Legrand SA

PAR:LR

Earnings Call Transcript 2021-Q1

[Operator]

Ladies and gentlemen, welcome, and good morning to today's Legrand 2021 First Quarter Results Conference Call. [Operator Instructions] For information, this conference is being recorded. At this time, I would like to hand the call over to CEO, Mr. Benoît Coquart; and CFO, Mr. Franck Lemery. Sir, please go ahead.

[Benoît Coquart, CEO & Director]

Thank you. Hello, everybody. Good morning. Franck Lemery, Ronan Marc and myself are happy to welcome you to the Legrand 2021 Q1 Results Conference Call and Webcast. As you know, we have published today our press release, our financial statements and the slide show to which we're going to refer. Those documents are available on the Legrand website. Please also note that this conference call is recorded and webcasted on our website.After a few opening remarks, Franck and I will comment into more details, the Q1 results of 2021. I begin on Page 4 of the deck with 2 key focuses for today's release. First takeaway, in the first quarter, we recorded a strong growth in sales and financial results overall. This includes, in particular, an organic growth above plus 13%, i.e., plus 5% over 2 years, and adjusted operating margin close to 22% before acquisitions and an increase in the net profit of more than 36%. These achievements clearly reflect the strengthening of Legrand position in this market. They also demonstrate the quality of our positioning on growing segments of the building of tomorrow. Second takeaway on the back of the Q1 performance and despite the uncertainties linked to the pandemic situation as well as the pressure on supply chain, we are raising the full year 2021 targets. Now moving to Page 6, let's dive into sales trends recorded in the first quarter of the year. So total sales grew double-digit at plus 10.5%. Our revenues showed a steep rise in all regions with, at group level, a strong organic growth of plus 13.1%. This was driven mostly by good demand in residential and data center markets in many countries.It is also the result of the moves we made in 2020. For example, the fact that we maintained services to our customers during the year, launched many marketing initiatives, kept an unbid pace of innovation and also stepped up all digitalization initiatives. When combining Q1 2021 and Q1 2020 performance, organic sales grew plus 4.9% over 2 years, thus reflecting clear stronger positions in our markets, as I previously mentioned. Additionally, acquisitions contributed to an increase in sales of plus 3.4%, thanks to the operations we made in 2020. Based on those, the external growth for the full year would reach plus 2.5%.Exchange rates, on the other hand, had a negative impact of minus 5.5% in the first quarter, applying April average price rates to the rest of the year. These effects should theoretically be about minus 3% in 2021 as a whole. Going to Page 7 to 9 of the deck, let's now go into more details on the organic growth performance by region for this first quarter. So first, in Europe, organic sales were up plus 14% in the first 3 months of 2021. In Europe, major countries, sales rose steeply by plus 14.3%. Growth was very strong in the main countries, fueled in particular by many commercial successes. This was the case, for example, in France and in Italy. Europe's new economies were up plus 12.4% as a solid momentum continued in Eastern Europe and Turkey.Moving now to Page 8 with North and Central America, sales grew organically by plus 4.9% in the first quarter of 2021. The U.S. loan rose plus 4.4%. This was driven by continued buoyant business in data centers along with solid achievements in residential offerings. Sales in non-residential applications continued to decline, although less than the first quarter -- than the last quarter, sorry, of 2020. Sales increased in Mexico and fell slightly in Canada. In the rest of the world, now on Page 9, sales grew by plus 29.8%. In Asia Pacific, sales rose a steep plus 37.1%. They more than doubled in China, with a double-digit organic growth over 2 years. In India, the growth was very strong in the pandemic context, which, unfortunately, remains very difficult. In South America, sales were up plus 20.4%. There was a significant rebound in Brazil, and we recorded sustained increases in many other countries. In Africa and the Middle East, sales rose plus 19.1%. The growth was very significant in Africa, and sales increased also in the Middle East.On this note, I'm now passing the mic to Franck for an overview of our financial performance.

[Franck Lemery, Executive VP & CFO]

Thank you, Benoît, and good morning to all of you. Going to Page 10 now. Adjusted operating margin before acquisitions in the first quarter came to 21.9%. This represents an increase of plus 3.3 points from the same period of 2020. This increase in the profitability was mainly driven by, first, the operating leverage linked to the strong sales growth and the still-limited rise in costs. And second, the sales prices increase that offset in value a rise in raw materials and component costs, rise that accelerated over the quarter. When acquisitions are taken into account, the adjusted operating margin for the first quarter of 2021 was 21.6%. All in all, the adjusted operating profit was at EUR 361 million, up plus 27.8% from the first quarter of last year.On Page 11, I'm now commenting the net profit attributable to the group. It was up plus 36.4% compared with the first quarter of 2020. This performance reflects primarily a strong growth in operating profit. In addition, the financial results were favorable over the quarter. And these favorable trends were partially offset by an increase in the corporate income tax, while the corporate tax rate was stable at 28.5% compared with the first quarter of 2020.After the net profit, we are now focusing on cash generation on Page 12. As a percentage of sales, cash flow from operations was up plus 4.1 points at 18.8% of sales or EUR 315 million. Also, the working capital requirement remained under control over the quarter, representing 8.3% of the last 12 months in sales. As you know, the right reading of free cash flow generation should be done normalizing working capital requirement. So on this basis and on the right-hand side of the slide, normalized free cash flow was EUR 276 million. This means up plus 19.9% in the first quarter of the year.This concludes the key topics on Legrand Q1 very good financial performance that I wanted to share with you today, and I'm now passing back the mic to Benoît.

[Benoît Coquart, CEO & Director]

Thank you, Franck. Moving now to the second part of this presentation for an update on the target for the year. So we are on Page 14 now. Given its first quarter achievements and despite a persistently uncertain environment due to the pandemic situation and increasing pressure on supply chains, Legrand is raising its targets for 2021 and is now aiming for: an organic growth in full year sales of between plus 4% and plus 7%; a scope of consolidation effect of at least plus 3%, meaning a go get of plus 0.5%; and adjusted operating margin before acquisitions at 2020 scope of consolidation of between 19.6% and 20.4% of sales. The basis for comparison for both sales and margin will be very favorable in the second quarter of 2021 and challenging in the second half of the year, particularly in the third quarter. Legrand also aims to achieve at least 100% of its CSR road map for 2021, testifying to the ongoing deployment of a bold and exemplary ESG approach, with a particular focus on the fight against global warming and the promotion of diversity. These annual targets are fully in line with the group's mid-term targets released in February 2021. You'll find more details on those mid-term targets in the appendix, Page 19, if needed.Going to Page 15, we are concluding with some additional elements about governance. First, on the proposed evolution of the Board of Directors on Page 16. At the proposal of the Nominating and Governance committee and the approval by the Board of Directors, the appointment of Mr. Jean-Marc Chéry will be put to shareholders during the General Meeting of Shareholders to be held on May 26. As Chairman and CEO of STMicroelectronics, Mr. Chéry has solid experience in senior management in the field of strategic interest. As a result, the composition of Legrand Board of Directors will remain in line with sectors best practices with 75% of independent members, 42% of women and 5 nationalities.Second element on Page 17. As previously announced in February, the proposed dividend for 2020 is EUR 1.42 per share, i.e., up 6% from EUR 1.34 for 2019. This will also be put to the shareholders approval on May 26.This concludes the main messages that I wanted to share for this good start of the year. This performance testifies the healthiness and soundness of Legrand value creative model and the fact that it is well positioned to take full advantage of the next economic cycle. Before we leave the floor to questions, a very important word on our financial agenda as we will be holding a digital Capital Markets Day on September 22 this year. Of course, this will be, in particular, an opportunity to bring more colors on Legrand development prospects. And I hope that you'll be available to attend. So Franck, Ronan and myself are now ready to answer any questions you may have. Thank you.

