Schneider Electric Se · EURONEXT:SU
Schneider Electric — FY2022 Earnings Presentation
62 slides from Schneider Electric's earnings presentation, Feb 16, 2023
Slide 1: Full Year 2022 Results – February 16, 2023
Full Year 2022 Results – February 16, 2023 All-time high Revenues, Adj. EBITA and Net Income Well positioned for sustainable growth in coming years Enacting new governance structure, effective May 2023
Slide 2: Agenda and Disclaimer
3 FY 2022 Business Highlights Disclaimer 8 Enacting new governance structure All forward-looking statements are Schneider Electric management’s present expectations of future events and are subject to a number of factors and 11 Reflecting on our transformation uncertainties that could cause actual r
Slide 3: FY 2022 Business Highlights
FY 2022 Business Highlights Jean-Pascal Tricoire | Chairman & CEO Investor Relations – Schneider Electric | Page 3
Slide 4: We responded with speed and agility executing on our Future-ready strategy
We responded with speed and agility executing on our Future-ready strategy Prioritizing our People - Set the foundation and structure Humanitarian crisis in Ukraine Mobilized in response to for maximizing value of our Pandemic impacts in China Supply Chain pressures agnostic software portfolio Acqui
Slide 5: Strong financial performance against a challenging backdrop in 2022
Strong financial performance against a challenging backdrop in 2022 Group Energy Management € 34bn Industrial Automation +18% / +12.2% org. Energy efficiency Group FY 2022 revenues Process efficiency Adj. EBITA margin 20.4% € 26.4bn € 7.7bn Adj. EBITA margin 18.9% c.+40bps +12.9% +9.5% c.+30bps org.
Slide 6: Full Year 2022: Financial highlights
Full Year 2022: Financial highlights Sales Adj. EBITA Adj. Net Income Free Cash Flow Dividend €34bn €6bn €4bn €3.3bn €3.15 +18% +21% +16% +19% +9% Investor Relations – Schneider Electric | Page 6
Slide 7: Our distinctive DNA is externally recognized in 2022
Our distinctive DNA is externally recognized in 2022 Most Honored Company A Global 100 Most Sustainable Corporation Investor Relations – Schneider Electric | Page 7
Slide 8: Future-Ready: Enacting new governance structure
Future-Ready Enacting new governance structure, effective May 2023 Jean-Pascal Tricoire | Chairman & CEO Investor Relations – Schneider Electric | Page 8
Slide 9: Introducing the incoming Chief Executive Officer, effective May 4, 2023
Introducing the incoming Chief Executive Officer, effective May 4, 2023 AVEVA Chief Executive Officer, Switzerland 2021 Multi-decade industry experience in Energy Schneider Electric Management and Industrial Executive Vice President, 2016-2021 Industrial Automation, Switzerland Automation Siemens Ex
Slide 10: The right time to introduce a new governance, effective May 2023
The right time to introduce a new governance, effective May 2023 • Implementing previously announced separation of Chairman & CEO roles • Robust and detailed candidate selection process over the last four years • Unanimous and strong endorsement of the Board and Chairman: alignment on technology and
Slide 11: Future-Ready: Reflecting on our transformation and positioning
Future-Ready Reflecting on our transformation and positioning Jean-Pascal Tricoire | Chairman & CEO Investor Relations – Schneider Electric | Page 11
Slide 12: Schneider solutions increasingly relevant for customers
Schneider solutions increasingly relevant for customers COVID-19 Reshoring Energy volatility Climate impacts Digitization Electrification Sustainability Investor Relations – Schneider Electric | Page 12
Slide 13: Future-Ready: in portfolio, scale, balance and culture
Future-Ready: in portfolio, scale, balance and culture… 2003 2022 A technology company leading in Sustainability, In 20 years we have become… Digitization and Electrification Revenues €8.8bn €34.2bn x3.9 Net Income €0.4bn €3.5bn x8.8 A true global player with a balanced geographical R&D Spend €0.5bn
Slide 14: A Technology Company driven by Digital
