Schneider Electric Se · EURONEXT:SU
Schneider Electric — FY2023 Earnings Presentation
41 slides from Schneider Electric's earnings presentation, Feb 15, 2024
Slide 1: Full Year 2023 Results – February 15, 2024
Full Year 2023 Results – February 15, 2024 Strong execution drives record performance; well positioned for Next Frontier Seamless transition to new governance structure Revenues, Adjusted EBITA, Net Income and Free Cash Flow at record levels Public
Slide 2: Disclaimer
Disclaimer 3 FY 2023 All forward-looking statements are Schneider Electric Business Highlights management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ 13 FY 2023 materially from those described in the forwa
Slide 3: FY 2023 Business Highlights
FY 2023 Business Highlights Peter Herweck | CEO Investor Relations – Schneider Electric Page 3 Public
Slide 4: Full Year 2023 – record performance in milestone year
Full Year 2023 – record performance in milestone year Energy Management Industrial Automation € 28bn FY23 revenues +14% org. growth € 8bn FY23 revenues +7% org. growth Group Enabling a SUSTAINABLE future €36bn +13% FY23 revenues org. growth 17.9% +180bps Adj. EBITA margin org. improvement Adj. EBITA
Slide 5: Full Year 2023 – Key metrics at record levels
Full Year 2023 – Key metrics at record levels Sales Adj. EBITA Net Income Free Cash Flow Dividend €6.4bn €4.0bn ** €36bn €4.6bn €3.50 +13% +25% +15% +38% +11% * * * Organic growth ** Subject to Shareholder approval on May 23, 2024 Investor Relations – Schneider Electric Page 5 Public
Slide 6: Megatrends creating unprecedented opportunities in our end-markets
Megatrends creating unprecedented opportunities in our end-markets 1 AI ready Digitization & Edge & Core Data Centers with high density power and cooling addressing Artificial Intelligence specific needs of AI Sustainable Services for data driven insights & recommendations to drive highest 5 2 Susta
Slide 7: Delivering on key Management Priorities
Delivering on key Management Priorities Growth Culture Sustainability Innovation Software AI +130bps 6.13 /10 ~ 40% €3.0bn Software & Digital Services ~350 ROCE growth SSI score vs. year-end of FY23 order growth linked to new AI Hub employees target of 6.00/10 product innovations in last 3 years FY2
Slide 8: Aligning our engagements with Megatrends set to drive growth
Aligning our engagements with Megatrends set to drive growth Digitization & AI Evolution of Wealth Climate Change Energy Transition New Global Equilibrium Steering thought leadership Leveraging technology to address Urbanization trends shaping future on energy efficiency and AI climate change to res
Slide 9: An Impact company driving Efficiency and Decarbonization
An Impact company driving Efficiency and Decarbonization Data Center Building Industry Infrastructure Australia Egypt Saudi Arabia Canada Responsible growth Data-Driven 600t Trusted partner for their 2030 Net-Zero journey Superior customer engagement Sustainable solutions Carbon-free Hydrogen/day us
Slide 10: A full-year Sustainability Impact score surpassing the target
A full-year Sustainability Impact score surpassing the target 2021-2025 1 6.13 6.00 Schneider Electric's automation and process control solutions drive CLIMATE SSI #2 - Help our customers save and avoid 800 million scaling Brilliant Planet’s algae-based carbon tonnes of CO2 emissions 2 capture for g
Slide 11: External recognition in 2023
External recognition of our in 2023 Investor Relations – Schneider Electric Page 11 Internal
Slide 12: Transforming to be the Industrial Tech leader
Transforming to be the “Industrial Tech” leader Investor Relations – Schneider Electric Page 12
Slide 13: FY 2023 Financial Performance Highlights
FY 2023 Financial Performance Highlights Hilary Maxson | CFO Investor Relations – Schneider Electric Page 13 Public
Slide 14: Financial highlights – Strong performance in FY 2023
Financial highlights – Strong performance in FY 2023 Well positioned for the Next Frontier Revenues Gross Margin Adj. EBITA Margin €36bn, +13% org. 41.8%, +200bps org. 17.9%, +180bps org. Strong growth in Systems, Software and Services Strong gross margin supported by price carryover, Close control
Slide 15: Strong growth in FY 2023 up +13% organic
