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Schneider Electric — H1 2024 Earnings Presentation
47 slides from Schneider Electric's earnings presentation, Jul 31, 2024
Slide 1: Half Year 2024 Results - July 31, 2024
Half Year 2024 Results - July 31, 2024 Strong execution drives record revenues and adjusted EBITA FY24 Target Upgraded Internal
Slide 2: Disclaimer
Disclaimer 3 HY 2024 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 22 HY 2024 materially from those described in the forwa
Slide 3: HY 2024 Business Highlights
HY 2024 Business Highlights Peter Herweck | CEO Investor Relations – Schneider Electric Page 3
Slide 4: Ranked #1 of the world's most sustainable companies in 2024
Ranked #1 of the world’s most sustainable companies in 2024 Demonstrating execution of our purpose and mission Our purpose: Schneider’s purpose is to create Impact by empowering all to make the most of our energy and resources, bridging progress and sustainability for all. At Schneider, we call this
Slide 5: Record revenues, accelerating in Q2
Record revenues, accelerating in Q2 GROUP Q2: H1: Q2’24 revenues Org. growth H1’24 revenues Org. growth €9.6bn +7.1% €18.2bn +6.2% Record revenues for Record revenues for an H1 any quarter BY BUSINESS Energy Management Industrial Automation Q1 Q2 Q1 Q2 +8.9% +9.8% -6.6% -3.5% org. growth org. growth
Slide 6: H1 2024 – strong growth in key metrics
H1 2024 – strong growth in key metrics GROUP Gross Profit Adjusted EBITA Adjusted Net Income (Group share) € 7.9bn € 3.4bn €2.2bn up +8.8% org. up +12.2% org. up +10% Gross Margin Adjusted EBITA Margin Operating Cash Flow 43.4% 18.6% €3.1bn up +100bps org. up +100bps org. up +15% Investor Relations
Slide 7: On track for delivery of our medium-term (2023-2027) ambitions
On track for delivery of our medium-term (2023-2027) ambitions Megatrends driving U.S., India, Middle East Strong progress on structural growth & Africa leading growth subscription transition in On-track On-track agnostic software On-track Data Center and Targeted capacity Continuous innovation to I
Slide 8: Aligning our engagements with megatrends set to drive growth
Aligning our engagements with megatrends set to drive growth Digitization & Artificial Intelligence Strategic partnership on AI designs CEO forums discussing Thought leadership in AI forums digital technologies Climate Change & Energy Transition Thought leadership on climate change and new energy la
Slide 9: Strong traction across ALL end-markets supporting medium-term expectations
Strong traction across ALL end-markets supporting medium-term expectations Data Centers & Networks Buildings Industry Infrastructure 2023 CMD message: Complementary EM and IA offers #1 in electrical distribution #1 in electrical distribution Market Positioning #1 #1 #1 in electrical distribution #1
Slide 10: Our balanced global footprint and unique operating model is a competitive advantage
Our balanced global footprint and unique operating model is a competitive advantage 2023 CMD message: Indicative Market Focus for Growth leadership investment Our largest geographies are set to lead (2023-2027) growth in coming years United States ++ China + India ++ Middle East & Africa ++ France +
Slide 11: Capacity investments to support growth ambitions
Capacity investments to support growth ambitions 2023 CMD message: c.€2bn Capacity investment announced at CMD Key geographies (2024-2027) Investment focus in the U.S., India and Middle East & Africa Our view at H1: c.+170,000 m2 Tennessee, USA Dunavecse, Hungary Electrical switchgear Industrial new
Slide 12: Key Innovation Offers 2024
Key Innovation Offers 2024 Industrial Digital EcoStruxure Altivar Starter EcoStruxure Machine EvoPacT MasterPacT MTZ AirSeT Transformation Services Automation Expert EcoStruxure EcoStruxure EcoCare EcoStruxure DERMS ETAP Design Wiser HEMS EV Link Pro DC GRID Operations Microgrid Flex 6% R&D spend as
Slide 13: Dedicated Artificial Intelligence organization at the core of our strategy
Dedicated Artificial Intelligence organization at the core of our strategy AI teams in all 4 Schneider Hubs ~365 AI employees North America Europe 40%/60% dedicated to internal/external applications ~50 AI-powered features incorporated in customers offers with a strong focus on energy efficiency Chi
Slide 14: Software remains core to our digital journey
Software remains core to our digital journey H1 Highlights Strong further progress on journey to subscription in agnostic software predominantly led by AVEVA AVEVA delivered strong growth in Annualized Recurring Revenue (ARR), up +16% One Data Platform One Experience Strong organic growth for Softwa
Slide 15: Half-year sustainability results on track to meet 2024 target
Half-year sustainability results on track to meet 2024 target 2021-2025 CLIMATE SSI #2 - Help our customers save and avoid 800 million Ensuring improved New resolution approved tonnes of CO2 emissions quality and efficiency in at the 2024 Annual 2 electric vehicle battery General Shareholder's 605M
Slide 16: Reducing the climate impact of the world's biggest sporting event
Reducing the climate impact of the world’s biggest sporting event Official supporter of climate contribution projects for the Paris 2024 Olympic and Paralympic Games in collaboration with EcoAct Paris 2024 Successful at meeting the requirements France in three selected projects, bringing co-benefits
Slide 17: Blackrock's impressive new HQ
for Buildings Large building, minimal footprint U.S. Blackrock’s impressive new HQ a great example of achieving peak energy consumption well below the average for a modern glass office building Fully digitalizing this project by implementing a whole range of Schneider solutions with the focus to cre
Slide 18: Dawiyat Integrated Data Center
for Data Center Building a sustainable and future proof data center with fully fledged Schneider Electric EcoStruxure Architecture Dawiyat Integrated Addressing the increasing demand of Saudi Arabia hyperscalers by being able to provide a modular & scalable prefabricated design, supporting strategy
Slide 19: WANT WANT Holdings Ltd.
