1H26 results. Beat and raise. Solid price cost execution, and secular growth markets are bridging the gap to a cyclical recovery. Stay OW.

Research evidence excerpt

1H26 results. Beat and raise. Solid price cost execution, and secular growth markets are bridging the gap to a cyclical recovery. Stay OW.

UpdateMacknowledged that their guidance now assumed some increased embedded caution

around the rate of growth in European and US construction markets. Specifically in

Europe construction, it was not clear that Rexel had seen any deterioration, but in

fact they were perhaps embedding some caution, given geopolitical risks and lack of

interest rate reductions. Given strong Electrification growth has continued in July,

prices continue to rise, and data center growth is above Rexel's prior guidance, we

see risk to the upside on Rexel's updated 2026 growth guidance of ~5%.

Bottom line, we reiterate our Overweight rating, and see little reason why Rexel

should not be able to at least achieve our FY26 same day sales growth of ~6%

(consensus at 4.7%). In addition, after 1H26 EBITA margins of 6.2%, and accounting

for normal 2H26 seasonal margin improvements, this would put Rexel on a

trajectory towards 6.4% EBITA margins for FY26. As a result, we expect ~3%

upgrades to FY26 consensus estimates, and a modestly positive share price reaction

today. We stay Overweight as we see an interesting blend of secular growth

combined with cyclical optionality at Rexel, a self-help driven margin expansion

story, and continued value accretive M&A. All in, we forecast Rexel's EPS CAGR in

2026-29.

The 2Q26 results. European growth and EBITA margins surprise to the upside.

(1) 2Q26 organic constant day sales growth was 6.7% versus consensus at 5.4%.

The key drivers were Europe, which grew organically at 4.4% in 2Q26 (c'sus at

2.9%), due to Electrification (HVAC, Solar, and EV charging) growing double digit.

Electrification is ~20% of European sales.