Slide 1: H1 2018 – Successful execution of strategy drives strong results
H1 2018 – Successful execution of strategy drives strong results July 26, 2018 Investor Relations - Schneider Electric
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 H1 2018 Strategy Highlights 15 H1 2018 Business Performance Highlights 22 H1 2018 Finance Presentation 32 Full Year 2018 Target 35 Appendix Investor Relations - Schneider Electric Page 3
Slide 4: Successful execution of strategy drives strong results in H1 – Full year target upgraded
Successful execution of strategy drives strong results in H1 – Full year target upgraded Strong Revenue Growth Sustained Profit momentum Strong shareholder focus • Group H1 organic growth of +7.0% (up • H1 adj. EBITA organic growth: +11.1% • Net Income up +7% at €1.02bn in H1, +7.6% including Delixi
Slide 5: Leading the digital transformation of Energy Management and Industrial Automation
Leading the digital transformation of Energy Management and Industrial Automation Group Organic growth in H1 of ~+7.6%1 Energy Management Industrial Automation c.+7% +10% H1 organic sales H1 organic sales growth1 growth Energy Transition Industry 4.0 Integrated in EcoStruxure Software Data Centers &
Slide 6: Group priorities
Group priorities Operational focus Strategic focus Drive organic growth through more products and More products +7% innovation Accelerate: • Services More services +9% • Software • EcoStruxure Optimize cross selling More digital1 Faster than Group Lead Corporate Social Responsibility and contribute
Slide 7: Good progress in strategic priorities: more products and innovation
Good progress in strategic priorities Drive organic growth through more products and innovation Commercial Actions driven by digital Strong organic growth in H1 2018 across end-markets • Products revenues up +7.3% org. • Energy Management products up +6.6% org. • Product sales growing across all reg
Slide 8: Good progress in strategic priorities: Grow services
Good progress in strategic priorities Grow services Strong performance in H1 Customer wins examples Strong Growth University in Texas Services up +9% in H1, growing across all regions • Campus-wide energy efficiency project • Track and Service Installed Base • Financed through Energy savings perform
Slide 9: Accelerating connected assets and the control & advisor layer of EcoStruxure
Good progress in strategic priorities Accelerating connected assets and the control & advisor layer of EcoStruxure Continued investment in digital capabilities Good progress of Enlarged AVEVA business • Continually developing applications with open ecosystem • Integration on track • Good traction of
Slide 10: EcoStruxure-driven project wins continue across domains and geographies
Good progress in strategic priorities EcoStruxure-driven project wins continue across domains and geographies in H1 6 EcoStruxure Domains combining to serve 4 end-markets EcoStruxure EcoStruxure EcoStruxure EcoStruxure EcoStruxure EcoStruxure Building Power IT Machine Plant Grid Selected wins in end
Slide 11: Maximizing the Group's synergies and value proposition in end markets
Good progress in strategic priorities Maximizing the Group’s synergies and value proposition to customers in our end markets 2017 2018 end- FY 2017 Orders: Cross-selling by End Markets Orders1 market trend end-market1 Leading Business Resi., Commercial & Low 9.7 bn 78% Industrial Buildings Voltage D
Slide 12: Cross-selling our full portfolio of offers, driving more value for customers
Good progress in strategic priorities Cross-selling our full portfolio of offers, driving more value for customers Recent customer wins Strong cross-selling in targeted segments Inditex Arcelor Mittal Synergies between our two businesses continue to drive Spain/Netherlands Ukraine customer value in
Slide 13: Progress on sustainability targets; contributing to customers & society
Good progress in strategic priorities Progress on sustainability targets; contributing to customers & society Our commitments for a sustainable business Helping our customers in their sustainability journey Indicators & objectives 2020 - selection Q2 2018 Q1 2018 Modernizing in-house data center in
Slide 14: Recognition and continuous commitment in multiple areas