A Technology Company driven by Digital 2003 2022 €2.6bn agnostic software portfolio 1 ~€ bn Digital Revenue from IoT ~€ 15bn ~€6bn Electric Revenues ~€26+bn ~€0.4bn Sustainable Impact revenues ~€25bn 2003 2010 2020 2022 Make the most Building a New Electric World of your energy Multi-Hub Introduced
Slide 15: We have repositioned our unique portfolio to differentiate for the digital future
We have repositioned our unique portfolio to differentiate for the digital future Divestment of non-core assets Built software capability across the lifecycle vis a vis our strategic direction One set of applications to build your enterprise digital twin Transformer plants in Poland and Turkey sens
Slide 16: We have repositioned our offer to provide end-to-end solutions
We have repositioned our offer to provide our customers’ end-to-end solutions for efficiency and sustainability Products Systems Services Software Sustainability E-Commerce/ Digital Transactionalization CapEx to OpEx to C-level Opener C-level Opener Experience recurring Better Systems One unified Co
Slide 17: Driven by game-changing innovations for a future that is all-digital and all-electric
Driven by game-changing innovations for a future that is all-digital and all-electric 2003-2007 Compact NSX Symmetra MX PowerLogic TeSys T Modicon Quantum Acti9 Transparent Meters PAC Factory 2008-2013 PremSet InfraStruxure Uniflair Cooling Foxboro Evo Harmony eXLhoist Exxact Energy Odace Wiser Ener
Slide 18: We rebalanced our global presence
We rebalanced our global presence Balanced geographical footprint Unique Multi-Hub Structure 2022 weight €35bn 13% €30bn €25bn 30% €20bn €15bn 32% €10bn €5bn 25% €0bn 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Rest of the World x8.2 12% CAGR Asia Pacific x8.3 12% CAGR North America x5.0 9% CA
Slide 19: Our shareholder base is aligned with our global footprint
Our shareholder base is aligned with our global footprint and reflective of our impact on sustainability Percentage of Institutional shareholding by region Greater North America exposure North America than most European EMEA direct peers 36% Asia Pacific Greater Asia Pacific 57% exposure than all di
Slide 20: We created a purpose-led company to make a positive impact
We created a purpose-led company to make a positive impact across our ecosystem 5 GUIDING PRINCIPLES Performance the foundation for doing good IMPACT All Stakeholders in our ecosystem Company All ESG dimensions Business digital partner for Sustainability & Efficiency Model & Culture set up for globa
Slide 21: With ambitious targets and continuous benchmarking
With ambitious targets and continuous benchmarking Recognitions Our Commitments to Nature 2025 Carbon neutrality in our operations A List 2030 25% absolute GHG emissions reduction (Climate) 12 years in a row across the entire value chain “Net-Zero ready” in our operations 90/100 2040 Carbon neutral
Slide 22: Impact Company, committed that great people make a great company
Impact Company, committed that great people make a great company Diversity, Equity and Inclusion Employee Value Proposition Engagement From gender diversity Meaningful Purpose Incentives 2006 1st Diversity Policy To bridge progress and sustainability for all 2009 CEO commitment Gender Diversity Prog
Slide 23: Schneider grew in market indices over the past 20 years
Schneider grew in market indices over the past 20 years 2003: #19 rank in SCALE TODAY: #7 rank in CAC 40 CAC 40 #16 rank in EuroStoxx 600 INTEGRATE Schneider Electric +487% BUILD EuroStoxx 600 +111% CAC 40 +111% 100 Employee shareholders represent 3.8% of shares outstanding at Dec 31, 2022 Jan Dec D
Slide 24: Technology enables sustainability, and the moment is now
Technology enables sustainability, and the moment is now DIGITAL For Efficiency Smart & Green 5 integrations for next level efficiency + ELECTRIC For Decarbonization = All connected Electricity 4.0 for next level decarbonization SUSTAINABLE Investor Relations – Schneider Electric | Page 24
Slide 25: We see opportunities in both mature & emerging economies
