Slide 1: Half-year 2013 Results
Half-year 2013 Results July 31, 2013
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
4 Overview 6 Strategy and business update 15 Finance presentation 24 Outlook 28 Appendices Schneider Electric - Investor Relations – 2013 Half-year results – 31 July 2013 3
Slide 4: Overview
Overview
Slide 5: Schneider Electric – the global specialist in energy management
Schneider Electric – the global specialist in energy management Balanced geographies – H1 2013 revenue breakdown Western billion € revenues North Europe (last twelve months) America 29% 25% Asia Pacific Rest of 27% of revenues in new economies World 19% (last twelve months) Diversified end markets –
Slide 6: A three levers' sustainability strategy
A three levers’ sustainability strategy for a consistent commitment Green business Responsible practices BoP1 Innovation Energy Access to energy - Green products efficiency and sites BipBop Smart cities, smart Responsible Business grids, sustainability employer services Communities Innovation Renewa
Slide 7: Strategy and business update
Strategy and business update
Slide 8: Solid growth in the second quarter supports half-year performance
Solid growth in the second quarter supports half-year performance Solid growth in Q2 2013 • Across all businesses +2.6% organic growth in Q2 • Good performance in North America and China New economies & services drive growth €11,430 m revenue in H1 bringing H1 back into positive territory +0.1% orga
Slide 9: All the businesses posted positive growth in Q2
All the businesses posted positive growth in Q2 Q2 organic growth by business • Partner renewed its growth, supported by demand from residential markets in the US, construction in China and fast +2.6% growing offers in new economies +5.9% Group • Infrastructure led the growth, driven by investments
Slide 10: Q2 growth was strong outside Western Europe; Asia Pacific became largest region
Q2 growth was strong outside Western Europe and Asia Pacific became the largest region Q2 organic growth by geography • North America grew double-digit on solid performance across businesses +6.5% • Asia Pacific became the largest +10% region this quarter. It sustained its momentum thanks to continu
Slide 11: New economies and services outperformed the rest of the Group
New economies and services outperformed the rest of the Group in the first half New economies Services H1 organic growth H1 organic growth +8 pts +6 pts Mature countries New economies Rest of Group Services New economies represent Services grew in line with the Group’s 42% of H1 2013 revenues ambiti
Slide 12: Electroshield – TM Samara, a step change in presence in Russia
Electroshield – TM Samara, a step change in Schneider Electric’s presence in Russia Schneider Electric Electroshield – TM Samara offers in Russia Key position in • Products excellence Russian medium • R&D, technical design 2012 €1.2bn voltage competencies 12,000 employees Mining, minerals Oil & gas
Slide 13: Gross margin improves on strong industrial productivity and pricing actions
Gross margin1 improves on strong industrial productivity and pricing actions Impact on H1 2013 Gross margin1 adjusted EBITA (€m) Solid execution of 37.9% Tailored Supply Productivity 168 Chain 37.7% Effective pricing actions Pricing 48 Agile purchasing Raw material 17 H1 2012 H1 2013 +0.2% organic +
Slide 14: Tailored supply chain structurally reduces inventory to revenues ratio
Tailored supply chain structurally reduces inventory to revenues ratio Key initiatives Inventory to revenues ratio1 - 0.5 pt Improve forecasting and planning 14.8% thanks to strengthened collaboration between commercial 14.3% team and supply chain Define healthy inventory level according to service
Slide 15: Continuous investment in software and architecture increase solution capabilities
Continuous investment in software and architecture increase our solution capabilities Highlights of 2013 launches Telemetry for Water Plantstruxure PES Comprehensive integrated offer for Enhanced Process Automation system water treatment, storage & distribution Customer benefits Customer benefits Re
Slide 16: Finance presentation
Finance presentation >
Slide 17: H1 2013 posted positive growth in revenue
H1 2013 posted positive growth in revenue Analysis of change in Group revenues (in €m) Scope Fx +1.5% -1.4% Organic 11,430 11,408 +0.1% +0.2% H1 2012 H1 2013 Schneider Electric - Investor Relations – 2013 Half-year results – 31 July 2013 17
Slide 18: Good results, with adjusted EBITA margin at 13.4%
The Group continued to deliver good results, with adjusted EBITA margin at 13.4% In m€ H1 2012 H1 2013 Change Sales 11,408 11,430 +0.2% Organic growth +0.1% Gross profit 4,304 4,305 0% Margin % 37.7% 37.7% 0pt 37.9% without Electroshield – TM Samara Adjusted EBITA 1,556 1,532 - 2% consolidation Marg
Slide 19: Adjusted EBITA slightly down due to FX losses and increased R&D
Adjusted EBITA slightly down due to foreign exchange losses and increased R&D investment Analysis of change of adjusted EBITA (in €m) -25 -39 -24 +14 -38 1,556 -14 +168 1,532 -114 +48 Depreciation of SFC mainly some emerging impacted by market currencies, increased R&D Negative mix British Pound and
Slide 20: Margin expanded in Partner and Industry
Margin expanded in Partner and Industry H1 Revenue Adjusted EBITA by business1 €11,430m Buildings 21.0% Partner 20.0% +1.0 pt 7% IT Partner 7.2% 15% Infrastructure 8.4% -1.2 pt 36% 19.5% Industry 18.6% +0.9 pt 19% 17.1% Industry IT 17.5% -0.4 pt 23% 4.4% Buildings 6.5% -2.1 pt Infrastructure H1 2012
Slide 21: Net income penalized by FX losses and higher tax rate
