Power-socket giant eyes housing upturn in 2024
Key Points
- Why it matters: Legrand is a $38 billion French giant making power points, switches and lighting products and runs a factory in south-west Sydney.
- It is a bellwether for demand in the housing construction and renovations market, and its global ceo says demand has been “flattish” in Australia over the past six months.
- Electricians and other tradies find that customers increasingly want the most energy efficient products in the quest to go “greener”.
The global chief executive of French power sockets and light switches group Legrand says demand has been “flattish” in the past six months in Australia as the housing construction market sags, but he hopes for a rebound by the second half of 2024.
Benoit Coquart said he was optimistic that Australia would follow the same path as the United States economy, where there were early signs of a pick-up, but much would depend on the direction of interest rates.
French giant Legrand’s global chief executive Benoit Coquart at the company’s factory at Prestons in Sydney. Louie Douvis
“I hope it will pick up. We know the reasons why demand has been flattish in the housing market,” he said. “Much of it centres around interest rates.”
There are already glimpses of an improvement in Australia. New data released on October 3 showed new housing approvals, an indicator of future activity, rose 7 per cent in August to a seasonally adjusted monthly total of 13,647, following two months of decline.
Australian Bureau of Statistics figures showed detached house approvals picked up 6 per cent to 8762, while the category of apartments, townhouses and semi-detached homes rose 8.8 per cent to 4886.
Mr Coquart was visiting the group’s Sydney factory in Prestons, which makes about 14,000 product lines used by electricians, lighting contractors and do-it-yourself home renovators. It is one of Legrand’s 120 factories around the world.
The French industrial group has a sharemarket capitalisation of €23 billion ($38 billion) and a workforce of 38,000 people. Its best-known brands are HPM and Legrand.
Mr Coquart said the Australasian business was generating annual revenues of about $200 million, with growing demand from large data centre operators offsetting the temporary downturn in the housing construction market.
He said the rise in the use of artificial intelligence across society was a relatively new factor that would underpin even faster growth in data centres.
Across Legrand’s global business, sales to data centre customers now make up 15 per cent of total sales. The group supplies racks, cabinets and cooling equipment along with transformers and circuit breakers to data centres.
Mr Coquart said sales in Australia through retail channels made up about 20 per cent of total sales through hardware chains including the Wesfarmers-owned Bunnings and Mitre 10.
Electricians and other tradespeople were the core market for the company in what he calls the “pro channel”. Mr Coquart said new home buyers and renovators were increasingly wanting the most energy-efficient products possible, and that shift to becoming “greener” was in turn resulting in heavy investment in new products.
“The building industry is moving super fast,” he said.
Legrand has 350 staff in Australia and Mr Coquart said inflation in input costs had already passed the peak. But energy costs were rising even though raw material input inflation was slowing. “It’s a cost we just have to bear.”
He said while consumer confidence levels in Australia were low because of cost-of-living pressures and the sharp rise in interest rates, that could turn around once people were confident that rates were not going any higher. It was hard to predict when that might occur. “Unfortunately, I don’t have a crystal ball.”
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
Find out moreRead More
Latest In Manufacturing
Fetching latest articles