Slide 1: Half-year 2015 Results
Half-year 2015 Results July 29, 2015 1
Slide 2: Disclaimer
Disclaimer All forward-looking statements are Schneider Electric management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed des
Slide 3: Agenda
4 Overview 6 Strategy and business update 21 Finance presentation 30 Full year 2015 Targets 32 Appendices 3
Slide 4: Overview
Overview 4
Slide 5: Schneider Electric first half 2015 highlights
Schneider Electric first half 2015 highlights Balanced geographies – H1 2015 revenues €12.8 billion c.5% 26% 27% Western Europe H1 revenues of H1 revenues North America devoted to R&D 29% 43% 42% 18% Asia-Pacific Rest of of H1 revenues in of H1 revenues as the World new economies Solutions Four inte
Slide 6: Strategy and business update
Strategy and business update 6
Slide 7: H1 Adj. EBITA up 6% despite headwinds from China and O&G
H1 Adj. EBITA up 6% in an environment with stronger than expected headwinds from China and O&G H1 +9.8% reported H1 revenues slightly up org. in all businesses except Industry, H1 flat org. excl. Invensys impacted by Invensys integration & headwinds Q2 flat org. Adj. EBITA margin stable excl. Invens
Slide 8: Despite impact of O&G and China, revenues slightly up in most businesses
Despite impact of O&G and China, revenues slightly up in most businesses. Infrastructure stabilizing H1 organic growth Infrastructure organic growth Group: -0.9% org, flat excl. Invensys. Utility stabilized in Western Europe 0.7% 0.5% 0.7% 0.4% excl. Invensys -2.4% -2.4% -5.3% -6.7% Buildings Indust
Slide 9: Western Europe improving, Services continued to outperform
Western Europe improving, Services continued to outperform the rest of the Group Organic growth in Western Europe H1 organic growth 1% -1% 6 pts -3% H1 2014 H2 2014 H1 2015 Rest of Group Services Solid execution in France Services grew in most businesses Growth in Spain, Italy and the U.K. Infrastru
Slide 10: Buildings & Partner posted positive growth in most regions
Buildings & Partner posted positive growth in most regions Analysis Of Change of H1 Revenues (€m) North America up thanks to continued growth in the construction market in the U.S. and recovery in Mexico Fx 5,763 +12.0% +13.0% In Western Europe, growth in France, the U.K., Italy and Spain offset wea
Slide 11: Infrastructure is stabilizing thanks to focused execution of growth initiatives
Infrastructure is stabilizing thanks to focused execution of growth initiatives Analysis Of Change of H1 Revenues (€m) Western Europe up from a low base, driven by project execution in France and growth in Spain, Italy and UK Growth in North America thanks to project execution in Fx 2,516 Canada, wh
Slide 12: IT was slightly up as growth in the US and Western Europe offset weakness in Russia
IT was slightly up as growth in the US and Western Europe offset weakness in Russia Analysis Of Change of H1 Revenues (€m) The U.S. up thanks to project execution in a slow market. 1,735 Western Europe positive, driven by active IT Fx1 +13.0% +13.4% spending India impacted by one-off event in the fi
Slide 13: Industry was penalized by lower industrial investments related to O&G and China
Industry was penalized by lower industrial investments related to O&G and weakness in China Industry performance was temporarily impacted by Analysis Of Change of H1 Revenues (€m) Invensys integration -2.4% - Spain and Italy up driven by the demand from export- Ex-Invensys oriented OEMs while German
Slide 14: Invensys synergy execution on track, but performance penalized by O&G and one-offs
Invensys synergy execution on track, but performance penalized by O&G and one-offs Synergy execution on track in H1 Performance overview • Revenue • > 50% planned 2015 cost-synergies realized through > One-off impacts from ramping down China nuclear - Simplifying process and organization setup proje
Slide 15: Industrial productivity remains at a good level despite the decline in volume
Industrial productivity remains at a good level despite the decline in volume Industrial Productivity (€m) Key drivers 168 177 Continued focus on supplier negotiation, 151 optimized design and rebalancing Industrial footprint optimization Lean manufacturing H1 2013 H1 2014 H1 2015 Schneider Electric
Slide 16: Support function costs down 2.1% organically in H1
Support function costs down 2.1% organically in H1 driving SFC ratio decrease Global functions 25.2% > Optimization of external spend > Expansion of HR and Finance shared services 24.5% Sales & Marketing > Driving efficiency of sales back-office > Rebalancing marketing competencies and removing over
