Schneider Electric Se · EURONEXT:SU
Schneider Electric — H1 2022 Earnings Presentation
47 slides from Schneider Electric's earnings presentation, Jul 28, 2022
Slide 1: Half Year 2022 Results – July 28, 2022
Half Year 2022 Results – July 28, 2022 Strong performance in H1 2022 Full Year 2022 Target upgraded
Slide 2: Agenda and Disclaimer
3 HY 2022 Business Highlights Disclaimer 19 HY 2022 Financial All forward-looking statements are Schneider Electric management’s present expectations of future events Performance Highlights and are subject to a number of factors and uncertainties that could cause actual results to differ materially
Slide 3: HY 2022 Business Highlights
HY 2022 Business Highlights Jean-Pascal Tricoire | Chairman & CEO Investor Relations – Schneider Electric | Page 3
Slide 4: Strong performance in H1 2022 Group
Strong performance in H1 2022 Group Energy Management € 16bn Industrial Automation +10% Energy efficiency Group H1 2022 revenues, org. growth Process efficiency Adj. EBITA margin € 12.3bn € 3.8bn Adj. EBITA margin 20.4% +10.8% +7.5% 18.2% Org. Org. Adj. EBITA margin 17.3% Confirmed strong demand + s
Slide 5: Half Year 2022: Record levels of Sales, Profit and Operating Cash
Half Year 2022: Record levels of Sales, Profit and Operating Cash in a challenging supply chain and geopolitical environment All-time high records Sales Adj. EBITA Adj. Net Income Operating Cash Flow €16bn €2.8bn €1.8bn €2.6bn +10% 17.3% +11% +21% Org. growth Adj. EBITA margin Growth Growth Investor
Slide 6: Our long-standing strategy is reinforced in an all-digital, all-electric world
Our long-standing strategy is reinforced in an all-digital, all-electric world Challenges Customer opportunities Our positioning Energy Security + Climate Sustainability Digital COVID-19 Digitization Energy Geopolitics Electrification Supply tensions Efficiency Automation Inflation Reshoring Acceler
Slide 7: Key customer successes in recent months
Key customer successes in recent months Lendlease EcoStruxure™ ADMS solution with Integrated EcoStruxure™ solution Holistic offer of energy management Role-model solution composed of 22-year service contract to enable differentiated with 5-year Digital technology with services to support hardware an
Slide 8: Buildings will be all-digital, all-electric
Buildings will be all-digital, all-electric resulting in increased need for our complete portfolio 3. Design & Build > Operate 1. Energy + Automation & Maintain Integrated building, power, and occupancy Average Building management Design & Build From RIB software EcoStruxure Building Operation Opera
Slide 9: Accelerated need for all-digital, all-electric – Industries
Accelerated need for all-digital, all-electric – Industries designed to be Eco-efficient, agile and resilient Average Industries 1. Energy + Automation 3. Design & Build > Operate & Maintain Substation • Limited remote oversight Operation Galaxy UPS EcoStruxure Automation Expert AVEVATM United • Sup
Slide 10: Data Centers accelerated by IoT, computing, AI and edge applications
Data Centers accelerated by IoT, computing, AI and edge applications Data Center & Networks HV/MV & MV/LV MV Switchboard Transformers Access Control, Environmental monitoring Cloud & Service On Distributed IT LV Switchboards Busway provider (C&SP) Premise (Subset of Edge) Network connectivity LV & C
Slide 11: Accelerated need for all-digital, all-electric – Infrastructure
Accelerated need for all-digital, all-electric – Infrastructure Electrical grids are evolving: Software Demand Peak DER End-user response shaving management data Smart Grid More Sustainable Decentralized Smart Grids Microgrids grid • Integrating distributed generation • Digitally equipped for remote