[Operator]

[Operator Instructions] Your first question from Andreas Willi from JPMorgan.

[Andreas P. Willi, Head of the European Capital Goods]

I have a question on the outlook. Obviously, we appreciate that you don't have a lot of visibility, but I would like to better understand whether, based on the data you have in terms of what your assessment is what -- over the last couple of quarters, what the level of restocking is that contributed to the demand and maybe the catch-up demand from the pandemic to better put into context that Q1 is 5% above the pre-pandemic level, but your guidance assumes the full year is still going to be below that level even at the higher end? That's my first question.

[Benoît Coquart, CEO & Director]

It's indeed an important question. So as far as the potential destocking or restocking is concerned, we haven't seen anything material in Q1. And in most of our countries, our distributors have more or less brought us what they were able to sell. So we haven't seen a significant restocking impact. They could be here and there a bit of destocking, here and there a bit of restocking. But overall, we haven't seen material impact coming either from further destocking nor from restocking. The reason being that the demand has been very solid and the supply chains and their constraints. So we don't feel that those -- the growth we have seen in Q1 was neither positively nor negatively impacted by any significant move from our distributors.As far as the outlook is concerned, well, you know the business model, you know how tough it is for us to predict what we have ahead of us, there are a couple of uncertainties. If I list those uncertainties, we're clearly -- even though the pandemic seems to be a little bit more under control than it was 3 months back, there are still a number of dark spots, if I may say. Take, for example, India, which is for us, our fourth largest country, which is facing an extremely difficult situation. Take also Latin America, where you have a number of countries, which are still under lockdown. So the pandemic itself is not over.Number two, it is true that, for a couple of months, if not quarters, the demand has been supported by very strong residential and probably the fact that in a number of countries, households couldn't spend much on traveling, dining out leisure and stuff like that. So they could reallocate part of their remuneration or part of their savings to renovating their home. It had a good impact in a number of countries to the residential segment, especially either DIY or the small contractor doing small [indiscernible]. How long will it last? We did continue in the next quarters with lockdown progressively lifted and the health situation progressively easing. I don't know. I'm myself pretty convinced that we have a long-term trend of people willing to improve their homes and remote working and connected products. All that will definitely -- our trend that will definitely help our residential market. But what will happen is the [indiscernible] and with the very strong growth we've been experiencing for a couple of months continues to be a question mark. Another uncertainty is about the nonresidential, especially in the U.S. To give you maybe orders of magnitude, excluding residential and excluding data centers, our sales were down about 10% in Q1 in the U.S. So it's better than Q4 2020. Q4 2020 was down by about 20% compared to the previous year. Q1 2021 is down by about 10%. So of course, we could qualify that as an improvement. But even though there are a number of positive signs, a number -- the number of quotes is improving. For example, you have the billing index, which is improving. So we believe that at some point, the non-residential market in the U.S. will improve. But will it be in 6 months, 12 months, 18 months? It's been a big, big question mark. So if you add to -- not to mention, of course, the constraints on the supply chain, which is something we could deal with in Q1, but with always a sort of constraint we have to manage.So if you put together the state of the pandemic, the resi the non-resi and the supply chain, you have a number of uncertainties that definitely could impact our -- the remaining 9 months, not to mention the basis for comparison, which is a bit more technical. It's going to be very easy in sales for Q2, a lot more demanding for H2 and especially for Q3.So putting all that together, well, led us to the guidance or to the revised guidance we are shooting today.

[Andreas P. Willi, Head of the European Capital Goods]

Just a follow-up on price cost, which seems to have been relatively neutral in Q1. And obviously, we know that over a longer period, you always managed to pass on higher costs or higher raw material costs. Is there now a couple of quarters where it could be negative before you catch up again?

[Benoît Coquart, CEO & Director]

Well, the price cost, I will give you the numbers, but the price cost balance is -- has a negative impact in Q1, slightly negative impact in Q1 to our P&L. To give the numbers, our selling price was up 1.9% in Q1 and inflation of raw materials and components was about plus 3.8%. So even though it were more than compensated in value, it had a negative impact -- a slight negative impact on margin. Well, you can see in our account that it was compensated by many things. It was compensated by, well, the leverage coming from the very good volume growth, which is more than 11%, which is very sustained. It was compensated by good control of our costs, both production expenses and SG&A and by a number of other factors. But assuming specifically on the difference between selling price and purchase price, it had a slight negative impact. Well, going forward, it's very difficult to see what the purchase price is going to be. It is clear, I think, to everybody that the cost of raw materials components is increasing sharply, not to mention the -- sometimes difficult -- the difficulties we are sometimes facing to source some of them. But maybe I can remind you 3 numbers. Purchase price in Q3 2020 were down 1% compared to the previous year. Purchase price in Q4 2020 were up plus 1.5%. And purchase price in Q1 2021 were up, excluding tariff, the number I gave you was including tariff, excluding U.S. tariff, plus 4.1%. So there's a clear deterioration, and we expect this deterioration to continue. And as we put in the press release, we have seen an acceleration of the rise in raw material and component cost over the quarter. So it's going to continue. It's going to weigh on our P&L. Now as far as our pricing strategy is concerned, we intend to do, as usual, context where raw material -- price of raw material components is going up sharply. We intend on a yearly basis to compensate in value. So not necessarily in margin, but it is a very typical model. Not necessarily every single quarter, but on a yearly basis, we intend to do whatever it takes in terms of pricing so that it compensates at least, in value, the negative impact of the raw materials pricing comment. But this should clearly be factored and has been factored, of course, into the revised guidance that we are shooting today.

[Operator]

Next question from Gael de-Bray from Deutsche Bank.

[Gael de-Bray]

Congratulations on this very strong quarter, but can I follow-up on Andrea's question regarding the guidance on the revenue side because one of your peers delivered a similarly strong organic growth this quarter and is now guiding to an annual organic growth between 8% and 11% for the full year. So I'd really like to understand why your guidance is 4 points below theirs. I mean if I take it and look at the comps for Q2, it looks like you basically expect growth to turn negative in the second half of the year. So again, a little bit more clarification on this would be probably helpful. It is just conservatism as usual.The second question I have is about your pricing strategy. In the past, in those -- in some of those years with high inflation, Legrand was typically able to raise prices by 2%, 2.5%. Do you think that the current environment would justify raising prices clearly much more than this 2% or 2.5% level? And do you think there could actually be some kind of a cap to what you can do in terms of price rises in any given year or not really?

