Q2 Small PandL beat, strong FCF Group Q2 sales came in -1% light of Consensus, mainly due to North and Central America, where sales missed by -4% driven itself by double digit declines in residential demand. Group Q2 adjusted EBIT came in 2.8% ahead; the margin was 100bps ahead. All three regions delivered a 100bps margin beat. Second quarter FCF of EUR482mn was 39% ahead of Consensus supported by a cash inflow from reduced working capital as well as the stronger trading profit. This was probably the standout figure in the release. Guidance upgraded to level of Cons; H2 margin set to be impacted by higher SGandA The Company has raised its FY23e guidance. Group sales growth at constant exchange rates of between +5% to +8%, including scope of consolidation of around 2% (previously +2% to +6%, including scope of consolidation of around 3%). Consensus sits at 4.3% (org. and scope combined). The FY23e adjusted operating margin (before acquisitions) is now seen at around 20.5% (previously around 20%). Consensus sits at 20.7% after acquisitions. This guidance implies an H2 margin of 18% to 18.5% (after 22.2% in H1). During the Q2 conf call analysts mainly focused their questioning on the drivers of this implied sequential margin decline. The CEO highlighted that margins are often seasonally weaker in H2 (by c 200bps). However, he acknowledged that the expected margin step down in H2 23 is bigger than this (closer to 400bps). The driver of the additional sequential fall in margins is a proactive decision by management to invest in SGandA for growth. You may recall that we suggested management would go for this strategy in our Q2 Electricals preview. However, we had thought that this might already impact H1 margins; it did not, but it is seen as a significant H2 phenomenon. Despite these headwinds to the H2 margins, the CEO did state that a higher H2 SGandA base will not preclude Legrand from achieving a 20% margin again in 2024 (Consensus models a headline...