Slide 12: We continue to progress on our digital journey
We continue to progress on our digital journey, digital flywheel up +11% org. in H1 SOFTWARE* €1.3 bn +10% pro-forma H1 2022 org. growth Energy Industrial Management Automation EDGE +7% +6% FIELD CONTROL org. org. SERVICES growth growth Assets under Management of +16% 6.5m, up +35% YoY org. growth C
Slide 13: Unified agnostic software offers adding value to multiple customers
Unified agnostic software offers adding value to multiple customers CEMENT EcoStruxure™ Plant solution comprising S.E., L&T E&A and AVEVA offerings to control, monitor, optimize and improve plant availability & efficiency GOLD MINING An open and unified IT & OT ecosystem to empower efficiency and su
Slide 14: Supporting our customers amidst supply chain constraints
Supporting our customers amidst supply chain constraints 's 2 nd Supply Chain Top 25 Mobilized for (2015–2022) Maintained ranking for 3rd supply chain pressures consecutive year among top 5 Leveraging experience from Schneider’s Smart Factory deployment Strategic relationship with suppliers Le Vaudr
Slide 15: Our sustainability journey continues
Our sustainability journey continues 2021-2025 2022 Q1 Q2 Q3 Q4 Target Score1 4.17 4.70 RESOURCES SSI #5 - 100% of our primary and secondary packaging is free from single-use plastic and uses recycled cardboard 5 guiding principles 36% Newly committed to source deforestation-free wood for our packag
Slide 16: Integrated approach for sustainable growth for customers
Integrated approach for sustainable growth for customers to achieve climate ambitions Sustainability Services help East Coast City Invests in Sustainable companies across the globe develop and Resilient Infrastructure to Protect strategic plans & implement projects Against Climate Change & programs
Slide 17: Our distinctive DNA is externally recognized in H1 2022
Our distinctive DNA is externally recognized in H1 2022 Winner Microsoft Partner of the Year Energy & Sustainability Award Investor Relations – Schneider Electric | Page 17
Slide 18: Inflection point towards a more electric world
Inflection point towards a more electric world Efficiency Green Flexibility through Electrification Electricity Digitization Energy saving by digital End users to electrify: Ramp up renewables, retrofit Grid stability / resilience, means EV, heat pumps, industry of nuclear VPP balancing, DRM, grid N
Slide 19: HY 2022 Financial Performance Highlights
HY 2022 Financial Performance Highlights Hilary Maxson | CFO Investor Relations – Schneider Electric | Page 19
Slide 20: H1'22 Financial highlights
H1’22 Financial highlights – Strong performance in supply- constrained and inflationary market environment Good progress on sustainable growth journey Revenues Gross Margin Adj. EBITA Margin €16bn, +10% org. 40.6%, -110bps org. 17.3%, -10bps org. Strong demand across end-markets and geographies, Pro
Slide 21: Strong growth in H1 up +10% organic
Strong growth in H1 up +10% organic Analysis of Change in Group Revenues (in €m) +5.5% 16,077 +7.5% +0.6% +10.8% Mainly due to the 13,774 strengthening of the USD and CNY against the EUR Mainly comprises the FY21 acquisitions of ETAP and OSIsoft Group +10.1% organic by AVEVA, partly offset by some s
Slide 22: Strong growth across strategic pillars in H1
Strong growth across strategic pillars in H1 MORE PRODUCTS MORE SOFTWARE & SERVICES MORE SUSTAINABLE +12% +8% Strong double-digit H1 organic growth H1 organic growth H1 organic growth • Double-digit growth in Energy Management, • Software & Digital Services up double- • Growth led by North America h
Slide 23: Q2 2022 up +10.3% organic