Slide 17: Wave of new launches in H1 enhances technology leadership
Wave of new launches in H1 enhances technology leadership Buildings & Partner Industry Infrastructure IT New generation UPS handles more power in AccuSine harmonic filtering less space improves power quality and extends equipment lifetime First HMI with smart phone- like interface and wireless Miner
Slide 18: New software to accelerate growth in software and services
… and new software to accelerate growth in software and services ˃ Energy consumption insight reduces ˃ Innovative integration of BMS1 and ˃ Weather data integration maximizes building operating cost DCIM2 systems drives increased power availability and reduces ˃ New analytics enhance visualization
Slide 19: Creating a leading industrial software business with AVEVA
Creating a leading industrial software business with AVEVA1 Strategic rationale Unique portfolio for full asset lifecycle management > Create a global leader in industrial software, with a unique portfolio from design & build to operations > Realize full value of contributed industrial software asse
Slide 20: Our Planet & Society barometer reaches 4.66/10
Our Planet & Society barometer reaches 4.66/10 Indicators and objectives 2017 Q1 2015 Q2 2015 Barometer’s score end of Q2 Planet 4.66/10 2nd quarter 2015 10 Selected indicators ● 10% energy savings 2% 2.7% 8 Target 2017 8 ● 10% CO2 savings from transportation - 9.5% 6 6 4 4.5 Profit 2 Selected indic
Slide 21: Finance presentation
Finance presentation 21
Slide 22: Revenues up 9.8% in H1 2015
Revenues up 9.8% in H1 2015 Analysis of change in Group revenues (in €m) Fx 12,848 -0.9% org, flat excl. Invensys +10.5% +9.8% +1.1% excl. China Western Europe Asia-Pacific Rest of World Scope 11,700 +1% -5% North America +0.2% -1 % +2% H1 2014 H1 2015 > Based on current rates, the positive FX impac
Slide 23: Positive net pricing and productivity partially offset negative mix and increased R&D cost
Positive net pricing and productivity partially offset negative mix and increased R&D cost Gross margin: analysis of change (%) 1.2 -1.6 0.4 38.1 0.0 -0.4 -0.5 -0.2 37.0 • 1 pt : Large project pricing Raw material tailwind (impacted by competitive of €77m more than pressure & investment for New prod
Slide 24: Dedicated initiatives to improve project margin
Dedicated initiatives to improve project margin > Adopt tiered selection criteria > Drive performance through by project profile enhanced project governance > Strengthen pipeline > Strengthen risk mitigation & Increase Increase profitability contract management process management & tendering selecti
Slide 25: Strong control of Support Function Costs
Strong control of Support Function Costs (SFC). Adj. EBITA margin stable excluding Invensys In €m H1 2014 H1 2015 Reported Change Revenues 11,700 12,848 +9.8% 3 points growth rate Gross Profit 4,457 4,752 +6.6% difference between revenues and SFC Support function costs (2,953) (3,151) +6.7% Adjusted
Slide 26: Group Adjusted EBITA margin impacted by Industry business
Group Adjusted EBITA margin impacted by Industry business H1 Revenue by business Adjusted EBITA margin (%) by business1 H1 2014 H1 2015 IT +0.3 pt, slightly up thanks Buildings & 17.6 to better support function 14% cost control Partner 17.9 Buildings & -2.7 pt, penalized by volume Infra- 44% Partner
Slide 27: Adj. EBITA up 6%, but EBIT impacted by higher restructuring charge
Adj. EBITA up 6%, but EBIT impacted by higher restructuring charge as expected In €m H1 2014 H1 2015 y-o-y Change Adjusted EBITA 1,504 1,601 +6% Mainly due to disposal of Other income and expenses (57) (75) non-core business, Telvent Global Services - of which losses on business disposals 0 (55) Res
Slide 28: Adjusted for exceptional items, net income up +4%
Adjusted for exceptional items, net income up +4% In €m H1 2014 H1 2015 y-o-y Change EBIT 1,249 1,230 -2% Net financial expense (201) (226) Cost of debt stable Income tax (241) (231) Discontinued operations 70 0 - of which gain from business disposal 25 0 Equity investments 6 (1) Effective tax rate
Slide 29: Free cash flow +21% thanks to better working capital management
Free cash flow +21% thanks to better working capital management Analysis of debt change in €m H1 2014 H1 2015 Net debt at opening at Dec 31 (3,326) (5,022) Operating cash flow 1,083 1,134 Capital expenditure – net (386) (382) Change in trade working capital (385) (283) Better control on account paya
