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Schneider Electric — FY2014 Earnings Presentation
47 slides from Schneider Electric's earnings presentation, Feb 19, 2015
Slide 1: Full year 2014 Results
Full year 2014 Results February 19, 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: Strategy and business update, Finance presentation, Connect Update
4 Strategy and business update 19 Finance presentation 30 Connect Update 32 Full year 2015 Targets 34 Appendices Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 3
Slide 4: Strategy and business update
Strategy and business update Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 4
Slide 5: Solid execution delivered full year targets
Solid execution delivered full year targets Invensys integration well on track Strong H2 performance lifted full year revenues growth • Early cycle businesses together with IT drove growth, Infrastructure improved +6.6% in 2014, • Improvement in mature countries balance new economies. • Services kep
Slide 6: Strong H2 performance drove full year revenues up 1.4% organically
Strong H2 performance drove full year revenues up 1.4% organically, 3.2% excluding Infrastructure Group organic growth, % Full year 2014 organic growth, % Focus on growth initiatives Group +1.4% org. +3.2% organic growth and project execution in a excluding Infrastructure turbulent market 2.5 2.5 4.
Slide 7: Buildings & Partner kept its growth pace in H2
Buildings & Partner kept its growth pace in H2 Organic growth, % Buildings & Partner H2 performance: Dynamic construction and data center markets in the US Buildings and Partner Slowdown in China while Australia and India improved 3.5 Western Europe stabilized 3.4 Rest of the World grew with mixed t
Slide 8: Industry continued to grow in H2 though at a slightly lower pace
Industry continued to grow in H2 though at a slightly lower pace, due to high comparison base Industry H2 performance: Organic growth, % Solid OEM demand in US Industry Soft China market offset by growth in Japan and Australia 5.1 Sustained export-oriented OEMs demand in Western Europe 3.5 M580: Wor
Slide 9: Solid execution in H2 lifted up full year IT growth
Solid execution in H2 lifted up full year IT growth Organic growth, % IT H2 performance: Good growth in the US driven by both products and solutions IT Continued active IT market in Western Europe 3.9 Active IT investments in Australia and South East Asia -2.0 H1 2014 H2 2014 Power Bank Prefabricate
Slide 10: Infrastructure showed signs of improvement towards the end of the year
Infrastructure showed signs of improvement towards the end of the year Organic growth, % Infrastructure H2 performance: Utility market remains weak in Western Europe Infrastructure Active datacenter and services in the US 0.3 Growth in Australia and India thanks to project execution Mixed trends in
Slide 11: Mature countries accelerated their growth in H2
Mature countries accelerated their growth in H2, balancing the lower growth from new economies Mature countries’ organic growth, % New Economies organic growth, % • Mid single digit growth in the US • Improvement in Western Europe 3 3 • Slow down in China 2 -1 H1 2014 H2 2014 H1 2014 H2 2014 Schneid
Slide 12: Services continued to be the growth engine
Services continued to be the growth engine thanks to focused investments 2014 organic growth, % 2014 investments Continued efforts to improve installed base tracking 8.0 Recruitment of around 500 field service experts Launch of an Enterprise IoT platform (Schneider 0.7 Electric Cloud), a key enabler
Slide 13: Invensys strategic fit confirmed and integration well on track
Invensys strategic fit confirmed and integration well on track ST RAT EG I C F I T I NT EG RAT I O N HI G HLI G HT Reinforce industrial automation capabilities Invensys fully integrated in the Industry business Boost Group’s positions in Value proposition updated for targeted segments key electro-in
Slide 14: Revenue synergies with Invensys
The Group is well positioned to generate revenue synergies with Invensys Opportunity examples > Design, start-up & commissioning of Jamnagar > Complete solution for large ammonia compressor Refinery in India for Reliance, a former Invensys machine for a German OEM customer Schneider Electric Invensy
Slide 15: New products and software launches positioned the Group for future growth
New products and software launches positioned the Group for future growth Enhanced products thanks to software & connectivity Software for targeted segments is a success M580 2014 Highlights > World’s first ePAC1 with built-in ethernet > Enabling remote real-time monitoring of industrial installatio
Slide 16: We continued to improve our supply chain efficiency