We see opportunities in both mature & emerging economies Mature economies Emerging economies • Energy Transition, with special urgency in Europe • Rapid demand acceleration in infrastructure • Electricity 4.0 of buildings, processes and mobility • Urbanization, Industrialization and digitization • I
Slide 26: We remain well positioned for the future
We remain well positioned for the future … Accelerating Incremental Unique Markets Growth Drivers Operating Model Electric Services Integrated Digital Software Partnership Sustainability Multi-Hub ESG Investor Relations – Schneider Electric | Page 26
Slide 27: FY 2022 Financial Performance Highlights
FY 2022 Financial Performance Highlights Hilary Maxson | CFO Investor Relations – Schneider Electric | Page 27
Slide 28: 2022 Financial highlights - Strong performance in supply constrained market
2022 Financial highlights - Strong performance in supply constrained and inflationary market environment Good progress on sustainable growth journey Revenues Gross Margin Adj. EBITA Margin €34bn, +12.2% org. 40.6%, -50bps org. 17.6%, +40bps org. Strong and dynamic market demand in the majority Infla
Slide 29: Strong growth in 2022 up +12% organic
Strong growth in 2022 up +12% organic Analysis of Change in Group Revenues (in €m) +5.7% 34,176 +9.5% -0.2% +12.9% Mainly due to the 28,905 strengthening of the USD and CNY against the EUR Mainly comprises the acquisition of OSIsoft offset by the disposal of Group +12.2% organic Russia operations an
Slide 30: Strong backlog creation in 2022 supporting growth ambition for 2023
Strong backlog creation in 2022 supporting growth ambition for 2023 Backlog evolution (in €bn) ~6.0 Normalized backlog of ~3.8 months Months of Sales Closing 2022 with record high backlog of Sales on average (2018 to 2020) ~5.0 16.5 • >x2 in value over 2018-2022 period Months of • From ~3.5 months o
Slide 31: Strong growth across strategic pillars in FY 2022
Strong growth across strategic pillars in FY 2022 MORE PRODUCTS MORE SOFTWARE & SERVICES MORE SUSTAINABLE +13% +9% >20% FY 2022 organic growth FY 2022 organic growth FY 2022 organic growth • Double-digit growth in both Energy • Software & Digital Services growing high • Growth led by North America,
Slide 32: Making strong progress on our digital journey
Making strong progress on our digital journey – flywheel up +15% org. Full Year 2022 SOFTWARE* 2021 2022 +9% org. growth Digital Flywheel as % of Group revenues ** 8% c.50% 53% Software & Services as % of Group revenues EDGE FIELD c.18% 18% CONTROL SERVICES +13% 10%** 10%** +8% Recurring revenue as
Slide 33: A full-year Sustainability Impact score well above the target
A full-year Sustainability Impact score well above the target 2021-2025 1 CLIMATE SSI #2 - Help our customers save and avoid 800 million tonnes of CO2 emissions Half-way milestone crossed! And in 2022 alone, Schneider Electric’s 440M solutions and services helped customers save and avoid more than 9
Slide 34: Q4 2022 Group revenues up +16.0% organic
Q4 2022 Group revenues up +16.0% organic Analysis of Change in Group Revenues (in €m) +13.4% -2.1% +3.9% 9,320 +24.3% +9.2% +15.3% Mainly due to the 7,910 strengthening of the USD against the EUR Mainly relating to disposal of the Group’s Russia operations and the net Group +16.0% org. impact of som
Slide 35: Energy Management +18% Q4 org. growth
Energy Management +18% Q4 org. growth W. Europe N. America Asia Pac. Rest of the World Split of Q4 2022 revenue by geography: 24% 35% 28% 13% North America +28% Western Europe +15% U.S. and Mexico up c.+30% with Canada also up double-digit Double-digit growth in each of the five main economies Stron
Slide 36: Industrial Automation +11% Q4 org. growth
Industrial Automation +11% Q4 org. growth W. Europe N. America Asia Pac. Rest of the World Split of Q4 2022 revenue by geography: 27% 28% 31% 14% North America1 +9% Western Europe +18% High-single digit growth in U.S., with double-digit growth in both Each of the five major economies grew double-dig
Slide 37: Adj. EBITA: Margin at 17.6%, +40bps organic
