Investors presentation. November 2011

Transcription

1 Investors presentation November 2011

2 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.

3 04 Overview 07 Strategy and business update 16 Finance presentation 25 Outlook 28 Appendices 3

4 Overview

5 Schneider Electric the global specialist in energy management Balanced geographies H1 2011sales billion sales (last twelve months) of sales in new economies (last twelve months) North America 23% Rest of World 18% Western Europe 33% Asia Pacific 26% people in 100+ countries of sales devoted to R&D Diversified end markets FY 2010 sales 1 Utilities & Infrastructure 20% Industrial & machines 24% Data centres 17% Non-residential buildings 30% Residential 9% 1 On a comparable basis with 12- months of Areva D 5

6 A responsible commitment supporting Schneider Electric s sustainable growth Sustainable and responsible business Ethics and responsibility Engage all our people Environmental protection Access to energy Green Premium products Measure our commitment Planet & Society Barometer (June 2011). BipBop programme People & communities development Health & Safety and engagement Schneider Electric Foundation Gain recognition In 2 ethical stock indexes: - Dow Jones Sustainability Stoxx (Europe) Index - Aspi Eurozone 6

7 Strategy and business update

8 Strong sales and EBITA increase in H1 despite inflation and investment for growth +10.2% +14% H1 organic growth, driven mainly by Industry and new economies. Strong reported growth, +21% EBITA* up 14% - growth and efficiency offset strong inflation headwinds and investments to tap future growth Portfolio Strategic acquisitions to strengthen the business portfolio in particular solutions (on track to add > 1bn of sales), India & Latin America Investments & customer Organic investments in geographical coverage & skills Customer 1 st approach temporarily penalized working capital * Before acquisition and integration costs Well positioned to grow in energy efficiency, smart grid and new economies 8

9 Strong investments in solutions in H1 to deliver superior growth Solutions - Share in Group sales Sales organic growth 30% 35% +20% +10% +0% Group Solutions +14% +4pts vs Group Services: 10% (10%) 2008 H (20%) H1 H2 H1 H2 H Investment in Software technology Architecture by market segment Commercial & execution competencies Services ramp-up 9

10 Approaching 40% of sales in new economies Sales in new economies Sales in new economies (Last 12 months to June 2011) 1.1* 2008 billion sales LTM June Eastern Europe Latin America Middle East Africa 38% of sales in new economies Asia * Excluding Elektroshield TM Samara consolidated with the equity method (2010 sales: 0.4bn) Investment in Geographical coverage Commercial presence Local R&D and offer development Solutions & services ramp-up 10

11 New economies continued to be a powerful growth engine of the Group Organic growth in new economies +12% +17% +16% +15% H1: +17% New economies +1% H1: +7% Mature countries -14% -14% -9% 34% 37% 38% % of Group sales Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

12 Local for local innovation to boost growth in new economies Power LV switchboards and trip unit energy meters Energy MV Switchgear for China Easy to assemble and install low voltage switchboards and enclosures for diffused residential and building markets Competitive trip unit developed completely in China with advanced features like remote energy measurement and control Prisma IPM Micrologic E Adapted design to new Chinese standards Targeting an improvement of our market share to utilities and expansion in the private market FBX range Industry Motion Control for Asia IT Small systems for India New high performance servo drives to conform to Asian standards with lower installation time Adapted design to local specificities: atmosphere, lack of grounding, frequent black outs BR600CI-IN Wide range of application in textile, plastic, printing, packaging machinery Motion Lexium 23 Full range of products launched recently Symmetra 12

13 Business portfolio strengthened, in line with stated strategic priorities 2011 deals (closed and in-process) Estimated sales Digilink Steck Group 25m 80m Telvent Leader & Harvest 1 Lee Tech. Luminous + APW Summit Energy 750m 103m 104m 188m 46m New economies Solutions and services (smart grid, energy efficiency) Business leadership Power Energy Industry IT Buildings 1 Deals in process but not closed Maintain strict M&A discipline Boosting growth and shareholder returns Targeting quick EPS accretion ROCE above WACC beyond year 3 Maintaining a solid rating: A- or BBB+ if necessary 13

14 We accelerated organic and external growth to capture our growth opportunities Energy efficiency is mainstream Smart grid is emerging New economies are driving world growth 2010 Solutions +9% EcoStruxure One signature brand Areva Distribution, EV infrastructure, Renewable energies New economies +15% Areva Distribution +Electroshield Samara 2011 Solutions +14% in H1 Offer on Telvent +17% in H1 14

15 while maintaining efficiency on productivity and support function costs Productivity in m Support function costs in % of sales H1 10 H % Purchasing Lean Manufacturing Rebalancing % Incl. Areva D. 25.6% 24.5% Absorption of fixed manufacturing costs Industrial productivity H H H H Support function cost/sales ratio incl. Areva D Efficiency initiatives: on track for FY 2011 targets 15

16 Finance presentation

17 Solid growth across businesses, coupled with acquisitions, drove total H1 growth to +21% Analysis of change in Group sales (in m) Organic +10.2% Change in Scope +11.4% Fx (1.0%) 10, % 8,571 Power +8.5% Energy +5.4% Industry +17.8% IT +9.8% Buildings +7.0% % of H1 sales Power Energy 38% 20% Industry IT Buildings 21% 14% 7% H H