[Benoît Coquart, CEO & Director]

Well, I will obviously not comment the guidance of other companies. And I think that each business model is different. The visibility we do have going forward might be different from others. The market position are different. The geographical mix is different. So I don't enter into this game of comparing the guidances. I'm focusing on my performance. And I can see going forward, we have not much to add to whatever answer to Andreas.We guided in February to 1.126. We are doing a very solid Q1. It's not irrelevant or questionable to add 2 points of growth to the initial guidance given the good Q1 that we did and to narrow a bit the range because now we have 9 months to go and not well. So I think this 4% to 7% is very consistent with the guidance we issued in February as well as with the other performance we delivered in Q1 compared to what you had expected, typically.So again, I'll not comment to my peers on the guidance or other company's guidance. I don't believe that we are overcautious or overconservative. I'm just cautious of the uncertainty that we have ahead of us, and that's it. So not sure that I can make a lot more comments than that. Well, and then we'll see what the next month is going to be. As far as the pricing strategy is concerned, yes, of course, the 2% to 2.5% price effect is not out of reach. We are already at plus 1.9% in Q1. Yes, of course, there is a limit to the sort of pricing we can do. Pricing is not automatic. It's not something -- it's not like a tax that you can impose to your customers. It's something that you have to do very wisely, very carefully if you don't want to lose your competitiveness and if you still want to secure cost competitive projects and so on. So I don't believe that it would be reasonable to seeing that Legrand could do 4%, 5%, 6% pricing. This is not what we are aiming for. And I think it would deposition the goal in terms of competitiveness. So we'll see. The total price we will do will definitely depend on many factors, including what the raw materials and components will do, which is a bit uncertain for H2. And if we are not able to compensate in margin, the rise in price in raw materials component through pricing, we have other ways to do it. We have, of course, the leverage coming from volume. And you know that we are an industrial company, and we have a strong leverage on our costs. We can increase cost less than top line. There are many other factors that we can do beyond pricing in order to mitigate the impact of raw materials in all accounts. And this is the reason why we are shooting this guidance, which is showing a significant improvement in margin compared to last year despite this raw material context.

[Gael de-Bray]

Can I just try to follow up on the first question? Maybe you could help us understand what was the -- what were the dynamics throughout Q1, January versus Feb versus March?

[Benoît Coquart, CEO & Director]

You mean in terms of top line or organic growth?

[Gael de-Bray]

Organic growth, sorry.

[Benoît Coquart, CEO & Director]

Organic growth. I will not -- I cannot comment that because I've been consistently telling you that the monthly number doesn't mean anything in our business. It might be meaningful for a distributor business because you have many things that could happen. But for industrial companies such as Legrand, it depends on the mix from the different countries, depending from the number of open days. It depends on the weather. It depends. So mostly numbers are not relevant. Neither will I comment April except to remind you that we have, of course, an easy comp because the month of April last year was down 41% like-for-like. But again, we'll comment Q2 numbers when we release them. Now of course, you may complain that I'm not giving enough granularity to the Q1. Well, I think that by releasing a full set of results, full accounts, P&L, balance sheet, cash flow, I think that, no, it gives you quite a nice level of [indiscernible].

[Operator]

Next question from Alexander Virgo from Bank of America.

[Alexander Stuart Virgo, Director]

I was just wondering if you could give us a little bit of color on your comments around data centers. I wonder whether you could talk a little bit about the differences in regional demand and customer demand there, just to give us a little bit of an understanding of how that market is developing.

[Benoît Coquart, CEO & Director]

Yes, of course. So data center, which is, as a reminder, about 10% of our sales globally and a little bit more in the U.S., has been up very nicely in Q1, more than the average of the group. And this has been true in all regions. So Europe, North and Central America and rest of the world. So very strong growth in Q1 in data centers. And I have the feeling that with the market positioning that we have and the acquisitions that we have made in data centers, which are not only acquisitions for U.S. companies. So of course, we are very happy and pleased by the acquisitions of Starline, [indiscernible], Server Tech. But we have also made, in the past 10 years, a number of acquisitions in China, in Europe, in Singapore also. I have the feeling that we have a very strong positioning, especially in the white space, so the space where you have the server room basically and especially amongst big customers that are pulling the demand for data centers in which are big guys, what we call the Super 8. So the Amazon Web Services, LinkedIn, Google, Alibaba, and so on. So we are very happy with the growth we have been experiencing in Q1, which came after a very good year 2020 and a very strong over performance in data center compared to the rest of our sales.

[Operator]

Next question from Daniela Costa from Goldman Sachs.

[Daniela C. R. de Carvalho e Costa]

I have two. I'll do one at a time. One, to come back to, I guess, very clear on your point on the 4% to 7% guidance on what you see still in terms of uncertainty, but didn't hear you mentioning anything regarding stimulus. And we had couple of announcements like Biden, we have the Green Deal and a few other regional country announcements regarding renovation. Is it fair to say that you haven't factored those in even at the top of the organic growth guidance? And can you give us an overview of sort of how you're seeing things panning out for your portfolio given some of the measures that are being discussed? That's my first question.

[Benoît Coquart, CEO & Director]

Hello, Daniela. No, we have not factored in a lot of impact of the stimulus plans in 2021 because we feel that, whether the U.S. or the European stimulus plan, those are plans which are not yet enacted and it will take time before they are. Maybe I can take as an example, the U.S. plan. So as you know, there was USD 1.9 trillion, American Rescue Plan. This is the name, which was voted and which was implemented. Well, this plan is, of course, massive, but there's nothing specific to our trade. It is a plan, which is mostly driven toward direct stimulus to individuals and to education. So for example, you have more than USD 400 billion of stimulus checks. You have an extended employment program. So this plan was massive. It probably had a positive impact on the consumption. And it is probably supporting the very good growth we are experiencing in residential in the U.S., but there's nothing specifically targeted out of it.The one plan, which could be interesting to our business is the so-called American Jobs Plan, which is, if I remember properly, something like USD 2 trillion on 8 years. This is the one, which is supposed to be financed through tax increases. And here, you have a number of topics that could positively impact our business. For example, you have something like USD 200 billion, which are supposed to be dedicated to the manufacturing and retrofitting of so-called 2 million affordable house. You have investments, which will be directed to modernize the schools, to modernize federal buildings, child care facilities and stuff like that. Of course, all that can very positively impact our trade, but this American Jobs Plan hasn't been voted yet. And we know that it would take a lot of discussions and debates at Congress before it is voted, and nobody knows under which format it's going to be voted. So you see for this specific U.S. situation, yes, a positive impact of the American Rescue Plan, but which is somehow indirect through consumption. And as far as the plan is specifically dedicated to energy efficiency, refurbishment of buildings, it is not yet voted. And before it is voted, enacted and implemented, it will take a couple of quarters. Same comment for the Green Deal, where you currently have a number of countries that are submitting their commitments and plans to the European Union. And again, it would take a couple of quarters, I believe, before plans are effectively implemented, even though some countries have already started to do their own initiatives, such as in France. So to make a long story short, all those plans are obviously positive. We believe that, over the years to come, they will support the growth of our business, but we don't expect to have massive impact as early as 2021.