for Industry Pilot energy project in the food & beverage industry in China WANT WANT Implementing Schneider’s software Holdings Ltd. as the main software for tracking the energy use of the whole Group China Digital transformation and dual-carbon operations whereby Schneider's automation and electric
Slide 20: External recognition of our in H1 2024
External recognition of our in H1 2024 Investor Relations – Schneider Electric Page 20 General
Slide 21: Well equipped for value creation, while promoting a sustainable future for all
Well equipped for value creation, while promoting a sustainable future for all DRIVEN BY MEGATRENDS: 1 2 3 4 5 Digitization & Climate Energy Evolution New Global Artificial Intelligence Change Transition of Wealth Equilibrium Enabling a SUSTAINABLE AND MANAGEMENT PRIORITIES: future 1 2 3 4 5 Growth
Slide 22: HY 2024 Financial Performance Highlights
HY 2024 Financial Performance Highlights Hilary Maxson | CFO Investor Relations – Schneider Electric Page 22
Slide 23: Financial highlights – Strong performance in H1 2024
Financial highlights – Strong performance in H1 2024 Strong start to our medium-term journey – ‘The Next Frontier’ Revenues Gross Margin Adj. EBITA Margin €18bn, +6% org. 43.4%, +100bps org. 18.6%, +100bps org. Record H1 revenues driven by strong growth in All-time high gross margin driven by strong
Slide 24: Strong growth in H1 2024 up +6% organic
Strong growth in H1 2024 up +6% organic Analysis of Change in Group Revenues (in €m) +9.4% -5.1% -1.2% -1.8% 18,173 17,633 Mainly due to weakening of the Chinese Yuan, Turkish Lira and Argentinian Peso vs. the Euro Group +6.2% organic Mainly representing divestment of the Industrial Sensors business
Slide 25: We continue to progress on our digital journey
We continue to progress on our digital journey, digital flywheel representing 56% of H1 Group revenues SOFTWARE & DIGITAL SERVICES 8% of H1 2024 Group revenues Key achievements of H1 2024: • Innovation driving strong growth in connectable products EDGE 9% 11% FIELD • Organic growth in Software and D
Slide 26: Q2 2024 Group revenues up +7% organic
Q2 2024 Group revenues up +7% organic Analysis of Change in Group Revenues (in €m) +14.4% -1.2% +13.3% -1.0% 9,567 +3.8% Mainly driven by weakening 9,140 -1.2% of Chinese Yuan & several new economies, partly offset by strengthening of the U.S. Dollar, vs. the Euro Group +7.1% org. Mainly representin
Slide 27: Growth in Q2 led by Systems, Software and Services
Growth in Q2 led by Systems, Software and Services PRODUCTS SYSTEMS SOFTWARE & SERVICES 52% of Q2 revenues 30% of Q2 revenues 18% of Q2 revenues +1% +16% +13% Q2 organic growth Q2 organic growth Q2 organic growth • Energy Management seeing good growth in • Energy Management up strong double-digit •
Slide 28: Energy Management +10% Q2 org. growth
Energy Management +10% Q2 org. growth W. Europe N. America Asia Pac. Rest of the World Split of Q2 2024 revenue by geography: 22% 40% 27% 11% North America +15% Western Europe +3% Strong growth against high base of comparison +24% in Q2’23 Strong growth in Italy, up high-single digit with strong Sys
Slide 29: Industrial Automation -4% Q2 org. growth
Industrial Automation -4% Q2 org. growth W. Europe N. America Asia Pac. Rest of the World Split of Q2 2024 revenue by geography: 27% 23% 33% 17% North America 0% Western Europe -15% U.S. flat overall High base of comparison, +16% in Q2’23 Strong growth into Process industries in U.S. particularly in
Slide 30: Adj. EBITA: Margin at 18.6%, +100bps organic
Adj. EBITA: Margin at 18.6%, +100bps organic Energy Management Industrial Automation Reported Organic In €m H1 2023 H1 2024 change change Revenues 17,633 18,173 +3.1% +6.2% 22.2% 15.4% c.+170bps c.-300bps Gross Profit 7,482 7,889 +5.4% +8.8% Org. Org. Gross Margin (%) 42.4% 43.4% +100bps +100bps • S
Slide 31: Gross Margin: +100bps organic progression
Gross Margin: +100bps organic progression Gross Margin: Analysis of Change (%) +0.5 -0.4 +1.1 0.0 -0.4 43.4 +0.2 42.4 Driven by Systems gross margin improvement partially offset by relative growth of Systems vs. Products Net price +€69m Scope impact around flat, ‘Others’ • Pricing on products: +€58m
Slide 32: SFC: delivering further savings while investing for the future