Net income was penalized by foreign exchange losses and higher tax rate In m€ H1 20121 H1 2013 Change Adjusted EBITA 1,556 1,532 -2% Other income and expenses & (51) (50) Restructuring Amortization & impairment of (118) (109) purchase accounting intangibles EBIT 1,387 1,373 -1% Decreased cost of deb
Slide 22: Solid free cash flow generation at €339 million
Solid free cash flow generation at €339 million Analysis of debt change in €m H1 2012 H1 2013 LTM Net debt at opening (5,266) (4,395) (6,155) Operating cash flow 1,199 1,069 2,672 Capital expenditure – net (349) (286) (656) Change in trade working capital (149) (322) (95) Change in non-trade working
Slide 23: Continued high cash conversion and solid balance sheet
Continued high cash conversion and solid balance sheet Cash conversion Net debt / Adjusted EBITDA (Free cash flow / net income) 114% 1.4x 103% 1.3x 1.1x 84% 2011 2012 LTM June 2011 2012 LTM June 2013 2013 Adjusted EBITDA of €1,865m in H1 2013 (€1,873m in H1 2012) Schneider Electric - Investor Relati
Slide 24: Outlook
Outlook
Slide 25: H2 2013 priorities
H2 2013 priorities Drive profitable growth Deliver operational efficiency Integrate acquisitions to capture synergies Schneider Electric - Investor Relations – 2013 Half-year results – 31 July 2013 25
Slide 26: 2013 outlook
2013 outlook The first half showed confirmation of growth in North America and China, continued good momentum in new economies and overall weakness in Western Europe. While the worldwide economy is still uncertain, the company expects first signs of sequential stabilization towards the end of the ye
Slide 27: Appendices
Appendices
Slide 28: 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 29: ROCE
ROCE After-tax adjusted EBITA / Average Capital Employed ROCE calculation LTM Jun 2013 P&L items EBITA (1) 3 318 Restructuring costs (2) -183 Other operating income & expenses (3) 10 = Adjusted EBITA (4) = (1)-(2)-(3) 3 491 * Effective tax rate of the period (5) 23.9% = After-tax Adjusted EBITA (A)
Slide 30: Extra-financial results Q2 2013
Extra-financial results Q2 2013
Slide 31: Q2 2013 Sustainability results at a glance
Q2 2013 Sustainability results at a glance Results above the objectives 10 Barometer performance through 2005-2008 and 2009-2011: 8 8 6.42 6.25 6.09/10 6 4.94 3.87 3.94 5.50 4 3.85 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014 Actual Reference A performing Planet & Society Barometer ● Barom
Slide 32: 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 Q1 2013 Q2 2013 12/2014 Overall score (out of 10) 3.00 6.25 6.09 8/10 Planet Carbon1 10% CO2 savings on transportation - 14.80% 2
Slide 33: Q2 2013 Sustainability results at a glance
Q2 2013 Sustainability results at a glance Start Q2 2012 2013 Planet Selected indicators A recognised commitment ● 10% CO2 savings on transportation - 29% World & Europe ● 10% energy consumption savings - 7.4% CPLI Index Profit MSCI ESG World Selected indicators MSCI ESG Europe ● 1 million household
Slide 34: Q2 revenues details
O2 revenues details >
Slide 35: Q2 organic growth at +2.6%
Q2 organic growth at +2.6% Analysis of change in Group sales Organic Scope Fx +2.5% -1.4% +2.6% 6,219 +3.7% IT Buildings Industry +3.6% Infrastructure +3.5% +1.3% +5.9% Power 5,997 +0.7% Q2 2012 Q2 2013 Schneider Electric - Investor Relations – 2013 Half-year results – 31 July 2013 35
Slide 36: Partner Business
Partner Business renewed with growth, supported by products Analysis of change: Partner The Product business was slightly up, supported by fast-growing offers in new economies, improvements in the residential Organic Scope market in the US and construction in China. +0.7% -0.4% Fx This growth compen
Slide 37: Infrastructure Business
Infrastructure Business posted the strongest growth among all businesses Analysis of change: Infrastructure Both products and solutions observed growth Product business was driven by good performance in North America and utility in the Scope Fx 1,519 Middle East, offsetting a soft utility market in
Slide 38: Industry Business
Industry Business was solid, both products and solutions performed well Analysis of change: Industry Product business reported moderate growth, helped by demand for contactors, drives and control & signalling products in North America and China. Organic Scope Fx +3.5% -0.8% 1,152 -1.8% +0.9% Solutio
Slide 39: IT Business
IT Business benefited from sustained demand for power reliability Analysis of change: IT Product business continued to grow, supported by the demand in North America, success of Luminous in India and power reliability products in South East Asia. Organic Scope Fx +1.3% +0.3% -2.3% 900 893 Solution b
Slide 40: Buildings Business
Buildings Business turned positive thanks to good growth in services Analysis of change: Buildings Products renewed with growth this quarter, due to good performance of video products. Organic Scope +3.6% -1.6% Fx Solution business was up, driven by the -1.0% 410 success of services in the US and We
Slide 41: Solid Q2 performance with Asia Pacific becoming the largest region
Solid Q2 performance with Asia Pacific becoming the largest region of the Group Analysis of change in Group sales Organic +2.6% Rest of Scope Fx North +2.5% -1.4% 6,219 Q2 revenues West. America World Asia +3.7% Europe Pacific +10% +4% West. 27% 5,997 -6% +5% Europe Asia 28% Pacific North 25% Americ
Slide 42: 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 25 October Q3 2013 Revenues Conference call 19 November Investor
Slide 43: Help people make the most of their energy
Help people make the most of their energy