We continued to improve our supply chain efficiency Industrial Productivity (€bn) Inventory to Revenues Ratio1 (%) €1bn Accumulated Since 2012 0.36 0.36 ~2 pts 0.29 2012 2013 2014 2011 2014 1 Excluding Invensys Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 16
Slide 17: Planet & Society barometer reached 9.52/10
At the end of Connect, our Planet & Society barometer reached 9.52/10 9.52/10 10 9.20 Performance of our 8.85 Planet & Society 8.04 8 Q4 2014 barometer 7.51 8 target 6.42 6.25 6.38 6.09 6 4.94 3.87 3.94 5.50 4 3.85 2 0 Actual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Target 2012 2013 2014 A performing Pla
Slide 18: Our performance and commitment have been recognized
Our performance and commitment have been recognized Indicators and objectives 2014 Q3 2014 Q4 2014 Highlights of the year Planet “Industry Leader” Selected indicators of the Dow Jones Sustainability World & Europe for the second year ● 10% CO2 savings on transportation 15.4% 16% Member of “The A lis
Slide 19: Finance presentation
Finance presentation Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 19
Slide 20: 2014 revenues up 1.4% with all regions excluding Western Europe showing growth
2014 revenues up 1.4% with all regions excluding Western Europe showing growth Analysis of change in Group revenues (in €m) Scope Fx +7.6% -2.4% Organic 24,939 +1.4% +6.6% Rest of World North America Western Europe Asia-Pacific +3% +2% 23,392 -2% +3% 2013 restated1 2014 1 2013 figures were restated
Slide 21: Gross margin improved on positive net price and strong productivity
Gross margin improved on positive net price and strong productivity Analysis of change of gross margin (%) +1.4 -0.9 Industrial productivity is the key -0.5 gross margin improvement driver +0.4 -0.4 37.7 37.5 0.0 +0.2 +20bps Net price contributed 0.2pt Negative mix driven by the strong growth of mid
Slide 22: Adjusted EBITA grew high single digit at constant FX
Adjusted EBITA grew high single digit at constant FX despite SFC investments In €m 2013 2014 Change Organic Change at Restated1 change constant FX Gross Profit 8,763 9,407 +7.4% +1.7% +10% Support function (5,407) (5,944) +9.9% +2.4% costs Adjusted EBITA 3,356 3,463 +3.2% +0.6% +8% 1 2013 figures we
Slide 23: 40 bps Adjusted EBITA margin improvement at constant FX
40 bps Adjusted EBITA margin improvement at constant FX and current scope Analysis of change of adjusted EBITA (%) 14.5 -0.2 14.3 -0.4 +0.4 -0.4 13.9 13.9 2013 reported CST & Delixi 2013 restated Invensys 2013 Proforma1 Margin FX 2014 impact impact improvement at constant FX 1 The Proforma includes
Slide 24: Margin in Industry up excluding Invensys
Margin in Industry up excluding Invensys while Infrastructure impacted by low volume and mix 2014 Revenue by business Adjusted EBITA margin (%) by business1 2013 2014 IT -0.8 pt, down mainly due to 18.6 negative FX. Slight impact Buildings & 14% from unfavorable mix due to Partner 17.8 mid-market of
Slide 25: Net income is up c. 11% at constant FX
Net income is up c. 11% at constant FX and 6% adjusted for Invensys acquisition & integration costs In €m 2013 2014 y-o-y Change at Restated Change constant FX Adjusted EBITA 3,356 3,463 +3% Mainly due to Invensys Other income and expenses 71 (106) integration costs Restructuring (173) (202) EBITA 3
Slide 26: Free Cash Flow generation at €1.7bn
Free Cash Flow generation at €1.7bn, cash conversion remains high at 96%2 Analysis of debt change in €m 2013 Restated 2014 Net debt at opening (4,398) (3,326) Stable excluding US office investments in 2014 and one- Operating cash flow 2,628 2,640 off building disposal gain in Capital expenditure – n
Slide 27: Invensys performed strongly in 2014
Invensys performed strongly in 2014 and contributed double-digit accretion to Group EPS in 2014 Order intake (€m) Invensys performance 2013 1,742 c. flat org. Solid revenue growth in systems and software; and regionally in excl. unusual North America and Asia Pacific 2014 1,683 large orders Adjusted
Slide 28: Solid cash conversion and improvement in ROCE
Solid cash conversion and improvement in ROCE despite negative FX impact Cash conversion ROCE (Free Cash Flow / Net income) (in %) Invensys contributed double-digit ROCE thanks 116 to strong margin improvement and tax-benefit 1041 962 106 12.1% 11.7% 10.9% ROCE improved 80bps adjusted for FX and by
Slide 29: Proposed dividend up 3% at €1.92
Proposed dividend up 3% at €1.92, reflecting growth and strong contribution of Invensys Dividend history Dividend Yield (%) 1 DPS (€) 2.0 7 6 1.5 2.8% 5 4 1.0 1.87 1.87 1.92 1.65 1.73 1.60 1.70 3 1.50 1.13 1.70 1.87 1.872 2 0.5 1.03 1 0.0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 20142 1 Based
