Schneider Electric Se · EURONEXT:SU
Schneider Electric — H1 2021 Earnings Presentation
56 slides from Schneider Electric's earnings presentation, Jul 30, 2021
Slide 1: Half Year 2021 Results - July 30, 2021
Schneider Electric Half Year 2021 Results - July 30, 2021 Record performance in Revenues, Profitability and Cash flow Full Year 2021 Target upgraded Investor Relations - Schneider Electric | Page 1 Internal
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
Agenda 04 H1 2021 Business Highlights 25 H1 2021 Financial Performance Highlights 45 2021 Target Upgraded 49 Q&A 51 Appendix Investor Relations - Schneider Electric | Page 3 Internal
Slide 4: H1 2021 Business Highlights
H1 2021 Business Highlights Jean-Pascal Tricoire Chairman & CEO Investor Relations - Schneider Electric | Page 4 Internal
Slide 5: Strong demand and execution driving record performance in H1
Strong demand and execution driving RECORD performance in H1 Group Energy Management € 14bn Industrial Automation +19% Energy efficiency Group H1 2021 revenues, org. growth Process efficiency € 10.5bn € 3.3bn Adj. EBITA margin Adj. EBITA margin 20.5% +19.8% +15.4% 18.2% Org. Org. c.+330bps c.+320bps
Slide 6: Exceeding pre-pandemic levels vs H1'19
Exceeding pre-pandemic levels vs H1’19 Sales Gross Profit Adj. EBITA Net Income +6 % Org. growth vs. H1’19 +10% Org. growth vs. H1’19 +24 % Org. growth vs. H1’19 +57% Growth vs. H1’19 Delivering: Delivering: Delivering: Delivering: • Growth in all 4 regions vs. H1’19 • Group +120 bps org. • Basic EP
Slide 7: Digital solutions for sustainability and efficiency
Digital solutions for sustainability and efficiency Energy Industrial Management Automation Energy Transition Industry 4.0 Electrification Digitization SUSTAINABILITY + EFFICIENCY One Platform Four End-markets Buildings & Data Center c.50% Infrastructure & Industry c.50% One Model Integrated Empower
Slide 8: Leveraging our multi-hub model for agility in H1
Leveraging our Multi-hub model for agility in H1 India 4 th hub Products R&D Strengthening our Multi-hub operating model Good progress in integration Supply Suppliers Sales Chain China Launched another R&D Center, in Beijing, Empowered teams Agile decision making dedicated to Software to drive the d
Slide 9: Prioritizing customers in constrained supply chain environment
Prioritizing customers in constrained Supply Chain environment Taking actions to respond with agility • Established supply chain end-to-end control tower for visibility, planning, demand analysis & capacity management One Schneider Production Leveraging Digital capabilities to ensure System (SPS) re
Slide 10: Powering the all-digital, all-electric world across four end-markets
Powering the all-digital, all-electric world across our four end-markets Buildings of the Future Create sustainable smart-buildings and people- oriented buildings, powered by digital helping achieve carbon neutral goals Sustainability Data Centers of the Future Leverage the power of connected infras
Slide 11: We are at an inflection point as strategic positioning gains traction
We are at an inflection point as each element of our strategic positioning gains traction Sustainability Carbon pledge 1.5°C climate objective Resiliency $250bn Digitization Global edge computing market by 2024 Source: IDC Electrification ~ 25% Final energy consumption 54 million >10% Electric Vehic
Slide 12: Accelerating on our strategic pillars
Accelerating on our strategic pillars More More Software More Products & Services Sustainable strong +30 % org. in Q2 1.5x Group average growth double-digit org. growth in Sustainability vs H1 2019 business revenues in Q2 Investor Relations - Schneider Electric | Page 12 Internal
Slide 13: More innovation and more natively digital products
More Products I More Software & Services I More Sustainable More innovation and more natively digital products Innovation with new product launches in H1 Okken™ & BlokSeT™ LV switchboards Galaxy VL Compact 3-Phase UPS Easy UPS 3L ComPacT/ PowerPacT New generation of TeSys Giga series Motor Starters
Slide 14: Market recognition for our designs
More Products I More Software & Services I More Sustainable We continue to receive market recognition for our designs Acti 9 SM AirSeT Model 6 Low Voltage MCC With ArcBlok Square D Energy Center Unica Iconic Connected Switch TransferPacT WATSN ComPacT Easy Lock PowerLogic HeatTag & ThermalTag Putuo
Slide 15: We are digital partners of our customers
