Presentation of the 2000 first half results. Meeting with financial analysts September 8, 2000

Transcription

1 Presentation of the 2000 first half results Meeting with financial analysts September 8, 2000

2 Summary Introduction Business Financial performance Strategic outlook

3 Schneider Electric: The WorldÕs Power & Control Specialist With two complementary core businesses: Electrical Distribution Industrial Control and Automation Serving four main markets: Building, Industry, Infrastructure and Energy 3

4 Introduction Schneider Electric today Global operations and a comprehensive lineup Leading-edge products Motivated teams A strong growth dynamic High profitability A solid balance sheet Attractive growth prospects 4

5 Introduction First-half 2000 financial results Key figures (in EUR million) 1st half /1999 Sales 4, % Operating income % Net income before amortization of goodwill % EPS (EUR) before amortization of goodwill % Operating margin 13.2% 5

6 Introduction These results show faster sales and earnings growth Sales up 14.3% up 7.5% Operating income up 24.8% up 17.0% H100/H199 H199/H198 H100/H199 H199/H198 Net income before amortization of goodwill up 24.5% up 15.1% EPS before amortization of goodwill up 23.7% up 18.0% H100/H199 H199/H198 H100/H199 H199/H198 6

7 Introduction Further increase in the operating margin: 13.2% at June 30, % 13.2% 13.4 % 11.0% 9.6% 8.2% June 30 '96 June 30, '97 June 30, '98 June 30, '99 June 30, '00 Schneider target for

8 Introduction First-half highlights Return to strong growth Extension of the product lineup and enhanced geographic coverage Innovation, a key success factor New strategic alliances Results ahead of Schneider growth and profitability targets 8

9 Business

10 Business Return to strong growth (Sales growth in relation to the previous six-month period) up up 9.5% 9.1% up up 2.2% 5.0% up up 7.5% 0.3% up up 15.0% 2.3% up up 14.3% 6.9% Reported growth Organic growth H198 H298 H199 H299 H100 10

11 Business Return to strong growth Sales EURÊ4.58 bn up 14.3% Acquisitions 1.2% Volume / Price 6.9% Excl. High Voltage 8.1% Exchange rates 6.2% Average EUR rate: $

12 Business Return to strong growth North America Strong growth Demand for IC and Automation back on a good trend Strong business in Low Voltage, (thanks in particular to the development of Internet-related infrastructure) Rest of the world Return to growth Strong sales in both core businesses in Asia and South America France Increase in Low Voltage and IC and Automation Slower billings in High and Medium Voltage Europe Return to growth Strong demand in Spain and Central Europe Scandinavian markets on a good trend 12

13 Business All geographic areas are participating in the return to strong growth (change in organic growth in relation to the previous six-month period)) 1st half st half 1999 North America up 11.5% up 6.3% Europe up 5.9% up 0.8% France up 2.8% down 0.8% Rest of the world up 4.9% down 8.8% Total up 6.9% up 0.3% 13

14 Business Extension of the product lineup and enhanced geographic coverage Targeted acquisitions to extend the lineup m Low VoltageÊ EFI Electronics (surge suppression, USA) m Voice-data-communication Infra + (LAN wiring systems, France) m Medium Voltage Bardin (fault detectors for distribution networks, France) m AutomationÊ Quantronix (sizing and weighing systems, USA) Sales EURÊ14m EURÊ30m EURÊ10m EURÊ16m 14

15 Business Extension of the product lineup and enhanced geographic coverage Acquisitions in regions with high growth potential Sales m India S&S Power Switchgear Ltd (miniature circuit breakers) EURÊ3m Crompton Greaves (switchgears) EURÊ20m m Australia Nu-Lec (MV switchgears for overhead dist.) EURÊ30m m South Africa CONLOG (prepayment metering systems, 2 million meters installed) EURÊ20m 15

16 Business Extension of the product lineup and enhanced geographic coverage Strategic partnership with MGE UPS m A world leader in large and medium-sized UPS systems m Worldwide market: EURÊ6 billion m Estimated 2000 sales: EURÊ640 million m Strong and profitable growth (estimated 37% increase in sales for 2000 and an operating margin of 11%) m Demand supported by investments in Internet infrastructure 16

17 Business Innovation: a key success factor Faster renewal of the product lineup Schneider Electric leader in Web Automation Corporate transformation driven by the Internet Creation of Schneider Electric Ventures 17