Slide 30: Connect Update
Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 30
Slide 31: We achieved most of our Connect targets by the end of 2014
We achieved most of our Connect targets by the end of 2014 Program target End of 2014 achievement Service +5 pts Outgrew rest of group by average 7 points growth rate p.a. vs rest of Group (on organic basis) Solutions Adj. +2 pts +1 pt EBITA vs 2011 vs 2011 COGS Productivity €1bn to €1.1bn €1bn of c
Slide 32: Full year 2015 Targets
Full year 2015 Targets Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 32
Slide 33: 2015 targets
2015 targets The Group expects North America to continue to grow, while Western Europe could show signs of stabilization. New economies will show a mixed picture: India should accelerate while Russia will face a difficult environment. China is expected to have a soft start of the year and should gra
Slide 34: Appendices
Appendices Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 34
Slide 35: 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 36: Adjusted EBITA grew mainly thanks to volume, net pricing, productivity and scope
Adjusted EBITA grew mainly thanks to volume, positive net pricing, productivity and scope Analysis of change of adjusted EBITA (in €m) -67 -166 -129 255 3,463 356 3,356 105 -59 -215 27 • FX negatively impacted adj. EBITA • Negative mix driven by the • Net price positive margin by 40bps strong growth
Slide 37: ROCE
ROCE After-tax adjusted EBITA / Average Capital Employed ROCE calculation 2013 2014 P&L items Reported Reported EBITA (1) 3,309 3,155 Restructuring costs (2) -176 -202 Other operating income & expenses (3) 73 -106 = Adjusted EBITA (4) = (1)-(2)-(3) 3,412 3,463 x Effective tax rate of the perio (5) 2
Slide 38: The Planet & Society barometer
The Planet & Society barometer Our 2012-2014 detailed sustainability scorecard The Planet & Society Barometer Start Results Results Target (objectives for 2014) 01/2012 Q3 2014 Q4 2014 12/2014 Overall score (out of 10) 3.00 9.20 9.52 8/10 Planet Carbon 10% CO2 savings on transportation - 15.4% 16% 1
Slide 39: Q4 revenues details
Q4 revenues details Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 39
Slide 40: Organic growth for all businesses in Q4
Organic growth for all businesses in Q4 Analysis of change in Group revenues (€m) Fx 6,954 Organic +2.3% +12.5% Scope +2.5% +7.7% Buildings & IT Partner Industry Infrastructure +6.5% +2.7% +1.8% +0.3% 6,181 Q4 2013 Q4 2014 Schneider Electric – Investor Relations –Full year 2014 results – 19 February
Slide 41: Buildings & Partner grew driven by US while China slowed down
Buildings & Partner grew driven by US while China slowed down Analysis of change in Q4 Revenues (€m) North America achieved good growth, benefiting from dynamic construction and data center market in the US and some Fx 2,890 recovery in Mexico. +3.5% +9.2% Western Europe was slightly up, driven by f
Slide 42: Industry grew thanks to good performance in OEMs and services
Industry grew thanks to good performance in OEMs and services Analysis of change in Q4 Revenues (€m) Industry grew at a slower pace compared to previous quarter, due to the slowdown in China and high base of comparison. Rest of Asia-Pacific was up, driven by South-East Asia, Australia and Scope Fx 1
Slide 43: Infrastructure was flat as utility market in Western Europe stabilized
Infrastructure was flat as utility market in Western Europe stabilized but remained weak Analysis of change in Q4 Revenues (€m) Performance was mainly penalized by continued weak utility market in Western Europe. Asia-Pacific was flat as slowdown in China and South-East Asia Organic Scope Fx 1,640 w
Slide 44: IT performed well driven by demand in mature markets
IT performed well driven by demand in mature markets Analysis of change in Q4 Revenues (€m) North America performed well thanks to good growth in products business and mid-sized datacenters investments. Large and extra-large data centers market remained active, benefiting IT Fx 958 and other busines
Slide 45: Q4 revenues by geography
Q4 revenues by geography Analysis of change in Group revenues (€m) Fx 6,954 Organic Scope +2.3% 12.5% +2.5% +7.7% Q4 revenues Western 26% Rest of World North America Europe Western Europe Asia-Pacific +5% +8% 6,181 -1% -1% Asia 28% Pacific North 26% America Rest of 20% the World Q4 2013 Q4 2014 Schn
Slide 46: 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 Q1 2015 Revenues Conference call Apr 21, 2015 and Annual General Meetin
Slide 47: Help people make the most of their energy
Help people make the most of their energy Schneider Electric – Investor Relations –Full year 2014 results – 19 February 2015 47