More Products I More Software & Services I More Sustainable We are digital partners of our customers Digital & Services combine in a compelling value proposition when engaging at customer C-suite level Software + Digital services 18% of Group revenues Growing 1.5x Group average vs H1’19 Software & S
Slide 16: We enhance our digital portfolio and capabilities
More Products I More Software & Services I More Sustainable In H1, we enhance our digital portfolio and capabilities Investment in Completion of recent Enhancing Digital competencies for front Digital salesforce software acquisitions office personnel Transactions completed in H1 AVEVA Capital Market
Slide 17: World's first software-centric universal automation system
More Products I More Software & Services I More Sustainable EcoStruxure Automation Expert World’s first software-centric universal automation system EcoStruxure Automation Where the edge control layer Bringing a 3-way paradigm shift to Expert is Industry 4.0 ready becomes software defined how we see
Slide 18: Investing in Services capability to harvest installed base
More Products I More Software & Services I More Sustainable Investing in Services capability to better harvest our installed base and enable new opportunities Enhanced investment in Field Services Aimed at increased coverage of existing installed base through Digital Services capability prioritized
Slide 19: The world's most sustainable company 2021
More Products I More Software & Services I More Sustainable the world’s most #1 sustainable company 2021 Investor Relations - Schneider Electric | Page 19 Internal
Slide 20: Accelerated sustainability journey continues
More Products I More Software & Services I More Sustainable Accelerated sustainability journey continues 2021-2025 CLIMATE SSI #3 - Reduce CO2 emissions from top 1,000 suppliers' operations suppliers have committed to join program 91% and actively reduce emissions have participated to the trainings
Slide 21: Preferred provider to enable customers' climate ambitions
More Products I More Software & Services I More Sustainable We are the preferred provider to enable customers to achieve climate ambitions Strong double-digit growth for Landmark milestone Sustainability business division reached in H1 ~800M 10,000MW metric tons CO₂ Advised Renewable Energy Power sa
Slide 22: We lead by example by deploying our technologies
More Products I More Software & Services I More Sustainable We lead by example by deploying our technologies within our ecosystem Our Pledge Concrete actions • Reducing CO2 emissions of highest emitting suppliers by 50% with 2025 Carbon neutrality in our operations The Zero Carbon Project (with CO2
Slide 23: Key customer successes in recent months
Key customer successes in recent months D.R. Horton Jushi EDF Oxy Technologies Citycon U.S. China JUSHI France India Finland Schneider integrated Fully connected EcoStruxure™ Turnkey and sustainable EcoStruxure™ Automation Unique and full Ecostruxure™ EcoStruxure™ Power Power solution to support pow
Slide 24: We are embracing the new normal as part of our DNA
We are embracing the new normal as part of our DNA Thankful For Our Embracing New Ways Deeply Committed Employee Engagement Of Working Towards Diversity Flexibility at Work Policy Well-being in our DNA 42% women at Board of Directors level Composition as of April 29th +7 pts vs 2019 44% women at ExC
Slide 25: H1 2021 Financial Performance Highlights
H1 2021 Financial Performance Highlights Hilary Maxson CFO Investor Relations - Schneider Electric | Page 25 Internal
Slide 26: H1'21 Financial highlights - Record revenues, profitability and cash flow
H1’21 Financial highlights - Record performance in Revenues, Profitability and Cash flow Further progress on our journey Revenues Gross Margin Adj. EBITA Margin €13.8bn, +18.7% org. +100bps org. +350bps org. Strong rebound of demand across end-markets Achieving record Gross Profit for H1 To reach a
Slide 27: Positive evolution of demand trends in Q2
Positive evolution of demand trends in Q2 and vs. pre-pandemic levels Q2’21 vs average of 2019 Improving trend Q2’21 vs Q1’21 Data Center ++ Machine Solutions / OEM ++ Residential Buildings ++ CPG ++ MMM + Utilities + Oil & Gas -- Based on non-GAAP orders in selected segments Investor Relations - Sc
Slide 28: Strong start to 2021 up +18.7% organic in H1
Strong start to 2021 up +18.7% organic in H1, c.+6% vs. H1’19 Analysis of Change in Group Revenues (in €m) +5.1% -4.8% +19.0% 13,774 +16.9% +21.2% +17.4% Mainly due to the 11,575 strengthening of EUR against the USD Mainly comprises the acquisitions Group +18.7% org. in H1 of L&T E&A, RIB Software,