Adj. EBITA: Margin at 17.6%, +40bps organic Energy Management Industrial Automation Reported Organic In €m FY 2021 FY 2022 change change Revenues 28,905 34,176 +18.2% +12.2% c.+40bps c.+30bps Gross Profit 11,843 13,876 +17.2% +10.8% Org. Adj. EBITA Org. Adj. EBITA Gross Margin (%) 41.0% 40.6% -40 bp
Slide 38: Gross Margin: Resilient performance despite inflationary headwinds
Gross Margin: Resilient performance despite inflationary headwinds Gross Margin: Analysis of Change (%) +1.8 -1.3 +0.1 -0.6 41.0 -0.2 -0.2 40.6 • Industrial Productivity -€457m • -€605m headwind from freight, electronics & other inflation • Underlying Industrial Productivity +€148m • Net Price +€1,3
Slide 39: SFC: Delivering further structural savings and investing for future
SFC: Delivering further structural savings and investing for future Analysis of Change of SFC (in €m) 547 27 -203 93 7,859 254 285 6,856 Investments in strategic priorities including R&D, Digital and Commercial footprint to support future growth • Further part reversal of the c.€300m tactical saving
Slide 40: Achieved targeted €1 billion of structural savings
Achieved targeted €1 billion of structural savings; associated restructuring costs significantly lower than initially expected Structural savings and restructuring costs 2020-2022 We delivered on our objective: 450 • €1.0 billion of structural savings delivered 400 in 3 years (2020-2022) 350 • Restr
Slide 41: Adjusted Net Income of €4.0bn up +16%
Adjusted Net Income of €4.0bn up +16% Includes €287m losses associated with Russia exit, In €m FY 2021 FY 2022 % change €180m costs of M&A and integration, €75m impairment associated with disposal of Transformer plants in Poland Adjusted EBITA 4,987 6,017 +21% & Turkey, offset by gains from other di
Slide 42: Free cash flow at €3.3billion – with strong progress in H2
Free cash flow at €3.3billion – with strong progress in H2 Analysis of debt change in €m FY 2021 FY 2022 All-time high Operating cash flow up +21% as a result of the record profitability in 2022 Net debt at opening at Dec. 31 (3,561) (7,127) Operating cash flow 4,469 5,393 Capital expenditure – net
Slide 43: Balance sheet remains strong
Balance sheet remains strong Net Debt / Adj. EBITDA1 Main impacts in 2022 • Inclusion of €4.6bn commitment to purchase minority 1.62x shares in AVEVA (transaction completed Jan. 2023) • Payment of FY21 dividend for €1.8bn in 2022 1.22x • FCF benefit of €3.3bn 0.93x Dec-21 Dec-22 Dec-22 excluding inc
Slide 44: Return on capital: Driving ROCE towards 15%
Return on capital: Driving ROCE towards 15% ROCE 15% 11.8% 12.2% Group ROCE: 12.2% 11.4% (vs. 11.8% in 2021) 10% +40bps increase on improved profitability from price and 5% capital discipline despite inventory build needed offset by increased tax rate, scope effects and changes in interest rates 0%
Slide 45: Portfolio evolution in Q4: AVEVA transaction & disposal program completed
Portfolio evolution in Q4: AVEVA transaction & disposal program completed Disposals Signed in Q4 Closed since Q3 results • Transaction to acquire the entire share Gutor Eurotherm capital of AVEVA completed Jan 18, 2023 • Agreement with Latour Capital for the • Disposal of Eurotherm to Watlow Electri
Slide 46: Capital allocation priorities unchanged
Capital allocation priorities unchanged 1 2 3 4 Strong Investment Grade Credit Ratings + Continued focus on Dividends + Portfolio Optimization + Share Buyback Progressive Dividend for 13th year in a row 1 Near-term management focus: €3.15 1 Successful integration of Dividend per share €3.151 Ongoing
Slide 47: Expected Trends & Financial Target
Expected Trends & Financial Target Jean-Pascal Tricoire | Chairman & CEO Investor Relations – Schneider Electric | Page 47
Slide 48: Expected trends in 2023
Expected trends in 2023 • A continuation of strong and dynamic market demand, supported by secular trends of electrification, digitization and sustainability • Demand in consumer-linked segments (Residential buildings, Distributed IT) to continue deceleration from highs, particularly in mature marke