SFC: delivering further savings while investing for the future Analysis of Change of SFC (in €m) 206 -127 6 4,506 144 4,308 -31 Cost savings initiatives mainly headcount related Investments in strategic priorities: R&D investment step-up, commercial footprint expansion and digital transformation pro
Slide 33: Adjusted Net Income of €2.2bn up +10%
Adjusted Net Income of €2.2bn up +10% Reported Organic In €m H1 2023 H1 2024 change change Consisting mainly of M&A and integration costs and some legal provisions. H1 2023 included a disposal gain partly Adjusted EBITA 3,174 3,383 +7% +12.2% offset by M&A and integration costs Other operating incom
Slide 34: Record H1 operating cash flow at €3.1 billion
Record H1 operating cash flow at €3.1 billion – FCF up +8% despite working capital requirements Record operating cash flow for H1 of €3.1bn, up +15% Analysis of debt change in €m H1 2023 H1 2024 due to strong profitability and lower cash tax paid Net debt at opening Dec 31 (11,225) (9,367) Mainly re
Slide 35: Balance sheet remains strong
Balance sheet remains strong Net Debt / Adj. EBITDA1 Main impacts in H1 2024 • Payment of €2.0bn to fulfill FY23 dividend 1.76x • Free cash flow generation of €0.9bn 1.38x 1.27x Credit rating upgrades in Q2 • S&P Global Ratings upgraded Schneider Electric to A/A-1 with a Stable outlook • Moody’s mai
Slide 36: Capital allocation in H1
Capital allocation in H1 Strong Investment Grade 1 Credit Ratings Credit ratings upgraded during Q2 Continued focus on 2 Progressive Dividends Paid 2023 dividend in Q2’24, 14th year of progression Agreement to acquire controlling stake in Planon Funding 3 Organic Growth Increasing Schneider’s owners
Slide 37: Expected Trends & Financial Target
Expected Trends & Financial Target Peter Herweck | CEO Investor Relations – Schneider Electric Page 37
Slide 38: Expected trends in coming months
Expected trends in coming months • 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 businesse
Slide 39: 2024 Target Upgraded
2024 Target Upgraded The Group upgrades its 2024 financial target as follows: 2024 Adjusted EBITA growth of between +9% and +13% organic (previously between +8% and +12% organic) The target would be achieved through a combination of organic revenue growth and margin improvement, currently expected t
Slide 40: Q&A
Q&A Investor Relations – Schneider Electric Page 40
Slide 41: Investor Relations ready to engage
Investor Relations ready to engage 31 July H1 2024 Results Investor Relations contacts 4 September Morgan Stanley Industrial CEOs Unplugged conference (London) Amit Bhalla – amit.bhalla@se.com 10 September Kepler Cheuvreux Autumn Conference (Paris) Graham Phillips – graham.phillips@se.com 30 October
Slide 42: Appendix
Appendix Investor Relations – Schneider Electric Page 42
Slide 43: 2024 additional notes
2024 additional notes Foreign Exchange impact: Based on current rates1, the FX impact on FY 2024 revenues is estimated to be between -€550 million to -€650 million. The FX impact at current rates on adjusted EBITA margin for FY 2024 could be around -40bps Scope impact: Around -€300 million on 2024 r
Slide 44: Adj. EBITA +12% org. due to strong revenue growth and productivity
Adj. EBITA +12% org. due to strong revenue growth and productivity Analysis of Change of Adjusted EBITA (in €m) 85 -78 210 -268 69 -104 427 -132 3,383 3,174 H1 2023 Volume Net price1 Productivity Mix R&D & SFC Forex Scope & H1 2024 Production others Labor infl. 1. Price on products and total raw mat
Slide 45: Q2 2024 Results
2024 Q1 Q2 Q3 Q4 Target Q2 2024 Results Score1 6.78 7.40 6 long-term commitments Baseline2 Q2 2024 2025 Ambition CLIMATE 1. Grow Schneider Impact revenues**3 70% 0% 74% 80% 2. Help our customers save and avoid millions of tonnes of CO2 emissions4 263M 0 605M 800M 3. Reduce CO2 emissions from top 1,0
Slide 46: Adjusted Net Income calculation
Adjusted Net Income calculation In €m H1 2023 H1 2024 Adjusted EBITA 3,174 3,383 Amortization of purchase accounting intangibles (196) (194) Financial Costs (207) (167) Income tax with impact from adjusted items (694) (710) Equity investment & Minority Interests (35) (69) Adjusted Net Income (Group
Slide 47: se.com
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