Slide 29: H1 Group revenue - exceeding 2019 levels across regions
H1 Group revenue - exceeding 2019 levels across regions NORTH AMERICA Country WESTERN EUROPE Country above/below H1’19 above/below H1’19 +5% +5% org. org. +17% +17% org. org. H1’19 H1’20 H1’21 H1’19 H1’20 H1’21 Sub-region Country REST OF WORLD above/below H1’19 ASIA PACIFIC above/below H1’19 +9% +7%
Slide 30: Products: Sustained strong demand throughout H1
Products: Sustained strong demand throughout H1 €8.2bn H1’21 performance highlights 60% of Group H1 2021 revenues • Strong demand, particularly in shorter-cycle segments, delivers revenue growth of +24% org. in H1, up +10% vs. H1’19 +24% org. • Growth supported by carryover and new price actions +10
Slide 31: Systems: Double-digit growth in H1
Systems: Double-digit growth in H1 but remaining below pre- pandemic levels €3.1bn H1’21 performance highlights 22% of Group H1 2021 revenues • Systems revenues up +13% org. in H1, but remain below pre- pandemic levels +13% org. • Strong growth in Energy Management resulting from strong contribution
Slide 32: Software and Services: Good growth against challenging base
Software and Services: Good growth against a relatively more challenging base of comparison €2.5bn H1’21 performance highlights 18% of Group H1 2021 revenues • Software and Services growing +10% org, in H1’21, having been resilient in H1’20 +10% org. • Software and Digital Services growing at ~10% i
Slide 33: Energy Management - H1 performance highlights
Energy Management - H1 performance highlights Key performance highlights €10.5bn • Strong pace of underlying demand in Q1 continued into Q2; 76% of Group H1 2021 revenues price increases also contributing to sales growth in H1 Scope • Residential buildings remain strong due to consumer Organic +5.0%
Slide 34: Energy Management - focus on Q2
Energy Management - focus on Q2 Q2 Org. Growth N. America W. Europe Asia Pac. Rest of the World Split of Q2 2021 revenue by geography: 25% 31% 31% 13% North America +32% Western Europe +26% • All countries growing strongly against low base and despite some supply-chain • Strength across all end-mark
Slide 35: Industrial Automation - H1 performance highlights
Industrial Automation - H1 performance highlights €3.3bn Key performance highlights 24% of Group H1 2021 revenues • Sales into Discrete end-markets grew double-digit, led by OEM Scope demand and manufacturing recovery in most of the geographies Organic +5.6% 3,287 +16.5% • Process & Hybrid end-marke
Slide 36: Industrial Automation - focus on Q2
Industrial Automation - focus on Q2 Q2 Org. Growth N. America W. Europe Asia Pac. Rest of the World Split of Q2 2021 revenue by geography: 27% 26% 32% 15% North America +40% Western Europe +24% • Very strong growth across the region against a low base, led by Discrete • Strong growth in all major ec
Slide 37: Adj. EBITA: +52% organic growth, +350 bps organic expansion
Adj. EBITA: +52% organic growth, +350 bps organic expansion Reported Organic In €m H1 2020 H1 2021 change change Revenues 11,575 13,774 +19.0% +18.7% Gross Profit 4,621 5,704 +23.4% +21.9% Gross Margin (%) 39.9% 41.4% +150 bps +100 bps SFC1 (3,045) (3,342) +9.8% +6.9% • SFC/Sales ratio reduces to 24
Slide 38: Gross Margin: +100bps organic in H1
Gross Margin: +100bps organic in H1 Gross Margin: Analysis of Change (%) +0.2 -0.3 +0.3 41.4 +1.4 +0.1 39.9 -0.2 • H1 Industrial Productivity +194M€ • Industrial Productivity +251M€ • -57M€ headwind from freight and electronic components • H1 Net Price +65M€ • Expecting further impact from freight a
Slide 39: SFC: H1 2021 continues to deliver on structural savings
SFC: H1 2021 continues to deliver on structural savings Analysis of Change of SFC (in €m) 251 3,342 144 211 135 3,045 93 71 Mainly impact of recent acquisitions • Partial reversal of the c.€200m tactical savings delivered in H1 20 • Structural savings on target and aligned with operational efficienc
Slide 40: Record Adj. Net Income and Adj. EPS
Record Adj. Net Income and Adj. Earnings per share, €1.6bn and €2.92 in H1 H1 2021 includes mainly the gain on disposal of the In €m H1 2020 H1 2021 % change Cable Support business and some M&A / integration costs. H1 2020 was mainly M&A / integration costs. Adjusted EBITA 1,576 2,362 +50% Other inc
Slide 41: Strong free cash flow of €1.1bn in H1, a record