18 Business New product launches Examples: mrenewal of the contactor lineup with Tesys m ATV28: the first speed drive jointly developed with Toshiba m Zelio mini PLCs m VDC products with LexComª HOME and LonWorks ª 18

19 Business Schneider Electric is confirming its leadership in ÒWeb AutomationÓ Development of the Internet: an opportunity for open, networked automation architectures Basic principle: Ethernet, Internet and Web servers at every level of production m Maintenance and data management solutions that can interface with other information systems m Related services Rapid extension of the Web-enabled product lineup (speed drives, miniature PLCs) Major customers: Wartsila, UPS, IBM, etc. 19

20 Business Corporate transformation driven by the Internet and new communication technologies Success factors m An internal Web culture m A solid infrastructure m 27,000 networked users Priorities: m Leverage the Internet to improve the CompanyÕs processes Ð e-procurement: extranets have been set up with 51 suppliers Ð R&D: product development projects involving several sites m Use the Internet to communicate with customers Ð Deployment in France and the rest of Europe of e- commerce systems already in use in the US (e-way TM ) Ð Promotion of other e-commerce tools, including extranets for major accounts and technical support 20

21 Business Major Internet projects Current situation Target for 2002 Technical support e- commerce 5% of the process handled on-line 25% of orders on-line 50% 45% e - procurement < to EUR 100 million of purchases on-line > to EUR 500 million e-training < to 5% of training on-line 45% 21

22 Business A new strategic alliance in speed drives: Schneider Electric Toshiba Inverter Objective m Become the world leader in kw speed drives (up to 600 V) by leveraging: Ð Complementary geographic coverage Ð Complementary sales channels Market m Worldwide market: EURÊ3.3 billion (est. growth of 13% in 2000) m Pro forma 2000 sales: EURÊ400 million, or around 12% of the worldwide market Profile m Schneider Electric: 60%, Toshiba: 40% m Operational in

23 Business New strategic alliance in voice-datacommunication with Thomson multimedia Objective m Develop and market products using power-line carrier (PLC) communication technologies Market m Applications: interactive consumer electronics, building management m Market estimated at EURÊ1 billion in 2003 and expected to experience strong growth Ambitions m Become the world leader in solutions using PLC technologies m Sales of EURÊ million in

24 Business New strategic alliance in voice-datacommunication with Thomson multimedia Equipments TMM lineup (multimedia) =S= lineup (building mgt.) Communication and access products JV =S= + TMM Passive infrastructure, wiring & connection systems =S= lineup (Lexel, Infra +) 24

25 Business Meeting Schneider Electric 2000+Õs commitments Growth: 14.3% Reduction in base costs at June 30, 2000: EURÊ140 million Behavior First-half 2000 performance puts the Company ahead of schedule in meeting these targets 25

26 Financial performance

27 Financial Sales breakdown at June 30, 2000 performance (reported growth in relation to first-half 1999) North America (up 28.6%) 34% 33% Europe (excl. France) (up 7.4%) Rest of the world (up 15.2%) 17% 16% France (up 3.2%) 27

28 Financial performance Simplified income statement (in Euro millions) 1st half st half /99 Sales 4,579 4, % EBITDA % as % of sales 16.0% 14.7% Operating income % as % of sales 13.2% 12.1% Interest expense - net (35) (44) Income from continuing operations before tax % as % of sales (12.4%) (11.0%) 28

29 Financial performance Simplified income statement (cont.) (in Euro millions) 1st half st half /99 Income from continuing operations before tax % Non-recurring items (15) (4) Income taxes (193) (144) Other (minority interests, affiliates) (10) (10) Net income before amortization of goodwill % Amortization of goodwill (66) (58) Net income % 29

30 Financial performance Growth in operating income (in Euro millions) 1st half Growth excl. Impact chg. 1st half 2000 chg. in scope in scope & 1999 & exch. rates exch. rates Sales 4, ,008 Growth up 14.3% up 6.9% up 7.4% Operating income Growth up 24.8% up 16.2% up 8.5% 30

31 Financial performance Earnings per share (Euros) 1st half 00 1st half Avg. number of shares outstanding (millions) EPS before amortization of goodwill up 23.7% EPS after amortization of goodwill up 26.5% 31

32 Financial performance Statement of cash flows (in Euro millions) 1st half 00 1st half 99 Recurring cash flow Payment of early retirement plan, France (40) Net capital expenditure (198) (184) Change in working capital (380)(2) (287) (1) Cash shortfall (118) (53) (1)Provision booked in 1999 and paid out in 1st half 2000 (2)Of which EURÊ100 million in exceptional items (impact securitization repayment, US pension payment, impact of exchange rates) 32

