Schneider Electric Se · EURONEXT:SU
Schneider Electric — H1 2017 Earnings Presentation
48 slides from Schneider Electric's earnings presentation, Jul 27, 2017
Slide 1: First Half 2017 Results: Accelerating Growth & Profitability
First Half 2017 Results: Accelerating Growth & Profitability July 27, 2017
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 de
Slide 3: Agenda
4 H1 2017 strategy highlights 24 H1 2017 finance presentation 31 Full year 2017 targets 34 Appendix XX Confidential Property of Schneider Electric | Page 3
Slide 4: Strong H1 performance confirming 24 months of continued profit growth
Strong H1 performance confirming 24 months of continued profit growth – Revenue growth +4%, Adj. EBITA +8%, Net income +18%, FCF +15% Revenues Growth Sustained Profit momentum Strong Earnings & Cash • Reported H1 growth: +3.7% • H1 adj. EBITA margin: 14.1% • Net Income growth: +18% • H1 organic grow
Slide 5: Acceleration in performance in H1 - Strategic roadmap delivering
Acceleration in performance in H1 - Strategic roadmap over the past 24 months delivering Push organic growth Accelerated cross-selling - ~1/3 of overall offers cross-sold leveraging integrated on differentiated sales force business models More Products - Growing + 4% organic More Services & So
Slide 6: Accelerating cross-selling
Accelerating cross-selling Businesses of Schneider Electric IT Building Infrastructure Industry Reporting organized Secure Low Medium Industrial by Key technologies Power Voltage Voltage Automation Primary End Data Center & Residential & Non- Infrastructure Industry & Machines Markets Networks Resid
Slide 7: Maximizing the Group's synergies and value proposition to customers in end markets
Maximizing the Group’s synergies and value proposition to customers in our end markets Energy Management Automation Significant Pull-through of Key technologies Secure Power Low Voltage Medium Voltage Industrial Automation technologies by end-market (Business) (IT) (Building) (Infrastructure) (Indus
Slide 8: Significant wins in H1 leveraging complete portfolio
Significant wins in H1 leveraging complete portfolio Naya Raipur – Smart City World Class Reference Shanghai Metro First Real Integrated Smart City Data Center in Africa Maintenance Co., Ltd With a leading telecom services Major transportation operator End to end Smart Grid solution & Water company
Slide 9: Our strategic priorities: More products through channels
Our strategic priorities More products through channels Mid-single digit organic growth in Wiring Devices & Mobility for Customer Engagement Final Distribution Anytime, Anywhere Impactful Launches across businesses • New web experience, Powerpact B with traffic +16% Galaxy VM EasyPact Exe boasti
Slide 10: Our strategic priorities: More services & software
Our strategic priorities More services & software More Services More Software Performance highlights Performance highlights • Good progress on tracking installed base – • Good growth in orders in Q2 exceeded 35%; • Strong performance of HMI/SCADA • Launched EcoStruxure Asset Advisor • O&G stabilizin
Slide 11: Our Digital Journey progressing
Our Digital Journey progressing Brand new EcoStruxure Community developing: 1.4 million of Assets Cloud Platform scaling up: 10,000+ SIs and under Management, data flow in cloud x2 Developers working with growing 15% vs Q4 2016 us on our platforms More to come… Digital Day on October 26th Confidenti
Slide 12: Innovation enriching EcoStruxure
Innovation enriching EcoStruxure End-market BUILDING DATA CENTER INDUSTRY INFRASTRUCTURE EcoStruxure EcoStruxure Profit Advisor EcoStruxure EcoStruxure Asset Advisor ADMS Analytics, IT Advisor Enables plant personnel to identify Services Apps & Remotely monitors the mission trueperformance-improving
Slide 13: Proven value for customers: EcoStruxure delivered in H1
Proven value for customers: EcoStruxure delivered in H1 Building Industry MGM (USA) Water Treatment Plant (Italy) Enable energy efficiency including 10%+ Increase in operational 50% green energy by 2030n efficiency thanks to a complete through EcoStruxure Power EcoStruxure Plant and EcoStruxure gath
Slide 14: Focused on higher growth businesses & segments
Focused on higher growth businesses & segments Strong positioning in fast Our strong value-proposition to customers growth segments & businesses enabled us to win the following in H1: Wiring devices and final Sustainability Services for AkzoNobel distribution Assessment of Power quality issues and D
Slide 15: Business Performance Highlights
Business Performance Highlights Confidential Property of Schneider Electric | Page 15
Slide 16: Sales and margin performance drive strong growth in adj. EBITA, +8%
Sales and margin performance drive strong growth in adj. EBITA, +8% H1 2017 ORGANIC GROWTH, % H1 2017 Adj.EBITA, % Group: +2.7% org. Group: +60bps org. Outside Infrastructure: +4.1% org. Group EBITA adj: +8% reported, +7% org. 20.5 20.8 c.+1% excl. selectivity 5.7 15.9 16.7 15.7 14.5 4.0 of c. €100m