Q2 2022 up +10.3% organic Analysis of Change in Group Revenues (in €m) +6.8% 8,511 +11.3% +8.4% -0.2% +5.3% +16.7% Mainly due to the 7,248 strengthening of the USD and CNY against the EUR Mainly comprises several small Group +10.3% org. disposals from H2 2021, partly offset by the acquisition of ETA
Slide 24: Energy Management – Q2 org. growth performance by geography
Energy Management – Q2 org. growth performance by geography W. Europe N. America Asia Pac. Rest of the World Split of Q2 2022 revenue by geography: 24% 33% 30% 13% North America +13% Western Europe +18% Up strongly despite high base of comparison and supply chain constraints Strong organic growth de
Slide 25: Industrial Automation – Q2 org. growth performance by geography
Industrial Automation – Q2 org. growth performance by geography W. Europe N. America Asia Pac. Rest of the World Split of Q2 2022 revenue by geography: 28% 25% 33% 14% North America1 +4% Western Europe +13% U.S. up high-single digit in Discrete due to machinery OEMs, against a high Strong growth des
Slide 26: Adj. EBITA: Margin at 17.3%, -10bps organic
Adj. EBITA: Margin at 17.3%, -10bps organic Energy Management Industrial Automation Reported Organic In €m H1 2021 H1 2022 change change Revenues 13,774 16,077 +16.7% +10.1% c.-10bps c.-50bps Gross Profit 5,704 6,535 +14.6% +7.2% Org. Adj. EBITA Org. Adj. EBITA Gross Margin (%) 41.4% 40.6% -80 bps -
Slide 27: Gross Margin: Resilient performance despite inflationary headwinds
Gross Margin: Resilient performance despite inflationary headwinds Gross Margin: Analysis of Change (%) +0.7 -1.8 41.4 +0.6 -0.5 +0.4 40.6 -0.2 • Industrial Productivity -288M€ • -298M€ headwind from freight, electronics & other inflation • Net Price +418M€ • Underlying Industrial Productivity +10M€
Slide 28: SFC: Continuing to deliver on operational efficiency
SFC: Continuing to deliver on operational efficiency Analysis of Change of SFC (in €m) 250 27 99 1 3,753 97 137 3,342 Investments in strategic priorities including R&D, Digital and Cybersecurity • Further part reversal of the c.€300m tactical savings delivered in 2020 • Structural savings on target
Slide 29: Adjusted Net Income of €1.8bn up +11%
Adjusted Net Income of €1.8bn up +11% Includes mainly an initial €220m charge associated with In €m H1 2021 H1 2022 % change exiting Russian operations and M&A / integration costs Adjusted EBITA 2,362 2,782 +18% Other income and expenses 35 (304) Restructuring (121) (85) Restructuring costs due to G
Slide 30: Record H1 operating cash flow at €2.6 billion
Record H1 operating cash flow at €2.6 billion – FCF impacted by working capital requirements Analysis of debt change in €m H1 2021 H1 2022 All-time high operating cash flow for an H1, up +21% as a consequence of the record profitability in the first half Net debt at opening Jan 1 (3,561) (7,127) Ope
Slide 31: Progress on capital allocation priorities in H1
Progress on capital allocation priorities in H1 Portfolio Share Optimization Buyback Acquisitions Divestments €1.1 bn of the €1.5-€2.0bn disposal • 1.7m shares re-purchased in H1 program now addressed • 7.6m shares re-purchased • Announced signing for disposal of cumulatively at an average price of
Slide 32: Balance sheet remains strong
Balance sheet remains strong Net Debt / Adj. EBITDA* Main impacts in H1 • Payment of FY21 dividend for €1.65bn 1.46x • Net payments of €350 million on M&A 1.42x 1.22x • Share buyback of €219 million • Positive FCF contribution Jun-21 Dec-21 Jun-22 * Trailing 12 months Adj. EBITDA; Net debt as of per
Slide 33: Expected Trends & Financial Target
Expected Trends & Financial Target Jean-Pascal Tricoire | Chairman & CEO Investor Relations – Schneider Electric | Page 33
Slide 34: Expected trends in H2 2022