Slide 30: Full year 2015 Targets
Full year 2015 Targets 30
Slide 31: 2015 targets
2015 targets In the first half, the Group saw stabilization of the Infrastructure business, improvement in Western Europe, and good progress in adapting costs and in achieving Invensys synergies. However the Group’s performance was impacted by stronger than expected headwinds from O&G and China and
Slide 32: Appendices
Appendices 32
Slide 33: Definitions
Definitions ● EBITA: EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill ● Adjusted EBITA: EBITA before restructuring and other operating income and expenses ● EBITDA: EBIT before depreciation, amortization, provisions and before share-based compensa
Slide 34: Q2 2015 revenues
Q2 2015 revenues €m Q2 2014 Q2 2015 Organic Scope FX Reported Buildings & Partner 2,679 3,062 +0.5% +0.6% +13.2% +14.3% Industry 1,368 1,463 -4.2% -0.1% +11.2% +6.9% Infrastructure 1,275 1,367 +1.2% -0.7% +6.7% +7.2% IT 814 960 +4.8% 0% +13.1% +17.9% Group 6,136 6,852 +0.1% +0.1% +11.5% +11.7% €m Q2
Slide 35: Adj. EBITA up 6%
Adj. EBITA up 6% Analysis of change of adjusted EBITA (in €m) 1,601 1,504 -45 200 -86 67 -20 5 -219 151 44 H1 2014 Volume Mix Net price2 Productivity COGS (inflation SFC Other Net acquisition Currency effects H1 2015 & R&D)1 impact 1 : Of which Production labour & other Costs: -€38m and R&D increase
Slide 36: The Planet & Society barometer
The Planet & Society barometer Our 2015-2017 detailed sustainability scorecard, as of Q2 2015 Planet & Society barometer Start Results Results Target (objectives for 2017) 01/2015 Q1 2015 Q2 2015 12/2017 Overall score (out of10) 3.00 3.67 4.66 8/10 10% energy savings - 2% 2.7% 10% 10% CO2 savings fr
Slide 37: Q2 revenues details
Q2 revenues details 37
Slide 38: Q2 revenues of €6.9bn
Q2 revenues of €6.9bn Analysis of change in Group revenues (€m) Fx 6,852 Organic +11.5% +11.7% +0.1% Buildings & Partner Industry IT Scope Infrastructure 6,136 +0.5% -4.2% +1.2% +4.8% +0.1% Q2 2014 Q2 2015 Schneider Electric – Investor Relations – 2015 Half year results – 29 July 2015 38
Slide 39: Buildings & Partner business continued to grow
Buildings & Partner business continued to grow Analysis of change in Q2 Revenues (€m) North America was up driven by continued growth in construction markets in the U.S. and Mexico. 3,062 Western Europe grew thanks to good execution in France, and Fx +14.3% improvement in Spain and Italy. +13.2% Asi
Slide 40: Industry was down due to lower O&G investment and weakness in China
Industry was down due to lower O&G investment and weakness in China Analysis of change in Q2 Revenues (€m) Performance temporarily impacted by Invensys integration Western Europe was flat as growth in Italy and Spain, driven by Fx 1,463 OEM exports, was offset by a soft market in Germany and Organic
Slide 41: Infrastructure business remained positive thanks to focused execution
Infrastructure business remained positive thanks to focused execution Analysis Of Change of Q2 Revenues (€m) Western Europe grew from a low base thanks to improvement in Spain, Italy and the U.K. Fx 1,367 North America was up driven by project execution in Canada, Organic Scope +6.7% +7.2% while the
Slide 42: IT business experienced stronger growth in Q2
IT business experienced stronger growth in Q2 Analysis of change in Q2 Revenues (€m) India posted strong growth after a one-off impact in Q1. The U.S. grew driven by channel initiatives and project execution 960 in a slow market. Fx +13.1% +17.9% IT investment in Western Europe remained positive. Or
Slide 43: Q2 revenues by geography
Q2 revenues by geography Analysis of change in Group revenues (€m) Fx 6,852 Organic +11.5% +11.7% +0.1% Q2 revenues Western 25% Western Europe Asia-Pacific Rest of World Scope Europe North America 6,136 +2% -5% 0% +6% +0.1% Asia 29% Pacific North 27% America Rest of 19% the World Q2 2014 Q2 2015 Sch
Slide 44: Contacts & agenda
Contacts & agenda Anthony Song – Head of Investor Relations Tel: +33-1-41-29-83-29 anthony.song@schneider-electric.com Alexis Denaud – Senior Investor Relations Manager Tel: +33-1-41-29-51-24 alexis.denaud@schneider-electric.com Oct 29, 2015 Q3 2015 Revenues Conference call 44
Slide 45: Make the most of your energy
Make the most of your energy ©2014 Schneider Electric. All Rights Reserved. All trademarks are owned by Schneider Electric Industries SAS or its affiliated companies or their respective owners. 45