Schneider Electric Se · EURONEXT:SU
Schneider Electric — FY2015 Earnings Presentation
45 slides from Schneider Electric's earnings presentation, Feb 17, 2016
Slide 1: Full Year 2015 Results
Full Year 2015 Results February 17, 2016
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 Full year 2015 performance highlights 19 Full year 2015 finance presentation 30 Full year 2016 targets 32 Appendices Schneider Electric – Investor Relations Page 3
Slide 4: Full year 2015 performance highlights
Full year 2015 performance highlights Confidential Property of Schneider Electric | Page 4
Slide 5: Schneider Electric 2015 highlights
Schneider Electric 2015 highlights Balanced geographies – FY 2015 revenues €26.6 billion c.5% 27% 26% Western FY 2015 revenues of FY revenues North Europe devoted to R&D America 29% 43% 43% 18% Asia- Rest of Pacific of FY revenues in of FY revenues as the World new economies Solutions Four integrate
Slide 6: Planet & Society barometer reaches 6.33/10
This quarter, our Planet & Society barometer reaches 6.33/10 Barometer’s score end of Q4: This year, Schneider Electric was awarded by: • Industry Leader in DJSI for the 3rd consecutive year and “Industry Mover” 6.33/10 4th quarter 2015 • Climate Leadership by CDP Highest 10 rating of 100 out of 100
Slide 7: Record results thanks to quick adaptation in a challenging environment
Record results thanks to quick adaptation in a challenging environment and balanced exposure to end-markets & regions Record revenues, org. growth impacted by China, O&G, Invensys one-offs Buildings & Partner and IT delivered solid results, Industry is on trajectory to recover margin and Infrast
Slide 8: H2 organic growth in line with H1 despite deteriorated markets
H2 organic growth was in line with H1 despite deteriorated markets, notably in O&G and China FY 2015 organic growth, % Organic growth, % Group: -1% org, H1 2015 ~ flat underlying1 H2 2015 Reflecting higher Excl. Invensys closing project selectivity impact and China nuclear ramp-down 0.4 0.4 0.7 0.5
Slide 9: Buildings and Partner revenues and margin up
Both revenues and margin were up in Buildings and Partner, strengthening its worldwide leadership position €12bn Performance highlights Growth across all regions except Asia Pacific, up ~2% 45% of Group 2015 revenues outside China Low voltage & Building Automation Retail showed robust growth, up
Slide 10: IT enhanced its competitiveness and maintained high performance
IT enhanced its competitiveness and maintained high performance level in a volatile market €3.7bn Performance highlights Growth in Western Europe thanks to positive IT investment, 14% of Group 2015 revenues while China & Russia were weak, and U.S. was soft Critical Power, Cooling & Services Serv
Slide 11: Infrastructure is turning the corner
Infrastructure is turning the corner with Adj. EBITA margin up +50bps, targeting double-digits margin by 2016 €5.4bn Performance highlights Strong growth on service and product business resumed 20% of Group 2015 revenues growth in H2 Medium voltage & grid automation All the regions were up excep
Slide 12: Industry executed Invensys integration well
Despite headwinds from O&G & China, Industry executed Invensys integration well and is on track for margin recovery €5.7bn Performance highlights Org. Growth impacted by Invensys China nuclear ramp 21% of Group 2015 revenues down and change of fiscal YE closing. Underlying1 growth is c. -3% for In
Slide 13: Successful Invensys integration
Successful Invensys integration shows our strong capability in driving value creation through acquisition High quality of assets fulfilling strategic intents Sound financial performance in 2015 Reinforce industrial automation capabilities Underlying1 revenue down mid-single digit Facility upgrade pr
Slide 14: Western Europe resumed growth; New Economies outside China grew
Western Europe resumed growth and New Economies outside China continued to grow Western Europe organic growth, % New economies outside China organic growth , % +3% organically in Q4 4 1 2 -2 2014 2015 2014 2015 France up driven by solid execution in a difficult market Growth in India, Mexico and A
Slide 15: Growth initiatives well executed
Our growth initiatives were well executed, achieving good results in a difficult market Organic revenues growth, % 7 -1 Growth across all the businesses Strong field service growth thanks to increased Service Group tracking of installed base and geography expansion Organic industrial software orde