[Daniela C. R. de Carvalho e Costa]

And my second question relates to M&A and the pipeline. Over the years, you've always shown us a correlation between organic growth and M&A growth and how the 2 normally go along together. Now with significant acceleration in organic sales growth, should we expect, as we move into the coming quarters, a significant acceleration on the M&A pace as well from the 3% that you're -- I guess, has a carryover?

[Benoît Coquart, CEO & Director]

Well, I wouldn't like to shoot a number. I mean, clearly, our objective remains to do at least 3%. It's difficult to commit on anything different today that, Daniela, because you have a lot of uncertainties, as you know, in M&A. And of course, we don't want to do M&A for the sake of doing M&A. We want to do the right deals at the right price and with a good fit with our strategy. So what I can tell you today that we have a lot of contacts, a lot of discussions going on with interesting targets, traditional bolt-on targets, of course, not anything different from what we've been doing. I'm pretty confident on the fact that some will materialize in the quarters to come, but of course, it depends on how long will the discussions last. It depends on this and many topics. So again, I'm not committing to anything more than 3%, at least 3%. But we are very active on M&A, and I'm very confident that we will be able, in the quarters to come, to demonstrate our ability to do good deals for the group.

[Operator]

Next question from Lucie Carrier from Morgan Stanley.

[Lucie Anne Lise Carrier, Executive Director]

Congratulation on the strong start. I have three questions. I will go one at a time, if I may. The first one was to have a bit more visibility maybe on the trend you are seeing on non-residential in the U.S. You mentioned the year-on-year comparison to minus 20 in the fourth quarter, minus 10 in the first quarter. But how does -- how has that evolved, I would say, sequentially between the fourth quarter and the first quarter? And just a little bit outside of the commercial non-resi, but on the data center business, generally, do you have more visibility versus the -- in the business versus what you have in the rest of your segment?

[Benoît Coquart, CEO & Director]

Well, Lucie, I have to admit that I'm not a great fan of sequential comparison because we're in a trade where quarters can had it be comparable because of the month of Jan, the month of December, the month of August, and many other factors and restocking, destocking and stuff like that. So not a great fan of sequential comparison. The feeling, though, is that things are improving in Q1 2021 compared to Q4 2020. It is more a qualitative comment that I'm making or comment based on soft signals, such as a number of quotes we are getting from our customers or a number of statistics that we are looking at. So it seems to have an improvement even though it's difficult to quantify it.My feeling for the U.S. is that you have 3 things: short term, mid-term, long term. Short term, it is somehow likely that there will be some works being performed at the time. People will go back to the office. And there's now a general consensus in the U.S. that more and more people will be asked to come back to their desk by mid-year. So hopefully, this will help a bit our overall business. Then you have medium-term. As I said, we have, for example, the so-called architecture billing index, which is a leading economic indicator for non-residential activity, which increased in February for the first time in a year. So it is a positive signal, but this will more translate and should not translate into jobs, let's say, within 6 to 18 months. So there's a significant time lag between the time those indexes are improving at the time we have actual work being performed. So a big question mark on when it will hit or big question mark on whether it last. Another one, a big question mark whether -- and when it will hit our top line.And then there's a sort of more fundamental structural and long-term where trends where I'm a lot more positive than what many specialists. We used to say 6 or 12 months back at the time of the pandemic on office building. I have the strong feeling that you have a number of trends that will support the growth of non-residential buildings, namely the need for energy savings and monitoring, namely the need for network upgrade, for infrastructure improvement, for remodeling in order to accommodate the sort of work-from-everywhere trend. And I'm pretty convinced that in the next years to come, the office space will be an interesting space to be.So I know that it doesn't straightforward answer your question, but short term, hopefully, some positive impact from return from home. Mid-term, all the signals that we are seeing that should translate into works within 6 to 8 months. And long term, there's a very strong trend that should support the business. As far as data center is concerned, we don't have a lot more visibility because even when customers are big customers, such as AWS or Google, they don't necessarily tell you what they're going to order in 6 months from now. So even for data centers, we don't have a significant order book that would help us to predict what H2 2021 or full year 2022 going to be.What I can tell you is that three things. Number one, as I already said, it was very positive, growing fast in H1. Number two -- in Q1, sorry. Number two, that mid-term, we expect this business to keep growing at the fast pace because of the need for data and data management coming from all the changes in habits that we have seen for the past 12 to 18 months, increasing -- increase use of smartphones, tablets and so on.Well, as far as H2 is concerned, of course, as always, a question mark, what will our customers do that could be basically for comparison topic, that could be many things. But -- so short term, I cannot commit to a number. But the long term, I can tell you that there's an area where we have a lot of growth prospects. Also, more at Legrand, as we have our internal cross engines, the fact, for example, that even though we are very strong in the U.S. in data center, there's still a number of regions where we have a small market share. So we are currently in the process of deploying geographically our product offering, mostly in Europe for the U.S. brands, mostly in Asia for the Chinese brands we have.So we're prompted by external factors or by own strength, I have the feeling that meet them. We have a lot of very interesting growth prospects [indiscernible]. Short term, same lack of visibility as well.

[Lucie Anne Lise Carrier, Executive Director]

My second question was around the cost structure. I seem to see from the slide show that your cost for admin, selling and R&D were about 4% lower. So there were 30% of sales in the first quarter versus 34% last year. I was just wondering if all of that was quite sustainable in terms of cost reduction or whether part of that was kind of more temporary as you transition your cost structure from the COVID time to a non-COVID time or maybe had -- if you had some phasing in the R&D project because that's quite a decrease in terms of that area of cost from last year.

[Benoît Coquart, CEO & Director]

Yes. Well, the numbers you are seeing in the P&L, of course, includes ForEx, include parameters. So it's not straightforward. What I can tell you to give maybe a more accurate number is that our total expenses, i.e., production expenses and SG&A were up like-for-like 3% in Q1. And as you know, our top line was up 13%. So plus 3% for production expenses and SG&A, plus 13% for our top line. So clearly, our fixed costs have been well under control in Q1. Is it sustainable? We will have, especially on the SG&A front, a ramp-up in expenses because we believe that this ramp-up is necessary for us to fuel growth in the years to come. So there will be a ramp-up in commercial expenses. There will be a ramp-up in R&D expenses, even though we haven't cut much R&D expenses last year. And this is what we have tried to factor -- I mean to say when we said that's the limit in the rising cost in Q1. So yes, there will be an increase in cost. Now it has been factored and included in our revised guidance for the year. So in other words, a 19.6% to 20.4% of sales include not only the impact of top line growth and volume growth, it also include, to come back to the previous question, the balance between the selling price and the purchase price. And it also includes the fact that there will be some increase in the number of expenses in the months to come.