Recognition and continuous commitment in multiple areas Our People Our Business & Products Our Sustainable Model Gender equality EcoStruxure wins Leader, Navigant Number 3 performance index "The most efficient Leaderboard report, worldwide for its ship solution" Award Microgrid Controls, revenue dev
Slide 15: Business performance highlights - Strong portfolio delivering growth
Business performance highlights - Strong portfolio delivering growth Confidential Property of Schneider Electric | Page 15
Slide 16: H1 Group Revenues
H1 Group Revenues €12.3bn Group H1 2018 revenues €9.3bn €3.1bn 75% of Group H1 2018 revenues 25% of Group H1 2018 revenues Energy Management Industrial Automation Organic growth +c.7%1 Organic growth +10% 1 Including Delixi, reported under equity method since 2016 Investor Relations - Schneider Elec
Slide 17: Energy Management – synergetic portfolio delivers strong performance
Energy Management – synergetic portfolio delivers strong performance €9.3bn Medium Voltage Back to growth; Selectivity over; Post-review c.€0.5bn of revenues identified requiring further actions 75% of Group H1 2018 revenues Low Voltage Strong portfolio and focused execution accelerates growth Energ
Slide 18: Energy Management: Medium Voltage - Back to growth, selectivity over
Energy Management: Medium Voltage - Back to growth, selectivity over Energy Management Revenues Org. Adj. EBITA % Org. Performance in H1 2018 Medium Voltage €9.3bn Performance in H1 2018 €1.9bn +0.4% 8.4% c. +110bps 75% of Group H1 2018 revenues H1 Performance Highlights Strategic Priorities • Back
Slide 19: Energy Management: Low Voltage – Accelerates growth across all regions
Energy Management: Low Voltage – Accelerates growth across all regions Energy Management Revenues Org. Adj. EBITA % Org. Performance in H1 2018 Low Voltage €9.3bn Performance in H1 2018 €5.6bn c.+10%1 20.9% c. +40bps 75% of Group H1 2018 revenues H1 Performance Highlights Strategic Priorities • Doub
Slide 20: Energy Management: Secure Power – growth across end-markets
Energy Management: Secure Power – growth across end-markets, despite component shortage Energy Management Revenues Org. Adj. EBITA % Org. Performance in H1 2018 Secure Power €9.3bn Performance in H1 2018 €1.7bn +3.8% 14.6% ~flat 75% of Group H1 2018 revenues H1 Performance Highlights Strategic Prior
Slide 21: Industrial Automation – complete offer driving strong growth
Industrial Automation – complete industrial automation offer driving strong growth €3.1bn H1 performance highlights • Strong growth across Discrete and Hybrid markets; Process markets accelerating 25% of Group H1 2018 revenues • Adjusted EBITA margin up c. +10bps organic; impacted by shortages, infl
Slide 22: HY2018 finance presentation
HY2018 finance presentation Schneider Electric – Investor Relations Page 22
Slide 23: Analysis of change in Group revenues
Organic revenues growth of +7% in H1 18, with growth across all regions ANALYSIS OF CHANGE IN GROUP REVENUES (in €m) Scope Rest of World +1.4% North America +5% +7% Asia-Pacific +13% Mainly comprises the acquisition of ASCO, AVEVA 12,317 Western Europe consolidation and DTN disposal +1.2% +2% 12,173
Slide 24: Organic growth across regions in H1
Organic growth across regions in H1 % Group Sales Org. growth Western Europe North America 27% +2% 27% +7% France Germany United Kingdom Spain Italy United States Canada Mexico Asia Pacific Rest of World 29% +13% 17% +5% China India Australia Indonesia Vietnam Russia South America Middle East Africa
Slide 25: Strong performance in H1 with all businesses contributing
Strong performance in H1 with all businesses contributing H1 ORGANIC GROWTH, 7% H1 ADJ. EBITA, 14.4% Group: acceleration to +7.7% on Q2 Group: +30bps with all businesses growing +50bps org. H1 organic Q2 18 H1 18 H1 17 H1 18 improvement Medium 3.2 Medium 8.4 ~+110 bps Voltage 0.4 Voltage 8.4 Energy
Slide 26: Gross Margin up +10bps organic in H1
Gross Margin up +10bps organic in H1 1.4 -0.1 0.1 39.1 0.0 38.7 -0.5 • Scope impact -0.5 mainly linked to • H1 Productivity +€174m. In good ASCO Power & environment, the Group faced challenges AVEVA, and in shortages of specific electronic Absolute Net Price DTN disposal components & freight costs.