Slide 49: 2023 Target
2023 Target The Group sets its 2023 financial target as follows: 2023 Adjusted EBITA growth of between +12% and +16% organic The target would be achieved through a combination of organic revenue growth and margin improvement, currently expected to be: • Revenue growth of +9% to +11% organic • Adjust
Slide 50: Our medium and long term targets from November 2021 Capital Markets Day
Our medium and long term targets as announced during November 30th, 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 av
Slide 51: Q&A
Q&A Investor Relations – Schneider Electric | Page 51
Slide 52: Investor Relations ready to engage
Investor Relations ready to engage 16 February 2022 Full Year Results Investor Relations contacts 24 February Sell-side meeting with Hilary Maxson (London) Amit Bhalla – amit.bhalla@se.com 9 March Deutsche Bank Global ESG Conference (Virtual) 28 March Barclays’ ESG conference (New York) Graham Phill
Slide 53: Appendix
Appendix Investor Relations – Schneider Electric | Page 53
Slide 54: 2023 additional notes
2023 additional notes Foreign Exchange impact: Based on current rates, the FX impact on FY 2023 revenues is estimated to be between -€600 million to -€700 million. The FX impact at current rates on adjusted EBITA margin for FY 2023 could be around -40bps Scope: Around -€750 million on 2023 revenues
Slide 55: Adj. EBITA +14.4% org. due to strong pricing and positive volumes
Adj. EBITA +14.4% org. due to strong pricing and positive volumes Analysis of Change of Adjusted EBI A (in €m) 1,348 -457 49 -197 -581 333 -226 6,017 761 4,987 2021 Volume Net price1 Productivity Mix R&D & SFC Forex Scope & 2022 Production others Labor infl. 1. Price on products and raw material imp
Slide 56: Continued focus on innovation with multiple new offers in 2022
Continued focus on innovation with multiple new offers in 2022 Data Centers Buildings Homes Industries Grids APC™️ Smart-UPS™️ Modular Ultra EcoStruxure™️ for eMobility Square D Energy Center & Wiser EcoStruxure™️ Automation Expert EcoStruxure™️ Grid he first modular Lithium-ion single Solutions for
Slide 57: Our integrated portfolio gaining tractions with customers
Our integrated portfolio gaining tractions with customers… 1. AI-driven software solution to optimize growing conditions, produce a higher yield at a lower energy cost, and improve energy efficiency for energy-intensive food producer to support its ambitions to transform the agricultural supply chai
Slide 58: Our digital offers combining for the benefit of our customers
Our digital offers combining for the benefit of our customers Integrated EcoStruxure™ building Cybersecurity consulting with RIB multi-year SaaS offer including solutions to enable digitalization of their engineering services to help integrated database to digitalize the water first all-electric hea
Slide 59: Schneider Sustainability Impact full year results
1 2022 full year results Baseline Q4 2022 2025 Target CLIMATE 1. Grow Schneider Impact revenues*2 70% 80% 72% 2. Help our customers save and avoid millions of tonnes of CO 2 emissions3 263M 440M 800 3. Reduce CO2 emissions from top 1,000 suppliers' operations 0% 10% 50% RESOURCES 18% 4. Increase gre
Slide 60: Integrated approach for sustainable growth for customers
Integrated approach for sustainable growth for customers to achieve climate ambitions cohort of suppliers to participate Expanding renewable electricity Announce goal of being 1st in Walmart’s renewable energy accelerator: Gigaton PPA portfolio to reach net-zero CO2 emissions Net-Zero in Scope 1 & 2
Slide 61: Adjusted Net Income calculation
Adjusted Net Income calculation In €m FY 2021 FY 2022 Adjusted EBITA 4,987 6,017 Amortization of purchase accounting intangibles (389) (423) Financial Costs (176) (215) Income tax with impact from adjusted items1 (1,028) (1,381) Equity investment & Minority Interests 15 (30) Adjusted Net Income (Gro
Slide 62: Life Is On | Schneider Electric
Lifels On | Schneider GeElectric