[Lucie Anne Lise Carrier, Executive Director]

And just my last question, which is more mechanical, but you very kindly gave us the impact of M&A you expect for this year based on what you have already purchased, so to say. How should we think about the dilution on the margin based on this existing acquisition? I think you see it was 30 bps in the first quarter. Is that something that we should kind of annualize based on what you have thought so far?

[Benoît Coquart, CEO & Director]

Well, it was indeed minus 30 bps in Q1. You can assume that it will be between 0 to minus 40 bps. So if you take the same minus 30 bps, you'll not be far from what the actual number will be.

[Operator]

Next question from Shane McKenna from Barclays.

[Shane Patrick McKenna, Research Analyst]

Just coming back into the sort of guidance. If I look at your European business over the last decade and observe the positive seasonality that we see in Q2 versus Q1, it's around roughly sort of $15 million to $20 million, is there any reason given that you flagged limited or no sort of pull-forward effect that normal seasonality shouldn't hold this year? And then I've got one other follow-up question.

[Benoît Coquart, CEO & Director]

Well, I see no reason why seasonality shouldn't play. But seasonality is basically weak months of August. I mean it's very connected to the -- but again, what will master and impact a lot more than seasonality, the sort of profile of our growth in 2021 going to be the end demand, and that's where the question mark lie. So take Q2, Q3, Q4 seasonality, we'll have the usual impact. But change in demand plus basis for comparison, we have a lot stronger impact. This is the reason why everybody expects Legrand, of course, to grow in Q2. As a reminder, our Q2 2020 was, I think, at minus 22.5%, turning to my colleagues. So of course, when you have such an easy comp, if I may say, except if you have a world catastrophe, which we are not expecting, we should deliver a very strong or strong growth in top line in Q2. So again, seasonality should play, but it's negligible, if I may say, compared to, number one, the evolution in demand, residential data center, nonresidential; and number two, the basis for comparison.

[Shane Patrick McKenna, Research Analyst]

Perfect. And thanks for the detail around your North American non-res business. I wondered if you could just sort of break out a little bit more what segments you're seeing those improving trends. Others have called out health care, clearly, education, warehousing, logistics. If you could give a bit more clarity around those verticals. And how exposed are you to hospitality and lodging? And then within that, maybe the trends that you're seeing across your nonres business for lighting versus non-res AV infrastructure?

[Benoît Coquart, CEO & Director]

Well, I would love to give you this kind of granularity, but it's already sometimes difficult to split ourselves between resi and non-resi because you have a number of products that are sold in both verticals in which are the same. It's even more difficult to break down between the various sub verticals, if I may say. What I can tell you is that it's highly likely that the majority of non-residential sales in the U.S. are going to office buildings. We have, I think, very little exposure to logistics because logistical center does not have a huge content in electrical product. We do have some exposure in education, health, retail and so on, but I would say that the majority of our exposure to the U.S. non-resi is office building. So if we are seeing some improvement, this improvement is clearly coming from office, from everywhere, including office building, if I may say. And the exposure to hospitality is not a big exposure in the U.S.Now as far as the split between the various businesses, we don't see a lot of differences between, let's say, AV, cable management, lighting features, lighting controls and the other. I think it's more or less all of them are dropping low double-digit in the non-residential segment. And most of them are growing, sometimes double-digit when they have some exposure to resi. Thanks, for example, AV, audio/video. Audio/video has an exposure to residential, small amounts for residential. You have some products helping to do an efficient Wi-Fi system within the home. You have some small video conferencing systems. Also, AV products are growing some double-digit in Q1 as they grew H2 last year. And on the other side, you have the AV products exposed to non-resi, which will be the traditional chief mouth. So the likes are smart screens, for example, and those businesses will be down double digit. So the main, let's say, driver remains the exposure to either resi or non-resi. But within non-resi, you don't have a huge difference between the different product revenues.

[Operator]

Next question from Andre Kukhnin from Crédit Suisse.

[Andre Kukhnin, Mechanical Engineering Capital Goods Analyst]

I wanted to touch on margin and ask a wider question you're thinking of that kind of 20% level that you cited before is the fair level that you wouldn't want to really go above that. In the context of having just printed significantly above that and seasonality is always positive for the second quarter, it looks like you are on track for better performance. I just wanted to check how are you thinking about that for the rest of the year, whether there's going to be a kind of a conscious effort to ramp up investment for growth, if you are looking to be on track to deliver significantly above. Or is that something that you would kind of observe through the year and then decide what you do in subsequent period?

[Benoît Coquart, CEO & Director]

Well, number one comment, this 20% EBIT margin, well, it's not granted. [indiscernible]. This is something that we will have to achieve. And it is challenging. Of course, we will be held and supported by the growth in volume. Of course, we have a good level of margin in Q1. So we have only 9 months to go.But I really want to emphasize two things, which we have already discussed. Number one, the fact that the price in raw material and components is increasing sharply. And even though we will compensate and we are shooting to compensate that in value, we might not in margin, and it could have a negative impact on our margin. Number two, as I've just said a couple of minutes ago, the fact that in order to sustain an interesting growth market share and volumes in the years to come, we'll have to put oil back into the engine and to invest in -- especially in SG&A. So the 20% is not granted. Even though you rightly noticed that we are shooting for a significant improvement in margin. It's clearly our objective for 2021. Now mid-term, I fully confirm that the 20% EBIT margin is our guidance and our mid-term target. And we clearly stated that in February when we released our mid-term guidance, and I can reconfirm it again. It's not ideologic. It's not -- because there would be a magic fitting and that we couldn't go to 20.5% or 21%. But it is because based on my experience and the many analysis that we have done, I think that this is the best balance between value creation and growth.Going to 21% or 22% could always be possible, but it would imply to cut R&D from 5% of sales to 4%, for example. It would imply to a little bit extra pricing, a little bit too much of pricing. It will imply to cut our digitalization expenses and a number of things that would hamper, if I may say, our growth potential in volume. At the same time, we could always do a 13%, 14%, 15%. I mean, not going to the extreme, but 18% EBIT margin, for example. But I believe that the extra volume growth we would get of this decrease in margin would not be as value creative as the current growth we are having with the 20% EBIT. So really, I think that this 20% is not a magic number, but this is the best balance between growth and profitability. And you know the Legrand model, this is something I've been standing for 3 years. It's 20% margin, very good free cash flow generation. And based on those 2 metrics, let's try to run as fast as possible, both organically and through external growth. And I think this is a very -- over the long term, a very value accretive model.

[Andre Kukhnin, Mechanical Engineering Capital Goods Analyst]

And second question I had was on the connected devices performance, Eliot range of products. Could you talk about how that did in Q1 and maybe with some regional color possible?

[Benoît Coquart, CEO & Director]

Well, we are usually commenting in that numbers once a year, not every single quarter because this is not a reporting, which is variable straight out of machines because, actually, it's a mix of many sales and different products at Eliot. What I can tell you though is that, from what we could see so far, it's growing faster than the rest of the group, but I don't have a lot more color to give you.We are very happy with the Netatmo growth in Europe, which is also, let's say, supported by the costs in residential, but which is clearly over performing the market. But again, we will give you a bit more color on a yearly basis, more than a quarterly basis, but it has been growing faster than the rest of the group.