33 Financial performance Sources and uses of funds (in Euro millions) Uses Sources Cash shortfall 118 Change in debt 304 Net financial investments 138 Change in cash 363 Dividends 212 Other (44) Share buybacks

34 Financial performance Simplified balance sheet at June 30, 2000 (in Euro billions) Assets Liabilities Net assets Goodwill Working capital ShareholdersÕ equity Provisions Net financial debt 07/30/00 12/ /30/00 12/

35 Financial performance Key ratios 1st half st half 1999 Return on equity 16.6% 14.7% (Net income before goodwill amortization/ shareholdersõ equity) Debt to equity 42% 38% Interest coverage (EBITDA/net interest expense) 16.6x 13.4x 35

36 Financial performance Performance of the stock Schneider Electric and composite index (euros) Schneider Electric up 52.4% Index up 26.8% Jun Sep Dec Mar May Aug-2000 Source: Morgan Stanley Dean Witter. Composite : ABB, Siemens, Tyco, Emerson, Invensys, Honeywell, Rockwell, Legrand et Johnson Controls 36

37 Strategic outlook

38 Strategic outlook Strategy Focus on customer: m Innovation m Geographical expansion m New businesses m Global and entrepreneurial To achieve a durable sustained growth 38

39 Strategic outlook Pushing back the limits of our markets Switching from an organization by activity (High voltage, Low Voltage, Medium Voltage, Automation business) to an organization of markets m Activities we deal with represent a market of EUR 100 billion m The markets (Building, Industry,Infrastructure and Energy) we are aiming at have an estimated potential of EUR 300 billion 39

40 Strategic outlook E-Transformation of the company New customers Closer to customer / increased satisfaction On-line services Web-enabled products Transformation of processes 40

41 Strategic outlook Ambition for services Why? m More sales m Improving our offer m Opportunities created by outsourcing m Intimate relationship with customer How : m By offering valued services m By using our know-how and installed base m By using opportunities offered by the Internet m If necessary, by acquiring competencies and market share 41

42 Strategic outlook 2000 Outlook Thanks to sustained demand in its two core businesses, recorded in all geographical regions, the Group expect to achieve further sharp organic growth in the second half of the year, at a level comparable to that of the first half. In this favorable environment, further satisfactory implementation of the Schneider Program should result in continued improvement in Group operating margin and profits. 42

43 Appendices Schneider ElectricÕs business Sales by geographic area Market value Change in shareholdersõ equity 43

44 Appendices Electrical distribution Supplying electricity with complete safety, from high voltage to consumer final low voltage 44

45 Appendices Industrial Control and Automation Controlling, monitoring, protecting and supervising machines and networks in industrial processes, infrastructures and buildings 45

46 Appendices France (First half 2000) Sales: EURÊ753 Mio Growth at constant scope of consolidation and exchange rates: 2.8% 46

47 Appendices Europe (excl. France) (First half 2000) Growth at constant scope of consolidation and exchange rates: 5.9% Total: EURÊ1,525 million % of global sales Iberian peninsula 288 6% Italy Benelux/Switz/Aust UK % 5% 5% Germany 136 3% Nordic Countries ECE/CIS % 3% 33% 47

48 Appendices North America (First half 2000) Growth at constant scope of consolidation and exchange rates: 11.5% Substantial currency effect in 1H (average exchange rate during the period EUR 1= $ vs EUR 1 = $ 1,0890$ in 1H199). Total: EURÊ1,544 million % of global sales USA Canada Mexico % 3% 3% 34% 48

49 Appendices Rest of the world (First half 2000) Growth at constant scope of consolidation & exch. rates: 4.9% Excluding High Voltage : % Northern Asia Middle East South America Africa Southeast Asia Pacific Total: EURÊ 758 million % of global sales 5% 3% 3% 2% 2% 2% 17% 49

50 Appendices Change in number of shares outstanding (in thousands) 1st half st half 1999 Avg. no. of shares outstanding (FAS128) Avg. no. of fully diluted shares outstanding No. of shares outstanding at (1) June 30, (1) Net of 6.7 million shares held in treasury at June 30,

51 Appendices Change in shareholdersõ equity (in Euro billions) At Dec. 31, Dividends (0.28) Share buybacks (0.15) Translation adjustment 0.08 Income 0.28 Other 0.02 At June 30,