Strong Free cash flow of €1.1bn in H1, a record Analysis Of Debt Change In €m H1 2020 H1 2021 Net debt at opening Dec 31 (3,792) (3,561) Operating cash flow 1,459 2,136 Capital expenditure – net (339) (379) Reversal of the FY20 impact on receivables and payables as we return to a growth environment,
Slide 42: Capital allocation: priorities unchanged, reinstating share buyback
Capital allocation: priorities unchanged, reinstating share buyback 1 2 Strong Investment Continued focus on Grade Credit Ratings Dividends 3 4 Share Buyback Existing program now Portfolio Optimization re-instated, with extension to 2022 Near-term Focus: Successful integration of Further progress Sm
Slide 43: Progress on integration of acquisitions and disposal program
Progress on integration of recent acquisitions & on disposal program in H1 Electrical & Automation Acquisitions • Cable Support - completed With these transactions, Energy Management business c. €800m of revenue Disposals • US Motion Control - signed Industrial Automation business disposed cumulativ
Slide 44: Balance sheet remains strong
Balance sheet remains strong - Net Debt impacted by OSIsoft completion as expected Net Debt / Adj. EBITDA* Main impacts 1.42x • Cash element of payment for OSIsoft of €3.7bn 0.75x • Payment of FY20 dividend for €1.5bn • H1 FCF benefit of -€1.1bn The Group remains committed to retaining its current s
Slide 45: 2021 Target Upgraded
2021 Target Upgraded Jean-Pascal Tricoire Chairman & CEO Investor Relations - Schneider Electric | Page 45 Internal
Slide 46: Expected trends for H2 2021
Expected trends for H2 2021 • Strong and dynamic market demand • Further demand recovery in late-cycle segments • All regions and all four end-markets expected to contribute to growth • Ongoing uncertainties linked to the rising delta variant infections in many countries • Potential impact of global
Slide 47: 2021 Target upgraded
2021 Target upgraded The Group upgrades its target (assuming no further deterioration linked to COVID-19 leading to significant economic disruption) as follows: 2021 Adjusted EBITA growth of between +19% and +24% organic (previously between +14% and +20% organic) The target would be achieved through
Slide 48: Investor Relations ready to engage
Investor Relations ready to engage Proposing quarterly interaction with investors showcasing specific businesses, geographies or functions 30 July H1 Results 7 September Exane BNP Paribas ESG Conference 8 September Morgan Stanley Industrial CEOs Unplugged 9 September RBC Industrials Conference 27 Oc
Slide 49: Q&A
Q&A Investor Relations - Schneider Electric | Page 49 Internal
Slide 50: Investor Relations contacts
Investor Relations contacts Amit Bhalla - Head of Investor Relations, amit.bhalla@se.com Graham Phillips - Investor Relations Director, graham.phillips@se.com Alban de Beaulaincourt - Investor Relations Director, alban.de-beaulaincourt@se.com Investor Relations - Schneider Electric | Page 50 Interna
Slide 51: Appendix
Appendix Investor Relations - Schneider Electric | Page 51 Internal
Slide 52: 2021 additional notes
2021 additional notes • Foreign Exchange impact: Based on current rates, the FX impact on FY 2021 revenues is estimated to be between - €400 million to -€500 million. The FX impact at current rates on adjusted EBITA margin for FY 2021 could be around flat • Scope: Around +€900 million on 2021 revenu
Slide 53: H1 adj. EBITA +52% org. due to higher volumes and productivity
H1 adj. EBITA + 52% org. due to higher volumes and productivity Analysis of Change of Adjusted EBITA (in €m) 194 29 39 206 742 65 88 89 2,362 1,576 H1 2020 Volume Net Price1 Productivity Mix R&D & Production SFC Forex Scope & H1 2021 Labor infl. others 1. Price on products and raw material impact In
Slide 54: Q2 2021 Results - Sustainability Impact targets
2021 Q1 Q2 Q3 Q4 Target Q2 2021 Results Score1 3.26 3.75 6 long-term commitments 11+1 targets for 2021 - 2025 Baseline Q2 2021 2025 Target CLIMATE 1 Grow our green revenues2 70% 70% 80% 2 Help our customers save and avoid millions of tons of CO2 emissions3 263M 302M 800M 3 Reduce CO2 emissions from
Slide 55: Adjusted Net income calculation
Adjusted Net income calculation In €m H1 2020 H1 2021 Adjusted EBITA 1,576 2,362 Amortization of purchase accounting intangibles (86) (180) Financial Costs (172) (78) Income tax with impact from adjusted items (317) (505) Equity investment & Minority Interests (6) 22 Adjusted Net Income 995 1,621 Ad
Slide 56: Internal
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