Slide 16: Strong attention to cost base
Strong attention to our cost base to continuously improve operational efficiency Industrial productivity, m€ Support function cost to revenues ratio, % c. €300m gross SFC savings 23.8 356 359 -0.5 pt 23.3 2014 2015 2014 2015 Schneider Electric – Investor Relations Page 16
Slide 17: Highly differentiated offers launched
We launch highly differentiated offers to strengthen our technology leadership and our network of partners SAFE RELIABLE EFFICIENT CONNECTED SUSTAINABLE Back-UPS Connect BGE50ML Mobile power pack UPS to protect and power-up home Ecoblade networking equipment Smart & scalable energy storage Foxboro S
Slide 18: Solid start of Schneider is On
Solid start of Schneider is On as all initiatives delivered good results INITIATIVES PROGRESS UPDATE in FY 2015 DO MORE > Growth in service, software and products > Services revenues up ~+7% org, > Drive cross selling for higher share of wallets > Industrial software orders +6% org > Constant projec
Slide 19: Full year 2015 finance presentation
Full year 2015 finance presentation Confidential Property of Schneider Electric | Page 19
Slide 20: Revenues up 6.8% in 2015, record high of €26.6bn
Revenues up 6.8% in 2015, reaching record high of €26.6bn. Underlying organic growth is about flat Analysis of change in Group revenues (in €m) Group: -1% org, ~flat underlying1 26,640 Fx +7.8% +6.8% +2% outside China Western Europe Asia-Pacific 24,939 +1% -5% North America Rest of World Scope -2 %
Slide 21: Gross margin analysis of change
Positive net pricing and strong productivity partially offset negative mix, higher R&D depreciation and cost inflation Gross margin: analysis of change (%) 1.3 -1.3 0.5 -0.3 -0.5 37.7 0.0 -0.4 • -0.7pt : Large project pricing 37.0 (impacted by competitive pressure & investment for New product • Raw
Slide 22: Adj. EBITA margin ~stable, up c.50bps in H2
Organically, Adj. EBITA margin ~stable, up c.50bps in H2 thanks to accelerated SFC1 control and robust industrial productivity In €m H2 2014 H2 2015 Reported Change FY 2014 FY 2015 Reported Change • 2.4 points growth rate difference between revenues Revenues 13,239 13,792 +4.2% 24,939 26,640 +6.8% a
Slide 23: Margin improvement in H2 by business
3 businesses showed margin improvement in H2, with Industry recovering strongly from H1 H2 Adjusted EBITA margin (%) by business1 FY Adjusted EBITA margin (%) by business2 H2 2014 H2 2015 FY 2014 FY 2015 18.0 17.8 +0.2 pt, slightly up thanks Buildings & Buildings & to better support function Partn
Slide 24: Adj. EBITA up 5%, EBITA impacted by divestments
Adj. EBITA up 5%, but EBITA impacted by divestments and higher restructuring charge as expected In €m FY2014 FY2015 y-o-y Change Adjusted EBITA 3,463 3,641 +5.1% Other income and expenses (106) (522) Mainly due to disposal of non- core businesses Juno, - of which losses on business disposals Telvent
Slide 25: Adjusted net income and EPS up 6%
Adjusted for exceptional items, net income and earnings per share up +6% In €m FY2014 FY2015 y-o-y Change EBITA 3,155 2,801 -11% Amortization & impairment of purchase c.€300m impairment accounting intangibles (259) (572) related to Pelco Cost of net debt (467) (446) cost of debt (net) Income tax (55
Slide 26: Free cash flow +20%
Free cash flow +20% thanks to better working capital management Analysis of debt change in €m FY2014 FY2015 Net debt at opening Dec 31 (3,326) (5,022) Operating cash flow 2,640 2,715 Capital expenditure – net (829) (787) Change in trade working capital (162) 91 Strong control over payables and Chang
Slide 27: Portfolio optimization and higher shareholder return
Fast progress on portfolio optimization and higher shareholder return as committed, target upgraded on share buy back Commitments at Feb 2015 Investor day 2015 Highlights Potential disposal of non-core / non- strategic businesses ~€470m cash generated from disposals of Juno, Telvent Global Service
Slide 28: Strong cash conversion and solid balance sheet
Strong cash conversion and solid balance sheet Cash Conversion1, % Net Debt / Adj. EBITDA1 116 1133 1.2 962 108 1.0 2013 2014 2015 2014 2015 1: See definition page for details of calculation 2: Based on Net income adjusted for discontinued ops 3: Based on Net income adjusted for business disposals i
