every branch had pivoted to “drive” mode, enabling customers to pick up their orders contact-free.
Within three days, the customer relations and expertise centers in France had moved to 100% remote working, in a seamless way for our customers. And while a handful of branches had no other choice than to close their doors temporarily, Rexel’s activity was never interrupted. This continuity was indispensable in allowing key buildings and services such as hospitals, certain public buildings, vital industries and essential retailers to keep functioning.
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€12.6 billionThe Group's 2020 sales.€613 millionFree cash flow, i.e. +€151 million in one year.
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A robust financial performance in 2020
The impressive mobilization of our teams had, and continues to have, a major impact on the quality of the Group’s financial results. While the first few weeks following the start of the pandemic witnessed a sharp drop in activity, the efforts made by Rexel’s teams helped to quickly rectify the situation and deliver a financial performance for the year that exceeded expectations. For example, the adjusted EBITA margin came to 4.2% with a limited margin decline of 78 bps thanks to Rexel’s proven ability to control its costs.
This performance enabled Rexel to reduce its debt to €1.3 billion, a decrease of €611 million for the year, while its debt ratio reached 2.14 times. Both its debt and its debt ratio thus reached their lowest point since Rexel’s initial public offering in 2007.
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€2.6 billionin Groupwide digital sales in 2020.
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A resilient business model
Rexel’s financial results during the pandemic demonstrated the relevance of its strategic and financial choices. Between 2018 and 2020, the Group invested €300 million in digital and information technology. Digital sales in 2020 accounted for 21% of its total sales.
Rexel’s digitization represents a paradigm shift affecting every level of the organization, including all of its work methods as well as the general mindset of its employees. Data and digital tools are becoming the company’s main assets, which is a key advantage in creating value for all of its customers, as well as differentiating itself from competitors and preserving the Group’s profitability. Today, Rexel is a major digital player at the forefront of its sector.
Towards a data-driven company
This second part of Rexel's transformation consists in leveraging relevant available data to make decisions based on facts and analysis, not just beliefs or experiences. It comprises three priority areas:
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INTERNALImprove performance through the implementation of use cases based on the use of algorithms and artificial intelligence.
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CUSTOMERDeepen the reflection on the customer journey and use the available data to ensure an ever simpler and more fluid experience.
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SUPPLIERGeneralize a dedicated data analysis offering for each supplier, who will receive factual information about their market positioning, omnichannel offering, and digital conversion rate by product category.
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<5 minThe time required to create a webshop account.165,000 ordersautomatically processed by E-Mail to EDI in eight European countries (France, Germany, Belgium, the UK, the Netherlands, Austria, Italy, Portugal).
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Innovating for our customers
In 2020, customers continued to benefit from Rexel Easy, the innovative back office process optimization program launched in 2019. Furthermore, the E-Mail to EDI solution that automatically processes customer orders by e-mail continued its deployment in 2020 in two new countries: Italy and Portugal. A predictive analytical model using artificial intelligence (AI) was also deployed in eight countries. It enables sales people to offer customers adapted or even personalized responses.
The Group also launched a new distribution model in the Paris region and in Zurich in 2020: Rexel Express. It allows customers to retrieve their orders 24 hours a day, 7 days a week, with guaranteed same-day deliveries at Rexel branches or work sites using zero-emission vehicles, thus improving efficiency and productivity while eliminating the risk of human error and improving employee working conditions.
AI and data in support of energy efficiency
At the forefront of its sector, the Group wants to become a global leader in the use of artificial intelligence and data analysis in the provision of energy-efficient supplies and equipment. To this end, in 2020 Rexel partnered with four major French groups and two prestigious grandes écoles, Institut Polytechnique de Paris and HEC Paris, to launch Hi! Paris, an interdisciplinary center for research excellence in the fields of AI and data analysis.
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Rexel ExpressBased on the automation of order preparation via Autostore technology, this concept improves customer service quality by offering more than 20,000 SKUs available immediately.
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Accelerating energy transition
Producing clean energies and accelerating innovation in the area of energy-efficient solutions are both underlying trends. The Group is ideally positioned to seize growth opportunities related to these challenges. The company is the most sustainable in its sector and the 11th most sustainable company in the world according to Corporate Knights. Rexel offers a wide range of eco-efficient products for the construction, renovation and maintenance of buildings, as well as energy consumption control and monitoring tools.
The Group also assists installers in promoting energy savings by providing energy audit tools and digital applications facilitating the implementation of energy-efficient solutions.
Rexel is present as well on the electric vehicle charging station market and offers full packages, scaled to suit the number of vehicles to charge. Related user services further enhance these offerings, including geolocation, charging station reservation and online payment.
Solid first-half 2021 results
In early 2021, Rexel confirmed the solidity of its financial performance:
– same-day sales growth up +32.3% in second quarter and first-half 2021 results up +19.9% vs. first-half 2020 (on a constant and same-day basis),
– first-half 2021 adjusted EBITA margin at 5.6%, driven by sales growth and digital transformation. More specifically, the 2021 second quarter benefited from further growth in digitization in all 3 geographies, with digital sales now representing 22.6% of Group sales, up +123 bps compared to second quarter 2020,
– full-year 2021 guidance confirmed thanks to robust growth drivers, with strong upside potential in all geographies, notably in North America where volumes (excluding inflation) are still 15% below pre-crisis level.
Upgraded goals for 2021
Following a better-than-expected start of the year and capitalizing on robust growth drivers and the growing benefits of its digital transformation, Rexel issued a trading update on June 29, 2021, raising its guidance for full-year 2021.
Rexel targets for 2021, at comparable scope of consolidation and exchange rates, assuming no severe decline in the health situation:
– same-day sales growth of between 12% and 15%,
– an adjusted EBITA1 margin of circa 5.7%,
– free cash flow conversion2 above 60%.
1 Excluding (i) amortization of PPA and (ii) the non-recurring effect related to changes in copper-based cable prices.
2 FCF Before interest and tax/EBITDAaL.
Expanding the Group’s footprint in the USA
In October 2021, Rexel entered into an agreement to buy Mayer, a major distributor of electrical products and services operating in the Eastern part of the United States.
Fully in line with the strategy and financial objectives Rexel presented at its Strategic Update last February, this acquisition is an important step in expanding Rexel’s footprint in the US, the world’s leading market for electrical supplies
Headquartered in Birmingham, Alabama, Mayer operates 68 branches in 12 states, with a strong presence in Alabama, Florida, Georgia and Pennsylvania. It employs 1,200 employees and generated sales of $1.2bn over the last twelve months through end-August 2021. Its customers are primarily in the commercial and industrial end-markets.