Slide 17: Building (Low Voltage) – Strong growth in top line and margin
Building (Low Voltage) – Strong growth in top line and margin €5.3bn Performance highlights 43% of Group H1 2017 revenues • All 4 regions grew Low Voltage • Final Distribution & Wiring Devices continued strong +6% org. growth, in line with past trends • EcoStruxure Power / Building points growing do
Slide 18: IT (Secure Power) – Strong growth in Datacenters and New Economies
IT (Secure Power) – Strong growth in Datacenters and New Economies Performance highlights €1.8bn • • New economies. up +7% Product business growing low single-digit despite destocking in Japan 15% of Group H1 2017 revenues thanks to residential power, edge computing and medium offers • Datacenter (D
Slide 19: Data Center – A growth segment
Data Center (DC) – A growth segment. Our value proposition and complete portfolio through IT channels results in strong opportunities for LV & MV DC: an attractive end-market A high share of cross-selling A strong performance in for all offers of the group using IT channels and sales cross selling i
Slide 20: Industry (Industry Automation) - Strong performance growing top line and margin
Industry (Industry Automation) - Strong performance growing top line and margin €2.9bn Performance highlights 24% of Group H1 2017 revenues • Strong growth across all 4 regions, with good growth in China Industrial Automation • Strong products & OEM performance driven by channel initiatives • EcoStr
Slide 21: Infrastructure (Medium Voltage) reaches double-digit margin over last 12 months
Infrastructure (Medium Voltage) reaches double-digit margin over last 12 months (LTM) – improvement continues Performance highlights €2.2bn • • Adj. EBITA Margin improved to 10.4% LTM: selectivity & execution Product sales through LV partners growing high single-digit 18% of Group H1 2017 revenues •
Slide 22: Infrastructure Rebound: plan on track, moving to next phase
Infrastructure Rebound: plan on track, moving to next phase Infrastructure Continue to grow synergies Next phase – Launching project Rebound on track with LV to implement new autonomous, specialized organization 10.4% ~ €2.5 bn revenues ~ €2 bn revenues Mid-teens adj. EBITA margin Mid-single digit a
Slide 23: Planet & Society barometer reaches 8.91/10
This quarter, our Planet & Society barometer reaches 8.91/10 Indicators & objectives 2017 - selection Q2 2017 Q1 2017 Highlights of Q2 2017: • 100% of Schneider Electric's products in R&D are eco-designed ● 10% CO2 savings from transportation 17.2% 11.2% according to the demanding ● 100% of products
Slide 24: H1 2017 finance presentation
H1 2017 finance presentation Schneider Electric – Investor Relations Page 24
Slide 25: Organic growth across all regions
Organic growth across all regions ANALYSIS OF CHANGE IN GROUP REVENUES (in €m) Mainly DTN & Telvent Fx 12,173 Group: +2.7% org New eco + 6% transport. +1.4% +3.7% disposals Rest of World North America +2% Asia-Pacific +2% +6% Scope -0.4% Western Europe Mainly due to the USD +1% and some new 11,742 e
Slide 26: Gross margin improved by 30bps organic
Gross margin improved by 30bps organic GROSS MARGIN: 1.7 ANALYSIS OF CHANGE (%) -0.1 38.7 38.5 0.0 -0.4 -0.1 -0.1 • Slight mix impact mainly driven by IT offers mix -0.8 • 90% of raw material impact on products covered outside of China, with improvement expected in H2 • R&D increase • In China, volu
Slide 27: We continue to simplify our operations
We continue to simplify our operations Industrial productivity (€m) KEY ACTIONS OVER H1 2017 206 Industrial productivity (c. €206m) 171 • Ranked #17 Top Global Supply Chain • Purchasing & lean manufacturing results boosted by volume • 3-year performance set to beat the c.€1bn target H1 2016 restated
Slide 28: Accelerating profit growth: Adj. EBITA up +7% organic
Accelerating profit growth: Adj. EBITA up +7% organic In €m H1 2016 H1 2017 Reported Organic restated change change Revenues 11,742 12,173 +3.7% +2.7% Gross profit improved organically Gross Profit 4,517 4,715 +4.4% +3.4% through strong productivity & pricing Gross margin (%) 38.5% 38.7% +20bps +30b
Slide 29: Accelerating profit growth: Net income up +18%
Accelerating profit growth: Net income up +18% In €m H1 2016 restated H1 2017 % change Adjusted EBITA 1,587 1,718 +8% Mainly due to gain on DTN Other income and expenses (8) 71 Restructuring (131) (156) Restructuring costs expected to Amortization & depr. of purchase be in line with last year accoun
Slide 30: Free Cash Flow up +15%
Free Cash Flow up +15% Analysis of debt change in €m H1 2016 H1 2017 restated Net debt at opening Dec 31 (4,631) (4,824) Operating cash flow 1,320 1,367 Capital expenditure – net (400) (351) Change in trade working capital Inventory increase linked to volume (275) (238) growth, balanced by better ac