[Andre Kukhnin, Mechanical Engineering Capital Goods Analyst]

Got it. That's helpful. And last question I had, again, quite a kind of broad one. On that future of office and what you mentioned is the near-term potential rework that you see as people come back to the office and kind of resetting the space for the new ways of operating, are you seeing that those kind of projects coming through already? And if you are, could you talk about what kind of work it is? We're just trying to understand kind of how much -- what sort of revenue opportunity per square meter, per 1,000 employees that could yield just that kind of rent to office and then maybe...

[Benoît Coquart, CEO & Director]

Sorry, it's very difficult to give you a precise sort of measurement. If we look at the quotes and the request from quotation that we have from engineering offices, architect, sometimes contractors, it's all across the board and it's about remodeling the space because planning for the return of people to the office, you have a lot of space to remodel in order to have more meeting rooms, less individual spaces, more, let's say, distance between desks. And every time, we are basically moving a table or moving a chair, you are potentially moving some connectivity products like wiring devices or sockets. You're adding some floor boxes or [indiscernible], and so and so forth. So there's a lot of things connected to -- and lighting features. So there are a lot of things connected to just remodeling of space in order to accommodate for the sort of what we call the new normal, which is maybe the head of more common spaces, less individual spaces, more social distancing and so on. Well, number two, you have also, as I said, network upgrade. The fact that with people working from everywhere including their homes, it also imply office buildings to have sometimes a more solid network than they have so that you could do a remote video conferencing, which are not only on Teams or Zoom, but which can also be using hard the bigs, AV systems and so on. And number three topic, which will probably -- which is still probably more to come than actually coming now is everything related to Green. Don't forget that's in the U.S., especially you have what the federal government can decide, and this is a big Biden plans that I described a little bit earlier. But you also have a number of local plans, which can impact positively the business. And if we take it, for example, in the U.S., you have a number of states, which on their own have been deciding to release a climate action plan. We have more than 30 states in the U.S., which have been releasing climate action plans, not only, of course, California, but you have Washington, New York, Portland, a number of others. But I think it is more to come than really actually there. I would say that the 2 main drivers are really AV, network quality, bandwidth, Wi-Fi, fiber and so on in buildings; and number two, space reorganization and remodeling. But this is a more qualitative feedback that I'm giving you more than something based on the hard facts.

[Operator]

Next question from Alasdair Leslie from Societe General.

[Alasdair Leslie, Equity Analyst]

So very strong performance in Europe, but just wondering whether you could elaborate a bit more on those commercial successes that you highlight for Europe. What you think that might have contributed to your growth relative to the market, if that's kind of a possible to assess and whether those comments relate more specifically to France and Italy as well? And then also, how much of that is sort of perhaps a shorter-term single quarter boost from new product launches, which you've -- we've sort of seen you report from time to time in the past versus something more sustainable? You talked about many commercial successes. So it sounds relatively broad based.

[Benoît Coquart, CEO & Director]

So we didn't have in Q1, a one-off impact of a very significant launch we would have done in France or Italy. We have commented that from time to time. On a given quarter, sometimes, we are launching a new range of simple [indiscernible] wearing devices, and then there is some inventory built up from distributors that can positively impact a given quarter. We haven't seen any of those in France and Italy. We have, of course, continued to launch new ranges of products, but none of them did have a significant impact such as the launch in Mosaic in France 2 years back, for example. So when mentioning commercial successes, it's more about the ramp-up of some ranges that we announced in the past 2 or 3 years, including actually in 2020 and which are doing very well. I can take a few examples. In Italy, we launched Living Now, what I said, 2 years back, which is a complete new range of foreign devices made of traditional products and connected products. And Living Now is doing fantastically well in Italy. And definitely, they're taking shares. Take in France, for example, we launched last year connected panel board, which is doing very well, even though the numbers are still small, and we are -- we launched Netatmo PoE, i.e, the set of these Netatmo products to a professional segment, smart thermostats, smart cameras and a number of other products, which is indeed also doing very well. And we are also able to secure -- so it's a tribute to the team, but the products we have launched over the past 2 to 3 years are extremely successful in France and Italy. And on top of that, you have, for example, the deployment for data center play. Data center performances are very, very strong in France, and we are taking shares on the white room in data centers. So it's across the board. It's not connected or not linked to one specific launch or one specific initiative. But what I can see, talking to my customers and looking at my competitors is that we have a very good dynamic in those 2 countries, and we expect this dynamic to continue.

[Alasdair Leslie, Equity Analyst]

Great. Could I just have a very quick follow-up on the European data centers. Just wondering if you could give us there, how much of your European sales today comes from data centers relative to the 10% at the group level, which I think we know is very much weighted to the U.S. still?

[Benoît Coquart, CEO & Director]

Well, I'll leave it to you to do the math. Data center is slightly more than 10% of our sales worldwide, and it's about 20% of our sales in the U.S. So it implies some selling to colleagues who are faster than me computing, but it implies that 80% of our sales in data center, something like that, are U.S.-based. So it's probably not more than 5% of our European sales, which are data center. So data center, it's about probably 20% of our sales in the U.S. and about 5% in Europe. Well, the data center market is more developed, if I may say, in the U.S. than in Europe, but growing fast in Europe. And that's also one of the reasons why we see a lot of potential for this business in Europe and elsewhere actually.

[Operator]

Next question from William Mackie from Kepler Cheuvreux.

[William Mackie, Head of Capital Goods Research]

Two question areas. Firstly, can we come back to Europe again? Fantastic growth performance in Europe in the first quarter. You called out France and Italy. Can you at least give a flavor of the level of organic growth you achieved in France and Italy in the quarter? And also, you said that you expect the positive performance to continue. I know you don't like talking about sequential performance, but can you give some early indications what you're hearing from your customers in France and Italy about how you would expect demand development to evolve in the second quarter versus the first quarter? I know we have a very low comparative base. The second question is, we haven't really talked about your supply chains and the fragility. Can you come back and discuss a little bit where you see the specific risks through the supply chain? Is it particular components? Is it plastics and resins? Is it semiconductors? Is it particular regions, which create the risk that you've highlighted as one of the factors addressing your outlook caution?