Slide 27: +174m€ of productivity delivered in H1
Driving continuous efficiency through our Global Supply Chain Flexible, Agile & Global Supply Chain to …Driving solid productivity despite meet growing demand of customers short term pressure • Global Supply Chain tailored to customer buying behavior • Electronic component bottlenecks impacting some
Slide 28: Strong H1 performance with +11% organic growth in Adj. EBITA
Strong H1 performance with +11% organic growth in Adj. EBITA, leading to Adj. EBITA of €1.77bn and H1 +50 bps organic improvement In €m H1 2017 H1 2018 Reported Organic change change Revenues 12,173 12,317 +1.2% +7.0% Gross profit improved through higher Gross Profit 4,715 4,818 +2.2% +7.2% volumes
Slide 29: Accelerating profit growth: H1 Net income over €1bn for first time
Accelerating profit growth: H1 Net income over €1bn for first time, up +7% In €m H1 2017 H1 2018 % change Including M&A and integration costs. Last year included DTN gain on sale Adjusted EBITA 1,718 1,769 +3% Decrease after conclusion of 3 year efficiency and Other income and expenses 71 (64) simpl
Slide 30: Strong operating cash flow: Free Cash Flow lower due to working capital
Strong operating cash flow: Free Cash Flow lower due to working capital increase linked to higher activity level as expected Analysis of debt change in €m H1 2017 H1 2018 Net debt at opening Dec 31 (4,824) (4,296) Operating cash flow 1,367 1,515 Capital expenditure – net (351) (308) Increase of +19%
Slide 31: Disciplined capital allocation
Disciplined capital allocation Reinforcing our core over the past 12 months Reiterating our capital allocation policy Progressive dividend policy: 1.2bn€ paid out for 2017 fiscal year + Share buyback of c.€1bn until mid-2019 c. €335m achieved over last 12 months + Opportunistic M&A in the core or ad
Slide 32: Full Year 2018 Target
Full Year 2018 Target
Slide 33: 2018 Target Upgraded
2018 Target Upgraded Following a very good H1, the Group revises its 2018 growth target upward and is now aiming at an organic growth of the adj. EBITA between +7% and +9% (vs. around +7% initially). This strong performance would be generated by a combination of dynamic top line growth and margin ex
Slide 34: 2018 additional notes
2018 additional notes • Exchange rates impact: Based on current rates, the FX impact on FY 2018 revenues is estimated to be around -€1.0bn. The FX impact at current rates on adjusted EBITA margin is expected to be c.-20bps. • Scope: Based on the most recent fiscal years for acquisitions, scope impac
Slide 35: Appendix
Appendix Life Is On Schneide Electric
Slide 36: Definitions
Definitions EBIT before amortization and impairment of purchase accounting intangibles and impairment of EBITA goodwill Adjusted EBITA EBITA before restructuring and other operating income and expenses EBITDA EBIT before depreciation, amortization, provisions and before share-based compensation cost
Slide 37: Schneider Sustainability Impact 2018 – 2020, Results as of H1 2018
Schneider Sustainability Impact 2018 – 2020, Results as of H1 2018 Objective Beginning Results Results 12/2018 01/2018 Q1/2018 Q2/2018 Our megatrends 2015 – 2020 and targets 2018 – 2020 Overall Score of 10 5/10 3 3.56 4.55 80% renewable electricity -- 5% 6% CLIMATE 10% CO2 efficiency in transportati
Slide 38: Analysis of change of adjusted EBITA
H1 Adj. EBITA up +11% organic thanks to strong productivity and volume Analysis of change of adjusted EBITA (in €m) -63 174 -11 -39 -137 -38 23 284 -141 1,769 1,718 H1 2017 Volume Mix Net price1 Productivity COGS SFC Other Scope FX H1 2018 (Inflation & R&D) Investor Relations - Schneider Electric Pa
Slide 39: Investor Relations ready to engage: upcoming events
Investor Relations ready to engage ✓ Upcoming events: ✓ Proposing quarterly interaction with investors showcasing specific businesses, geographies or functions Wk of Sep 3 Schneider Electric Management roadshow, U.S. 07 Sep Morgan Stanley Industrial CEOs Conf., London (IR) Wk of Sep 10 Schneider Ele
Slide 40: And many more to come…
Converting customers to EcoStruxure through dedicated events in Q2 Innovation Summit Launch of EcoStruxure Machine Innovation Summit Innovation Summit Paris, France / April 2018 Advisor, Stäubli partnership at Jakarta, Indonesia / April 2018 Tokyo, Japan / May 2018 2,500+ customers Hannover Messe /
Slide 41: Contact
Contact Amit Bhalla– Head of Investor Relations Tel: +44-20-7592-8216 amit.bhalla@schneider-electric.com Alexis Denaud – Director, Investor Relations Tel: +33-1-41-29-51-24 alexis.denaud@schneider-electric.com Investor Relations - Schneider Electric Page 41
Slide 42: Life Is On | Schneider Electric
Lifels On | Schneider f Electric