Slide 31: Full Year 2017 Targets
Full Year 2017 Targets
Slide 32: 2017 Targets upgraded
2017 Targets upgraded Following its strong performance in H1, the Group will continue to execute its strategic priorities. The Group expects the positive environment seen in H1 in its major end-markets to continue. Therefore, the Group upgrades its 2017 objectives: • The Group targets for 2017, orga
Slide 33: Investor Relations ready to engage
Investor Relations ready to engage Upcoming events: Conferences Schneider Electric events 08 Sep Industrial CEOs unplugged, London, Morgan Stanley Proposing quarterly interaction with investors 14 Sep Conference London Industrials, Crédit Suisse showcasing specific businesses, geographies or fun
Slide 34: Appendixes
Appendixes
Slide 35: 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 compensation cost
Slide 36: The Planet & Society barometer 2015-2017 - Results as of Q2 2017
The Planet & Society barometer 2015-2017 - Results as of Q2 2017 Start Results Results Target Planet & Society barometer 01/2015 Q1 2017 Q2 2017 12/2017 Our megatrends 2015-2020 and our targets 2015-2017 Overall score (out of 10) 3.00 8.79 8.91 9/10 1 10% energy savings - 7.2% 8.7% 10% CLIMATE 2 10%
Slide 37: Investing in Digital Customer Experience and impactful launches
Investing in Digital Customer Experience and impactful launches Refreshed Web Experience Globally Impactful Launches • ~38 Million Visitors in H1 2017 • Launched with 8 “hero” offers Mobility for Customer Engagement • Leader in Analysts Quadrants for Software, Grid, BMS, Data Center Anytime, Anywher
Slide 38: Innovation Summit World Tour 2017
Supported by active customer engagement in our Innovation Summit World Tour 2017 with 12,400+ customers (to-date) KOREA INDONESIA UAE RUSSIA CHINA AUSTRALIA GERMANY March 14-16 April 5-6 April 11-12 April 17-19 Beijing April 18 April 17-19 April 17-19 Tianjin April 18 Chengdu, May 16 Xi’An, June 13
Slide 39: Adj. EBITA up +7% organic thanks to strong productivity, volume, pricing
Adj. EBITA up +7% organic thanks to strong productivity, volume, positive pricing and cost control Analysis of change of adjusted EBITA (in €m) -44 -42 1,718 206 -21 0 19 -9 97 -75 1,587 H1 2016 Volume Mix Net price1 Productivity COGS SFC Other Scope Forex H1 2017 restated (Inflation & R&D) 1: Of wh
Slide 40: Q2 Performance
Q2 Performance Schneider Electric – Investor Relations Page 40
Slide 41: Q2 revenues up +2.2% organically, c.+4.7% underlying
Q2 revenues up +2.2% organically, c.+4.7% underlying Analysis of change in Group revenues (€m) Organic Growth: +2.2% c.+4.7% underlying growth1 Industry Fx 6,333 Building +6.0% +0.8% +2.9% +4.2% Infrastructure IT Scope 6,153 -4.9% -0.1% -0.1% Q2 2016 Q2 2017 Restated from Solar 1: Estimated underlyi
Slide 42: Building - solid growth across all four regions
Building - solid growth across all four regions Analysis of change in Q2 Revenues (€m) The Group’s strategic initiatives delivered good results: Final Distribution & Wiring Devices was up c. +5% thanks to initiatives leveraging its partner network, and EcoStruxure Building showed encouraging resul
Slide 43: IT - about flat in Q2 organically
IT - about flat in Q2 org. though good trends in data centers, particularly in 3-phase and in low and medium voltage Analysis of change in Q2 Revenues (€m) The U.S. saw growth in 3-phase UPS, but the performance was impacted by lower sales in IT channels, although orders grew slightly, and racks.
Slide 44: Industry - growth in all four regions
Industry - growth in all four regions Analysis of change in Q2 Revenues (€m) The Group saw continued success in its expansion into growing segments and benefitted from good growth in products sold through distributors as well as good momentum in its EcoStruxure offers. Process Automation returned
Slide 45: Infrastructure - flat excluding selectivity initiatives
Infrastructure - flat excluding selectivity initiatives Analysis of change in Group revenues (€m) Selectivity initiatives impacted revenues by c. -€60m in Q2. Selectivity initiatives will be completed by Q4 2017, to reposition the business for continued margin improvement. ~flat organic growth bef
Slide 46: Organic growth of +2.2% with new economies up +5%
Organic growth of +2.2% with new economies up +5% Analysis of change in Group revenues (€m) Organic: +2.2 % New economies: +5% Q2 revenues Rest of Fx 6,333 North Asia- World +0.8% +2.9% Western Pacific America 27% +2% Europe +1% +6% Scope Asia -0.1% Pacific 28% 6,153 Western North America 28% Europe
Slide 47: Contact
Contact Amit Bhalla– Head of Investor Relations Tel: +44-20-7592-8216 amit.bhalla@schneider-electric.com Alexis Denaud – Senior Investor Relations Manager Tel: +33-1-41-29-51-24 alexis.denaud@schneider-electric.com Confidential Property of Schneider Electric | Page 47
Slide 48: Life Is On | Schneider Electric
Lifels On | Schneider f Electric