[Benoît Coquart, CEO & Director]

Okay. Let me take the questions one after one. So I can confirm that we are pleased with our performance in Europe. And looking at the 1-year performance, 2-year performance, 3-year performance, I think we are doing very well in these places of the world. Well, as far as Italy is concerned, the growth in Italy is more or less in line with the growth we are doing for Europe as a whole.As far as France is concerned, it's slightly higher to give you order of magnitude, it's slightly higher than Rexel, for example, which released their French sales. Of course, again, it's not a call for a comparison because we know that the businesses are pretty different. We don't have copper cables, for example. So we don't have impact of compatible pricing. So it's a bit different, but I can tell you that the overall performance is slightly higher than the one I said would have released. So it's a pretty solid performance. As far as the dynamics is concerned, don't get me wrong. I'm not saying, of course, that we will grow 14% in Europe across the year. I'm just saying that the market share dynamics continue because our trade market share dynamics are usually not for a quarter. Once you have convinced increasing number of customers to trust you and go with your solutions and products, it is not such an easy game to convince them to change again. So I'm convinced, but we'll see that. I'm convinced that the market share dynamics will continue. As far as the supply chain is concerned, and I'm not talking again to the supply chain -- I mean to the price of raw material components which I already commented, but about the shortage. So it is true that it has been for a couple of months very difficult to get the components and raw materials, and it's not only about electronic components. So of course, electronic components for connected products are under pressure, and it's difficult to source them, but it's also the case, for example, for a number of metals and even for plastics. If you take polypropylene, for example, or polycarbonate, we have faced some difficulties to show some products. Now this situation was quite anticipated. And as early as in Q3 2020, we have started to implement mitigation actions trying to secure some contracts, some supplies and negotiating with suppliers and so on. And as a result of that, we didn't experience any production stoppage in Q1. And I cannot tell you that the scarcity of the sources had a lot of negative impact on top line in Q1. I believe that this impact was very limited because we could manage it properly.Now it's going to be difficult in Q2, probably also difficult in Q3, and everybody thinks that it will progressively ease starting somewhere in H2. But we have, ahead of us, a number of difficult months. For all what you know well, the fact that all those components and raw materials are difficult to source, not to mention containers from one country to another. So yes, we are facing a difficult situation, which was nicely anticipated as early as Q3, but it's going to be again difficult in the months to come.

[William Mackie, Head of Capital Goods Research]

One quick follow-up. I think Rexel reported about 20% growth in France. If your growth was a little higher, I'm still a bit confused or curious why you say you don't see the impact of a restocking or destocking sort of cycle, but I think 2 of your -- or maybe 3 of your contemporaries all highlighted the impact of pre-purchasing and restocking on the impact of their Q1 results. So I wonder how you rationalize or see that -- you don't see the same effect that they do with regard to restocking and destocking?

[Benoît Coquart, CEO & Director]

Well, so first, I think that -- but I may be wrong, but I see that it's plus 18% in France in Q1 2020. Second comment, I confirm that there is no restocking in France without any doubt. Well, don't forget that, mechanically, no destocking, no restocking in Q1 2021. And destocking in Q1 2020, mechanically, of course, has a significant -- has some impact on our top line.Yes, my colleagues are telling me that it's plus 18 current number of days, plus 20 constant number of days, like I said. And of course, we are only communicating and computing on current [indiscernible]. So current [indiscernible] days is plus 18.So mechanically, destocking Q1 2020, no destocking in Q1 2021, has impact on our top line growth. But I can confirm that there is no restocking. I'm pretty convinced that our customers would love to restock in order to improve their service level to the contractors. But it is given the state of the demand and the fact that the market demand was very strong in Q1 and, at the same time, the fact that it was sometimes of a fight to get the raw materials and the components in order to manufacture, even if they wanted to, they would have for Legrand. I'm not talking for other people, other companies, they would have had difficulties to restock. But I confirm that neither in France nor in Italy, which are 2 big markets where they could be strong destocking or restocking, we have seen in Q1 restocking. And again, our customers, our distributors have been selling more or less what they bought from us.

[Operator]

[Operator Instructions] We have a question from Jonathan Mounsey from Exane.

[Jonathan R. Mounsey, Analyst of Capital Goods]

Maybe just circling back to the stimulus that's coming. And I guess it's not a situation you were necessarily expecting before COVID. And I'm just wondering how it maybe changes the strategy. I imagine you're trying to look at ways to get maximum leverage to. And I guess it's all about energy efficiency, to some extent, at it's hard in terms of the building space. And does that lead you to think about maybe needing to expand or develop new product ranges to better leverage to that, maybe a different M&A pipeline than you would have otherwise pursued, perhaps more the presence in software, in automation and connectivity than you may have otherwise needed? And then as a follow-up, have you managed to assess how much of your product range is likely to be viewed as sustainable within the context of the European taxonomy? And if so, could you sort of share just your thoughts on that, please?

[Benoît Coquart, CEO & Director]

Okay. So a couple of answers. Number one, we haven't waited for the stimulus plans to be convinced that making buildings greener could be a very significant support for our business going forward. We launched years ago, a program, which we named [ LL ]. Your Eliot for connected products, [ LL ] for sustainable products. So we launched very early back a couple of years ago, the [ LL ] program, and we've been both organically and inorganically trying to grow our sales in energy efficiency products. I can give you a couple of examples. We, for example, acquired years back, a measuring company called IME in Italy. We acquired Netatmo, which has a leading market share [indiscernible]. We acquired CP Electronics in U.K., which is a leading European company, especially in the U.K. for lighting controls, and so on. And we acquired PDU companies, which are active in data centers, but it's energy efficiency for the data centers. And I couldn't give you the same examples for organic growth. We have had in our product pipeline for years, a number of very interesting developments, be the EV stations for electrical vehicle, being the lighting controls, being load shedding and so on. So it's not new to Legrand, but we are, of course, welcoming all the stimulus plan. And the fact that it is -- it will bring Asian business opportunities. On top of that, don't forget this, which is very interesting, once you have convinced because of an incentive, somebody being either residential, non-residential building owner to put a smart switch gear, a thermostat or whatever in order to improve its energy efficiency, it quite often leads to additional electrical works. You really ask contractor to come to your home only to change your thermostat, for example. So even a non-LL product or non energy-efficient products, it could benefit from those plants. Does it imply Legrand to start buying a lot of software companies? No, because this is not our strategy. Our strategy is to focus on the residential building and small commercial buildings. And when it comes to big commercial buildings, to let others providing the software and to come with a number of very targeted -- well-targeted solutions that would help to achieve energy savings. So not buying a software company does not imply that we don't have the right positioning for energy efficiency. It implies that we have our own positioning, which is based on our trends, on our assets, on our know-how, on our capabilities, and I strongly believe that we will benefit from this trend.Well, as far as the European taxonomy, I guess that you know that they were very fresh news. On April 21, there was what we call a Delegated Act, which was adopted by the European Commission that includes or indicates activities, which are included in the EU taxonomy. Based on the first analysis, it seems like the vast majority of Legrand turnover could be taxonomy eligible. Now be careful, eligible does not mean yet aligned or compliant. There is a lot of work, which is currently being done by industry specialists in order to analyze what we call the technical cleaning criteria mechanism. And this is what will make the product moving from eligible to align or compliant. And this work is currently being done. So even though it's a good news to see that the majority of our products are eligible, it doesn't mean that the majority of our products will be compliant. It's too early to confirm that to you and to give you an order of magnitude. All the more as this screening process, which will take a few months, is very, very complex. So to make long story short, we have positive signals so far, but it's still a work in progress, and we have to be in a position to give you more clarity, potentially at the next Investor Day, for example, which could be a good time to give you more clarity on the topic.

