Schneider Electric Se · EURONEXT:SU
Schneider Electric — FY2013 Earnings Presentation
45 slides from Schneider Electric's earnings presentation, Feb 20, 2014
Slide 1: Full-Year 2013 Results
Full-Year 2013 Results February 20, 2014
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
04 Strategy and business update 14 Finance presentation 23 Connect update 28 Outlook 31 Appendices Schneider Electric - Investor Relations – 2013 Full-Year results – 20 February 2014 3
Slide 4: Strategy and business update
Strategy and business update
Slide 5: We delivered higher margins in 2013 on an organic basis and record free cash flow
We delivered higher margins in 2013 on an organic basis and record free cash flow Solid results with growth in all key financial metrics Revenue +0.4% organically New economies +4.6% Services +9% Adj. EBITA margin up 0.3 pt at constant currencies and scope 14.5% on reported basis Net income: €1.9bn
Slide 6: We focus on the continuous execution of our operational and strategic priorities
We focus on the continuous execution of our operational and strategic priorities Focused execution in 2013 though impacted by weak currencies Successful initiatives for growth in the New economies Acceleration of growth in our Services business Tailored Supply Chain delivers improved customer satisf
Slide 7: We had solid growth outside Western Europe and saw early cycle improvements in Q4
We had solid growth outside Western Europe and saw early cycle improvements in Q4 FY 2013 organic growth, % Q4 2013 organic growth, % +3.0% +5.2% +2.6 pts +1.7% +0.4% +0.6% Group Outside Group Industry Partner Western Europe Partner experienced organic growth outside Western Europe of mid-single dig
Slide 8: New economies and Services delivered solid growth thanks to our targeted initiatives
New economies and Services delivered solid growth thanks to our targeted initiatives Initiatives in new economies Organic Growth Example: Growing footprint in China +4.6% ~2x city coverage from 2011 to 2013 • New factory for Partner Business Wuhan +7 pts • National Customer Care Center • New factory
Slide 9: We achieved strong industrial productivity despite low growth
We achieved strong industrial productivity despite low growth Tailored supply chain Industrial productivity, in €m Purchasing productivity 358 289 Continue footprint rebalancing Enhance SIOP1 process Logistic flow simplification 2012 2013 1 Sales Inventory Operation Planning Schneider Electric - Inv
Slide 10: With Invensys, we enhance our portfolio and position ourselves for further growth
With Invensys, we enhance our portfolio and position ourselves for further growth Smooth deal closing and Strategic fit and synergic deal successful start of integration Reinforce industrial automation Closing time in line with capabilities expectation Boost our positions in Divested Appliance busin
Slide 11: We continued our drive for innovation with focus on software and connectivity
We continued our drive for innovation with focus on software and connectivity Examples of 2013 launches Drive connected Increase segment Accelerate software as devices expertise a service Wiser, wireless home automation StruxureWare Energy Operation, real-time energy monitoring software 5 suites lau
Slide 12: We achieved solid progress of our performance on sustainability…
We achieved solid progress of our performance on sustainability… Performance of our Planet & Society barometer 10 8 ~7.51/10 Q4 2014 8 target 6.42 6.25 6.09 6.38 6 4.94 3.87 3.94 5.50 4 3.85 2 0 Actual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Target 2012 2013 2014 A performing Planet & Society Barometer
Slide 13: … and we create long-term value through our initiatives
… and we create long-term value through our initiatives Indicators 2012 2013 A recognized commitment Planet Selected indicators ● 75% of our product revenue DJSI World and with Green Premium products 65.5% 68.7% Europe ● 10% energy consumption Sector Leader 2013 savings 6.1% 8% One of only 26 global
Slide 14: Finance presentation
Finance presentation >
Slide 15: Reported revenue of €23.6bn, despite significant negative impact from currency translation
Reported revenue of €23.6bn, despite significant negative impact from currency translation Analysis of change in Group revenue Scope Currencies Organic +1.7% -3.7% 23,946 +0.4% 23,551 -1.6% 2012 2013 Unfavourable currency movements penalized revenue by €879 million Schneider Electric - Investor Rela
Slide 16: All profit indicators show an organic improvement thanks to a solid H2
All profit indicators show an organic improvement thanks to a solid H2 In m€ 2012 2013 Organic Reported change change Revenue 23,946 23,551 +0.4% -2% Gross margin 9,057 8,891 +2% -2% % of revenue 37.8% 37.8% +0.5pt = Research & Dev. (507) (535) +6% Selling, General (5,035) (4,944) -2% & Administrati
Slide 17: Organic margin is up thanks to strong industrial productivity and SG&A control
Organic margin is up thanks to strong industrial productivity and SG&A control Analysis of change (in €m) in adjusted EBITA +358 -50 -233 3,515 +10 -169 -24 -56 +37 3,412 +24 COGS Volume inflation2 Support Other function Currency Net Mix Price Produ- costs effects acquisition ctivity1 impact Negativ
Slide 18: Adjusted EBITA margin is up for Partner and Industry, while IT keeps its high level
Adjusted EBITA margin is up for Partner and Industry, while IT keeps its high level Revenue Adjusted EBITA by business1 €23,551m Buildings 1,801 21.2% Partner +0.5 pt 1,813 20.7% 7% Partner 560 9.8% IT Infrastructure -0.9 pt 15% 575 10.7% 36% 833 19.3% Industry +0.9 pt 823 18.4% 650 18.9% 18% IT -0.