Strong growth in FY 2023 up +13% organic Analysis of Change in Group Revenues (in €m) +6.7% -2.5% +14.4% -4.3% 35,902 Mainly representing the exit from 34,176 Russia, combined with the net impact of some smaller acquisitions/disposals Group +12.7% organic Mainly due to the weakening of the USD and C
Slide 16: Digital flywheel growing faster than Group, up +17% org. in 2023
Digital flywheel growing faster than Group, up +17% org. in 2023 +18% Moving towards 60% to 65% of Recurring revenue in Agnostic Software org. growth Group revenues by 2027 to increase to c.80% by 2027 SOFTWARE & DIGITAL SERVICES €3.0bn FY 2023 56% 70% 9% revenues of FY 2023 of FY 2023 of FY23 Group
Slide 17: Record high levels of backlog at the end of 2023
Record high levels of backlog at the end of 2023 +12.7% Org. sales growth in 2023 +12.2% €19.2bn BACKLOG CREATION IN 2023 Org. sales growth in 2022 €16.5bn +€2.7bn vs. 2022 closing backlog • Record high backlog at the end of 2023 • Backlog consumption in Products in Q4 while backlog increased in Sys
Slide 18: Q4 2023 up +9% organic
Q4 2023 up +9% organic Analysis of Change in Group Revenues (in €m) +17.8% -1.9% +8.8% -4.9% +7.2% +7.4% Mainly representing the net 9,480 impact of several small 9,320 acquisitions / disposals incl. Telemecanique Sensors Mainly driven by weakening of US Group +9.1% org. Dollar, Chinese Yuan and Arg
Slide 19: Strong growth in Q4 led by Systems, Software & Services
Strong growth in Q4 led by Systems, Software & Services PRODUCTS SYSTEMS SOFTWARE & SERVICES 53% of FY 2023 revenues 28% of FY 2023 revenues 19% of FY 2023 revenues +2% +17% +17% Q4 organic growth Q4 organic growth Q4 organic growth • Energy Management up mid-single digit in • Strong double-digit gr
Slide 20: Energy Management +11% Q4 org. growth
Energy Management +11% Q4 org. growth W. Europe N. America Asia Pac. Rest of the World Split of Q4 2023 revenue by geography: 25% 36% 27% 12% North America +10% Western Europe +11% Good performance against strong double-digit base of comparison Growth led by Italy, up strong double-digit with streng
Slide 21: Industrial Automation +1% Q4 org. growth
Industrial Automation +1% Q4 org. growth W. Europe N. America Asia Pac. Rest of the World Split of Q4 2023 revenue by geography: 29% 24% 31% 16% North America 0% Western Europe -3% U.S. down low-single digit, Mexico up double-digit and Canada Performance impacted by double-digit base of comparison i
Slide 22: Adj. EBITA: Margin at 17.9%, +180bps organic
Adj. EBITA: Margin at 17.9%, +180bps organic Energy Management Industrial Automation Reported Organic In €m FY 2022 FY 2023 change change Revenues 34,176 35,902 +5.1% +12.7% 21.1% 17.0% c.+220bps c.-110bps Gross Profit 13,876 15,012 +8.2% +18.1% org. org. Gross Margin (%) 40.6% 41.8% +120 bps +200 b
Slide 23: GM improvement of +200bps organic
GM improvement of +200bps organic Gross Margin: Analysis of Change (%) +0.5 -0.4 +0.4 -0.7 +2.6 -1.2 Driven by Systems gross margin 41.8 improvement partially offset by relative growth of Systems vs. Products 40.6 Return to positive productivity, accelerating in H2 “Others” primarily due to positive
Slide 24: 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) 568 -226 252 8,600 376 7,859 -229 Investments in strategic priorities: innovation through R&D, commercial footprint expansion and digital transformation including AI projects • Others: +€315m, prima
Slide 25: Net Income of €4.0bn up +15% boosted by gains on disposal
Net Income of €4.0bn up +15% boosted by gains on disposal In €m Reported Organic FY 2022 FY 2023 change change Consists mainly of +€265m gains on business disposal including from Telemecanique Sensors, Gutor and Adjusted EBITA 6,017 6,412 +7% +24.5% VinZero, offset by M&A costs for -€111m. 2022 incl
Slide 26: Free cash flow at €4.6bn – with strong progress in H2
Free cash flow at €4.6bn – with strong progress in H2 All-time high operating cash flow, up +3% as a Analysis of net debt change in €m FY 2022 FY 2023 consequence of the record profitability Net debt at opening Dec. 31 (7,127) (11,225) Inventory days stable YoY having been elevated at H1 Operating c
Slide 27: Balance sheet remains strong