[Operator]

Next question from Eric Lemarié from Bryan Garnier.

[Eric A. Lemarié, Research Analyst]

I got two actually. The first one on the price increase. You mentioned this 1.1% price increase in Q1. Could you tell us if it's similar to what you have observed in the market from your competitors? Are you more aggressive or less aggressive than your competitors in terms of price increase in Q1? And the second question on the workplace change you mentioned and you had described. I was wondering whether you are happy or not with you portfolio of product today. I remember back in 2019 that you got a so-called advanced sensor specifically designed for workplaces. Do you have some of the products specifically designed for workplaces in the pipeline or in the portfolio? Or do you think you might need to make an acquisition to muscle you offer?

[Benoît Coquart, CEO & Director]

So as far as pricing -- thank you for your questions. As far as pricing is concerned, it's 1.9%. Okay, 1.9%. I cannot give you a simplistic answer to the question because it's really -- we have 100 product families, thousands of competitors, 100 countries. So it's extremely difficult to say, and it's really a highly targeted approach. So when we feel in a given country that the trade-off between pricing and volume leads us to decrease our prices in order to get a lot more volumes, we don't hesitate to make this move. And there are a number of product families, a number of countries where we are pushing our prices down because we believe that this is the best way, the best balance between the margin and volume. There are other countries where there is less price sensitivity because of the average selling price of the product is quite low in absolute terms or because of a very strong competitive advantage we have compared to our competitors. And in those countries, we will increase prices by 4%, for example. And then you have details that can take on cutting discounts and stuff like that. So there's not a clear answer to your question. I don't have the feeling that we are doing too much pricing. I have the feeling that, as usual, this 1.9% is a good balance between profitability and market share. Well, it is also that there is a context today, which is more favorable to price increase because everybody knows, including our customers that the price of raw material and components is increasing. So as far as workplace changes are concerned, our portfolio is never enough sometimes because we are lacking a feature that we would like to add to a product, sometimes because we feel that there is a subsegment of vertical in which we should invest more, sometimes because we have a portfolio which is good in this country, but not good enough yet in that country. So no, we are continuously looking to complement our portfolio.Well, the smart sensor you are mentioning was indeed a sensor that we presented at the CS in 2019 as a very advanced R&D project in which we are effectively working, which is a very nice stuff, which helps not only to -- which is more than detecting moves of people. It can count people, for example. It can -- so it can do a number of things, which are extremely helpful in the context of innovative workplace, but this is one example out of many of things in which we are working. So both organically and inorganically, there could be interesting opportunities to complement our portfolio. But this is a never-ending game. It's not that we are not rightly positioned, but it's a never-ending game. Every year, we are complementing our product portfolio with additional products, source either organically or inorganically. And we're going to continue this strategy.

[Operator]

Next question from Magnus Kruber from UBS.

[Magnus Kruber, Associate Director and Research Analyst]

Magnus from UBS on behalf of Supriya. Just one left at this stage. Could you open up a little bit on what you're seeing in India at this point in respect to the current situation? That would be very, very helpful.

[Benoît Coquart, CEO & Director]

Sorry, I didn't get your question. Could you repeat, please?

[Magnus Kruber, Associate Director and Research Analyst]

Yes. Could you open up a little bit on what you're seeing in India to much obviously very strong in Q1 already, but Q2 might be different given the context.

[Benoît Coquart, CEO & Director]

Well, India, there is a good growth in Q1, but which is, of course, help, if I may say, but the basis for comparison. But over 2 years, it is still slightly negative. So it's not sort of big rebound, such as the one we could see in China, which is over 2 years, up 15%. So it's a lot of growth over 2 years. And again, triple-digit growth. So it was for China, minus -- close to minus 15% in Q1 last year, triple-digit growth in Q2, and over 2 years, plus 15%. We are not seeing that in India. It's a strong double-digit growth in Q1, but still slightly negative over 2 years. Well, the month of April, going to be an easy comp because last year we made almost no sales in India because of very -- it was the strictest lockdown implemented in all of our countries. The only products you could sell were products dedicated to hospitals. So our sales were down. I don't remember how much, minus 97% or something like that. So we're going to have a very good basis for comparison for April. But going forward, I'm extremely cautious in India. The sanitary situation is out of control, and it's dramatic. And I'm using these words cautiously. And consciously, it's a situation where you have not enough spaces in ICU units, where you have a lot of hospitals lacking oxygens and everything we could see in the news, but we are getting, of course, very recent feedback from our teams. So it's dramatic situation. And I don't see how India could escape a very strict lockdown, the national one in order to solve the situation. So I feel that the situation in the months to come going to be very difficult in India. Sanitary situation first and the economic situation second. Now India is such a great and fantastic country that people have the ability to get out of difficulties and rebound very strongly and very fast. So even though we have difficult months ahead of us, I'm very confident that our Indian friends and colleagues will rebound and potentially as early as H2, but it is a fact that the situation is today extremely difficult, and I don't expect it to improve in the months to come.

[Magnus Kruber, Associate Director and Research Analyst]

That's very clear. Can I just follow-up on the comps per month than last year. You said April was almost no sales. Was it a similar situation in the other month. I suspect not quite a bit better in the end in Q1?

[Benoît Coquart, CEO & Director]

No, we're not giving a [indiscernible]. But I can tell you is that, of course, for -- there was last year strong correlation between lockdowns and sales evolution. So the wider lockdowns, the stricter the lockdowns, the deferred impact of our top line. So it is fair to say that starting mid-March, the situation -- the base for comparison starting to be easier. April was the worst month last year, minus 41% for Q2, which was at minus 22%. And then the situation progressively started to improve starting, let's say, mid-May last year because a lot of countries exited from the lockdown. So you can assume that on a monthly basis, the basis for comparison depends very much on the lockdown that were implemented last year. Now this is for the sort of monthly basis for comparison. As far as quarterly basis for comparison, I can remind you the Q2 numbers last year, which were actually minus 22.8% for the group as a whole, of which minus 28% in Europe, minus 17.5% in LNCA and North and Central America and minus 22% in rest of the world. So the basis for comparison that is easier for Europe than for North and South America and for rest of the world. But again, on a monthly basis, it started, let's say, March. The worst month was April. It started to improve in May, which was still -- you had a couple of weeks on the lockdown in number of European countries. And then you have the June, July, let's say, the exit of the lockdowns with many people starting to do some heavy work at home and so on.

[Operator]

We don't have any more questions for the moment. [Operator Instructions] It looks like we don't have any more question. Back to you for the conclusion.

[Benoît Coquart, CEO & Director]

Well, thank you very much for your time. Thank you very much for your questions. We will talk again in the months to come. Please book your September 22 for the Investor Day. I think it's always an interesting opportunity for us to discuss the Legrand business for that and to give you many colors on many topics and also for you to meet the management team. And that's it. Thank you very much, and hope to meet you soon. Thank you.

[Operator]

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you.