Slide 19: EPS up 3% to €3.43 despite increasing tax rate
EPS up 3% to €3.43 despite increasing tax rate In €m 2012 2013 Change Adjusted EBITA 3,515 3,412 -3% Other income and expenses (10) 73 2013 includes one-time gains from pensions Restructuring (164) (176) Amortization & impairment of (475) (218) 2012 included a one-time purchase accounting intangible
Slide 20: Record free cash flow of €2.2bn driven by lower working capital and capex control
Record free cash flow of €2.2bn driven by lower working capital and capex control Analysis of debt change in €m 2012 2013 Net debt at Jan 1 5,266 4,395 Operating cash flow 2,802 2,673 Capital expenditure – net (719) (714) Change in trade working capital 78 276 Change in non-trade working capital (79
Slide 21: Cash conversion is well above target
Cash conversion is well above target Cash conversion ROCE (Free cash flow / net income) in % 116% 104%1 12.6% 12.1%2 84% Higher tax rate accounts for -0.35 pt drop vs. 2012 2011 2012 2013 2012 2013 1 Based on the adjusted net income of €1,996m 2 Based on 25.0% effective tax rate (before impairment o
Slide 22: Stability of proposed dividend at €1.87
Stability of proposed dividend at €1.87 Dividend history 6.6% 4.0% 2.5% 3.3% 3.0% 4.2% 2.8% Dividend yield1 (%) 3.0% 2.5% DPS 1.125 1.50 1.65 1.725 1.025 1.60 1.70 1.87 1.872 (€) 2005 2006 2007 2008 2009 2010 2011 2012 2013 1 Based on share price as of date of dividend payment, or Feb. 17 for 2013 d
Slide 23: Connect update
Slide 24: We executed well in the past 2 years on most of our Connect initiatives
We executed well in the past 2 years on most of our Connect initiatives Initial program target 2012-2013 achievement Outgrew rest of group Service +5 pts by average 7 points growth rate p.a. vs rest of Group (on organic basis) Solutions +2 pts Adjusted EBITA margin EBITA vs 2011 improved by 1 point
Slide 25: We improved our solution performance through higher margin and accelerated service growth
We improved our solution performance through higher margin and accelerated service growth Services organic growth Service growth levers Services organic growth Recruitment of 625 service experts in Vs. rest of Group 2013 +10pts +9.6% 9.1% Acceleration of customer connection points: 16+ million activ
Slide 26: We delivered strong supply chain performance and stabilized SFC in unfavorable conditions
We delivered strong supply chain performance and stabilized SFC in unfavorable conditions Gross Industrial productivity Inventory / Revenue1 (in m€) 1 Based on average monthly inventories Productivity of the year Cumulated productivity -1.5pt 358 289 2012 2013 2011 2012 2013 Support Function Costs /
Slide 27: We update our targets to maintain the focus on our strategic initiatives by end of 2014
We update our targets to maintain the focus on our strategic initiatives by end of 2014 New program target (by end of 2014, excluding Invensys) Service Outgrow the rest of Group by +5 pts growth rate per annum Solutions +2 pts EBITA vs 2011 COGS €1.0bn to €1.1bn Productivity Continued focus on optim
Slide 28: Outlook
Outlook
Slide 29: 2014 outlook
2014 outlook Recent trends indicate that North America should continue to grow though the first quarter would be impacted by severe weather. Western Europe is showing initial signs of stabilization with potential for improvement in the second half. End-market trends in China continue to be solid. Un
Slide 30: Help people make the most of their energy
Help people make the most of their energy
Slide 31: Appendices
Appendices
Slide 32: 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 compensa
Slide 33: ROCE