Balance sheet remains strong Main impacts in 2023: Net Debt / Adj. EBITDA1 • Cash payment of €4.6bn to purchase minority shares in AVEVA (shown as a purchase commitment at 31 Dec. ‘22) • Payment of €1.9bn to fulfill FY22 dividends 1.62x • Payment of €0.7bn to complete share-buyback program 1.27x • F
Slide 28: Further progress on ROCE: driving toward ambition of 15%+
Further progress on ROCE: driving toward ambition of 15%+ ROCE 15% 13.5% 12.2% +130bps improvement in 2023 driven by: 11.8% • Improved profitability supported by price, good volume 10% growth and return to positive productivity; • Shareholders equity impacted by AVEVA minority buy out in Q1’23 5% 0%
Slide 29: Proposing progressive dividend of €3.50
Proposing progressive dividend of €3.501 Progressive Dividend1 for 14th year in a row €3.50 €3.501 1 x3.4 Dividend per share +11% vs. 2022 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3-year TSR vs. CAC40 and peers: Schneider Electric +64% 150 Peers average +47%2 CAC40
Slide 30: Expected Trends & Financial Target
Expected Trends & Financial Target Peter Herweck | CEO Investor Relations – Schneider Electric Page 30 Public
Slide 31: Expected trends in 2024
Expected trends in 2024 • Strong and dynamic market demand to continue on the back of structural megatrends • Strong demand for System offers notably driven by trends in Data Centers, Grid Infrastructure investment and increased investments across Process Industries served by both businesses • Conti
Slide 32: 2024 Target
2024 Target The Group sets its 2024 financial target as follows: 2024 Adjusted EBITA growth of between +8% and +12% organic The target would be achieved through a combination of organic revenue growth and margin improvement, currently expected to be: • Revenue growth of +6% to +8% organic • Adjusted
Slide 33: Recap of medium-term targets as announced at CMD
Recap of medium-term targets as announced at CMD The Next Frontier Well positioned on structurally The Next Frontier +7% to +10% CAGR growing markets and will of organic growth organic growth, 2023-20271 outperform market growth Financial targets Agile operating model and c.+50bps CAGR Ambition to g
Slide 34: Q&A
Q&A Investor Relations – Schneider Electric Page 34 Public
Slide 35: Investor Relations ready to engage
Investor Relations ready to engage 15 February 2023 Full Year Results Investor Relations contacts 22 February Citi Global Industrials conference (Miami, US) Amit Bhalla – amit.bhalla@se.com 22 February Barclays Industrial Select Conference (Miami, US) Graham Phillips – graham.phillips@se.com 3 Apri
Slide 36: Appendix
Appendix Investor Relations – Schneider Electric Page 36 Public
Slide 37: 2024 additional notes
2024 additional notes Foreign Exchange impact: Based on current rates, the FX impact on FY 2024 revenues is estimated to be between -€400 million to -€500 million. The FX impact at current rates1 on adjusted EBITA margin for FY 2024 could be around -30bps Scope: Around -€300 million on 2024 revenues
Slide 38: Adj. EBITA +25% org. due to strong gross margin performance and cost control
Adj. EBITA +25% org. due to strong gross margin performance and cost control, while investing for the future Analysis of Change of Adjusted EBITA (in €m) 148 192 -152 -1,033 1,391 -573 1,135 -713 6,412 6,017 2022 Volume Net price1 Productivity Mix R&D & SFC Forex Scope & 2023 Production others Labor
Slide 39: Q4 2023 Results
2023 Q1 Q2 Q3 Q4 Target Q4 2023 Results Score1 6.13 6.00 6 long-term commitments Baseline Q4 2023 2025 Target CLIMATE 1. Grow Schneider Impact revenues*2 70% 80% 74% 2. Help our customers save and avoid millions of tonnes of CO2 emissions3 263M 553M 800M 3. Reduce CO2 emissions from top 1,000 suppli
Slide 40: Adjusted Net Income calculation
Adjusted Net Income calculation In €m FY 2022 FY 2023 Adjusted EBITA 6,017 6,412 Amortization of purchase accounting intangibles (423) (396) Financial Costs (215) (530) Income tax with impact from adjusted items1 (1,381) (1,305) Equity investment & Minority Interests (30) (115) Adjusted Net Income (
Slide 41: se.com
© 2024 Schneider Electric. All Rights Reserved. Schneider Electric and Life Is On Schneider Electric are trademarks se.com and the property of Schneider Electric, its subsidiaries, and affiliated companies. All other trademarks are the property of their respective owners Public