Slide 29: Proposed dividend of €2.00 per share
Proposed dividend of €2.00 per share, an increase of 4%, reflecting the growth of underlying net income Dividend history Dividend Yield (%) 1 DPS (€) 2.0 5 2.8% 4 1.5 3 1.92 2.002 1.87 1.87 1.60 1.70 2 1.0 1.70 1.87 1.872 1.03 1 0.5 0 2009 2010 2011 2012 2013 20142 2015 1: Based on share price prior
Slide 30: Full Year 2016 Targets
Full Year 2016 Targets Confidential Property of Schneider Electric | Page 30
Slide 31: 2016 Targets
2016 Targets In 2016, the Group sees continued growth in Western Europe and the construction market in the U.S. At the same time, headwinds from O&G, overall weakness in the U.S. industry markets, difficulties in China though to a lesser degree than in 2015 and mixed trends in the rest of new econom
Slide 32: Appendixes
Appendixes Confidential Property of Schneider Electric | Page 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 compens
Slide 34: The Planet & Society barometer
The Planet & Society barometer Our 2015-2017 detailed sustainability scorecard, as of Q4 2015 Planet & Society barometer Start Results Results Target (objectives for 2017) 01/2015 Q3 2015 Q4 2015 12/2017 Overall score (out of10) 3.00 5.06 6.33 8/10 10% energy savings - 3.4% 4.5% 10% 10% CO2 savings
Slide 35: Adj. EBITA up +5.1%, margin about stable at constant FX
Adj. EBITA up +5.1% and margin about stable at constant FX Analysis of change of adjusted EBITA (in €m) 3,641 3,463 254 -97 174 -71 6 -154 359 -382 89 FY 2014 Volume Mix Net price2 Productivity COGS SFC Other Net Currency FY 2015 (Inflation acquisition effects & R&D)1 impact 1: Of which Production l
Slide 36: ROCE calculation
ROCE calculation ROCE calculation 2015 P&L items Reported EBITA (1) 2 801 Restructuring costs (2) -318 Other operating income & expenses (3) -522 = Adjusted EBITA (4) = (1)-(2)-(3) 3 641 1 x Effective tax rate of the period1 (5) 21,0% = After-tax Adjusted EBITA (A) = (4) x (1-(5)) 2 875 2014 2015 20
Slide 37: Q4 Performance
Q4 Performance Confidential Property of Schneider Electric | Page 37
Slide 38: Strong organic growth in Buildings & Partners; IT impacted by high base
Strong organic growth in Buildings & Partners while IT was impacted by high base of comparison Analysis of change in Group revenues (€m) Fx 7,198 Organic: -0.6% +4.3% +3.5% Buildings & Partner Industry +2.0% -4.3% Infrastructure IT 6,954 Scope -0.1% -3.5% -0.2% Q4 2014 Q4 2015 Schneider Electric – I
Slide 39: Buildings & Partner grew across all regions except Asia Pacific
Buildings & Partner grew across all regions except Asia Pacific Analysis of change in Q4 Revenues (€m) North America was up. In the U.S, new offer launches , strong growth in the construction market and solid execution of commercial initiatives in solar Fx 3,113 market supported the growth. The re
Slide 40: Industry impacted by O&G and China
Industry impacted by further deterioration in O&G and continued weak industrial activities in China Analysis of change in Q4 Revenues (€m) Western Europe grew as Italy, Spain, and the U.K. were up thanks to positive OEM demand and successful OEM customer conversion. France and Germany also grew be
Slide 41: Infrastructure about flat on strong project execution
Infrastructure was about flat thanks to strong project execution Analysis of change in Q4 Revenues (€m) North America was up benefiting from project execution in Canada in a challenging market. Despite headwinds from O&G and delays in data Organic Scope Fx 1639 center investments, the U.S. was als
Slide 42: IT down -3.5% organically
IT was down -3.5% organically, penalized by a high comparison base Analysis of change in Q4 Revenues (€m) The U.S. was down due to soft IT investment and a Fx 982 high base of comparison, while services grew Organic +5.8% +2.5% strongly. 958 -3.5% Scope Western Europe was up thanks to good execu
Slide 43: Western Europe and Rest of World support Q4
Western Europe and Rest of World brought strong support to the Q4 performance Analysis of change in Group revenues (€m) Organic: -0.6% Fx 7,198 Q4 revenues Western Asia- +4.3% +3.5% Western Europe Pacific North Rest of Europe 26% +3% -6% America World Scope 6,954 Asia -3% +5% -0.2% 28% Pacific North
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 Apr 21, 2016 Q1 2016 Revenues Conference call Apr 25, 2016 Annual Gener
Slide 45: Life Is On | Schneider Electric
Lifels On | Schneider f Electric