ROCE After-tax adjusted EBITA / Average Capital Employed ROCE calculation 2012 2013 P&L items restated reported EBITA (1) 3,341 3,309 Restructuring costs (2) -164 -176 Other operating income & expenses (3) -10 73 = Adjusted EBITA (4) = (1)-(2)-(3) 3,515 3,412 x Effective tax rate of the perio (5) 22
Slide 34: FY 2013 adjusted EBITA margin change on constant FX and scope basis
FY 2013 adjusted EBITA margin change on constant FX and scope basis €m Revenue Adj. EBITA % of Revenue FY 2012 reported 23,946 3,515 14.7% FY 2013 organic 24,032 3,608 15.0% Chg vs. 2012 +0.4% +3% +0.3pt FX (879) (233) Scope 398 37 FY 2013 reported 23,551 3,412 14.5% Schneider Electric - Investor Re
Slide 35: The Planet & Society Barometer
The Planet & Society Barometer Our sustainability scorecard 2012-2014 in details The Planet & Society Barometer Start Results Results Target (objectives for 2014) 01/2012 FY 2012 FY 2013 12/2014 Overall score (out of 10) 3.00 6.42 7.51 8/10 Planet Carbon 10% CO2 savings on transportation - 14.80% 16
Slide 36: Q4 revenue
Q4 revenue
Slide 37: Q4 organic growth up +0.6% driven by Partner and Industry
Q4 organic growth up +0.6% driven by Partner and Industry Analysis of change in Group sales Organic +0.6% Scope Fx +1.8% -5.8% Partner Infrastructure Industry IT Buildings +1.7% -2.9% +5.2% -2.0% +2.5% 6,439 6,220 Q4 2012 Q4 2013 Schneider Electric - Investor Relations – 2013 Full-Year results – 20
Slide 38: Partner Business
Partner Business Up due to continued improvements in US and China Analysis of change: Partner The Product business was up, supported by continued investment in the residential market in the US, overall good performance in China and launch of mid-market offers in new Scope Fx Organic economies. Weste
Slide 39: Infrastructure Business
Infrastructure Business Penalized by weak utility investment Analysis of change: Infrastructure Product declined due to low investment by utilities in China and continued weakness in Western Europe. Scope Fx +8.4% -5.5% Organic 1,686 Solution business was down slightly facing a 1,686 -2.9% 0.0% high
Slide 40: Industry Business
Industry Business Solid growth from continued OEM market improvement Analysis of change: Industry Product business a good performance of low voltage drives and pick-up in OEM demand across regions. Organic Scope Fx Solutions were slightly positive with +5.2% -1.8% -6.1% 1,081 continued mixed trends.
Slide 41: IT Business
IT Business Impacted by weak demand and distributor destocking Product business grew slightly as the good Analysis of change: IT performance in Asia-Pacific notably in Japan, India and Indonesia was weighed down by distributor destocking in Russia and slight decline in Western Europe while North Org
Slide 42: Buildings Business
Buildings Business turned positive thanks to good growth in services Analysis of change: Buildings Products declined while building management products were stable Organic Scope +2.5% -3.0% Fx 445 Solution grew on strong services, while -5.1% 419 building management systems remained -5.6% difficult
Slide 43: Solid Q4 performance driven by Asia Pacific, Western Europe showed signs of stabilization
Solid Q4 performance driven by Asia Pacific, Western Europe showed signs of stabilization Analysis of change in Group sales Organic +0.6% Asia North Rest of Scope Fx West. America World +1.8% -5.8% Q4 revenue Europe Pacific +2% -3% 6,439 -4% +7% West. 29% 6,220 Europe -3.4% Asia 28% Pacific North 23
Slide 44: Contacts & agenda
Contacts & agenda Anthony Song– Head of Investor Relations Tel: +33-1-41-29-83-29 anthony.song@schneider-electric.com Grégoire Rougnon – Senior Investor Relations Manager Tel: +33-1-41-29-81-25 gregoire.rougnon@schneider-electric.com Conference call 24 April Q1 2014 Sales (in the morning) Shareholde
Slide 45: Help people make the most of their energy
Help people make the most of their energy