Expected trends in H2 2022 • A continuation of strong and dynamic market demand, including further recovery in late-cycle segments • Gradual easing in supply chains though pressures on electronics remain • Strong recovery in China post-Q2 impacts • Continued inflationary pressures • Despite the over
Slide 35: 2022 Target Upgraded
2022 Target Upgraded The Group acknowledges the ongoing economic/geopolitical uncertainties and the strong inflationary pressures now at unprecedented levels. Considering the continued strong demand environment and the Group's effort to address these uncertainties with agility, the Group upgrades it
Slide 36: Medium and long term targets from Capital Markets Day
Our medium and long term targets as announced during November 30, 2021 Capital Markets Day Accelerating Accelerating Markets Incremental Growth Drivers Unique Operating Model Sustainable Adj. EBITA Margin Expansion Free Cash Flow Revenue Growth Financial 2022-2024 Between +5% to +8% organic, on aver
Slide 37: Key Management Priorities in H2 2022
Key Management Priorities in H2 2022 Investor Relations – Schneider Electric | Page 37
Slide 38: Key Management priorities in H2 2022
Key Management priorities in H2 2022 • Serving customers on their energy transition and digitization agenda • Prioritizing supply chain resilience with specific focus on electronics • Focus on executing on backlog (resulting in more normalized inventory levels while preserving resilience) • Deliveri
Slide 39: Q&A
Q&A Investor Relations – Schneider Electric | Page 39
Slide 40: Investor Relations ready to engage
Investor Relations ready to engage 28 July 2022 Half Year Results 8 September Morgan Stanley Industrial CEO Conference 20 September RBC Virtual EU Industrials Event 27 October Q3 2022 Revenues 10 November Daiwa Investment Conference (Hong Kong) 30 November Credit Suisse Annual Global Industrials Con
Slide 41: Appendix
Appendix Investor Relations – Schneider Electric | Page 41
Slide 42: 2022 additional notes
2022 additional notes Foreign Exchange impact: Based on current rates, the FX impact on FY 2022 revenues is estimated to be between +€1.7 billion to +€1.8 billion. The FX impact at current rates on adjusted EBITA margin for FY 2022 could be around +20bps Scope: Around +€150 million on 2022 revenues
Slide 43: Q2 Group revenue: Strong growth across regions
Q2 Group revenue: Strong growth across regions NORTH AMERICA 31% +11% WESTERN EUROPE 25% +17% United States Canada Mexico France Germany United Kingdom REST OF WORLD 13% +8% Spain Italy Nordics ASIA PACIFIC 31% +5% Russia South America Middle East Africa % GROUP SALES ORG. GROWTH China India Austral
Slide 44: Adj. EBITA + 10% org. due to higher volumes, pricing and mix
Adj. EBITA + 10% org. due to higher volumes, pricing and mix Analysis of Change of Adjusted EBITA (in €m) 418 -288 89 -79 -190 144 25 2,782 301 2,362 H1 2021 Volume Net price1 Productivity Mix R&D & SFC Forex Scope & H1 2022 Production others Labor infl. 1. Price on products and raw material impact
Slide 45: Q2 2022 results
2022 Q1 Q2 Q3 Q4 Target Q2 2022 results Score1 4.17 4.70 6 long-term commitments 11+1 targets for 2021-25 Baseline Q2 2022 2025 Target 1 Grow Schneider Impact revenues*2 70% 70% 80% CLIMATE 2 Help our customers save and avoid millions of tonnes of CO2 emissions3 263M 381M 800M 3 Reduce CO2 emissions
Slide 46: Adjusted Net Income calculation
Adjusted Net Income calculation In €m H1 2021 H1 2022 Adjusted EBITA 2,362 2,782 Amortization of purchase accounting intangibles (180) (206) Financial Costs (78) (103) Income tax with impact from adjusted items1 (505) (670) Equity investment & Minority Interests 22 - Adjusted Net Income (Group share
Slide 47: Life Is On | Schneider Electric
Lifels On | Schneider GeElectric