18 H1 EBITA before acquisition and integration costs increased 14% to a record 1.4bn In m REPORTED FIGURES H H Change COMPARABLE FIGURES H H Change Sales 8,571 10, % 9,389 10, % Organic growth 10.2% Gross profit 3,499 3, % 3,678 3,965 +8% Margin % 40.8% 38.4% -2.4pts 39.2% 38.4% -0.8pt EBITA 2 before acquisition and integration costs 1,243 1, % 1,252 1, % Margin % 14.5% 13.7% -0.8pt 13.3% 13.7% 0.4pt +0.4 pt 1 Including Areva D impact on comparable basis since Jan 1, EBIT before amortization and impairment of purchase accounting intangibles 18

19 EBITA increased on strong volume & productivity, offsetting significant inflation headwinds Analysis of change (in m) , Volume -51 Mix +46 Price Productivity COGS inflation 2 Support function SFC cost Inflation investments +4 Other +9-7 Change in scope Currency effects 1,413 H comparable 1 Mix positive on geographies, negative on solutions SFC organic increase of ~+7% vs. sales at +10% H On a comparable basis including Areva D since 1 Jan Of which Raw materials: -214, Production labour & other Costs:

20 Most businesses showed EBITA progression, in particular Industry Sales 10,336m EBITA by business 1 Power % 20.9% -0.1 pt Power 38% Energy 20% Buildings 7% IT 14% Industry 21% Energy Industry IT Buildings % % % % 17.3% 19.6% 14.4% 13.3% 0.0 pt pts -1.1 pt -1.3 pt 1 Before acquisition and integration costs Before Corporate costs of 252m in H ( 239m in H1 2010) 2 On a comparable basis including Areva D since 1 Jan 2010 H H m and as % of sales 20

21 Net income up 9%, earnings per share of 3.0 * In m H H Change EBITA 1 before acquisitions and integration costs 1,243 1, % Acquisition and integration charges (18) (41) Including 16m for Areva Distribution ( 15m in H1 2010) Amortization & impairment of purchase accounting intangibles (90) (98) EBIT Net financial expense 1,135 (132) 1,274 (184) +12% Decreased cost of debt more than offset by 56m of negative swing on FX gains/losses Income tax (241) (262) Equity investments Minority interests 2 (29) 13 (39) Maintained attractive underlying tax rate of 24% Net income (group share) % Earnings per share* % * Before adjustment for the 2-for-1 share split 1 EBIT before amortization and impairment of purchase accounting intangibles 21

22 Free cash generation temporarily limited by high working capital consumption Analysis of debt change in m H H LTM Net debt at opening (2,812) (2,736) (4,013) Operating cash flow Capital expenditure net 1,167 (218) 1,146 (329) 2,447 (639) Change in trade working capital (424) (772) (781) Change in non-trade working capital Free cash flow Dividends Acquisitions net Capital increase Other (Increase) / Decrease in net debt Net debt at June 30 (68) 457 (199) 1 (1,271) 48 (236) (1,201) (4,013) (204) (159) (852) (642) 30 (111) (1,738) (4,474) 91 1,118 (852) (1,120) (461) (4,474) 1 ~62% of dividend payout in 2010 was in shares, at shareholders option 22

23 Working capital increase on seasonal effect and inventory build-up to secure revenues 4.1 Dec 2010 Trade working capital (in bn) (0.1) 0.35 FX & scope Normative impact from sales rebound + raw material inflation 0.4 Additional inventories (incl. raw materials safety stock) and receivables 4.75 June 2011 Excess inventories in H1 in the range of 300m, due to: Raw material safety stocks to minimize potential supply chain disruption caused by Japan natural disaster Extra inventory to ensure customer deliveries and secure revenues Inventory to return to normal level target reduction of about 300m in H2 Receivables 1 55 days (+3 d) Inventories 2 99 days (+8 d) Payables 3 65 days (=) 1 Days of sales 2 Days of COGS (cost of goods sold) 3 Days of purchases NB Changes are in days vs. June

24 Balance sheet continued to be very solid Cash conversion (Free cash flow / net income) Net debt / EBITDA 191% 1.2x 1.2x 101% 0.8x 63% LTM LTM June 2011 June 2011 EBITDA of 1,667m in H1 24

25 Outlook

26 Q and 9-month sales performance m Q Organic 9M 2011 Organic Power 2, % 6, % Energy 1, % 3, % Industry 1, % 3, % IT % 2, % Buildings % 1, % Group 5, % 16, % m Q Organic 9M 2011 Organic W. Europe 1,755 +0% 5,222 +3% Asia-Pacific 1, % 4, % North America 1,352 +9% 3, % Rest of World 1, % 2, % Group 5, % 16, % 26

27 2011 outlook Price increases should end up in line with the +1% guidance. While the Group also expects strong productivity, the combined effect of more negative mix on gross margin due to higher solutions growth over products and less favorable geographical mix, and stronger than expected inflationary pressures in new economies, is anticipated to reduce its near term profitability by 0.5 to 0.7 point compared to the Group s previous guidance Given the reduced visibility on the near-term economic outlook and in order to drive higher cost efficiency going forward the Group will book additional restructuring charges impacting the margin by a further 0.2 to 0.4 point Taking into account the year-to-date topline performance, Schneider Electric now expects its 2011 organic growth to fall comfortably within its target range of 6% to 9% The Group now targets an EBITA margin of about 14%, before acquisition and integration costs and consolidation impact of 2011 acquisitions 2011 is expected to be another year of growth of the EBITA before acquisition costs and restructuring 27

28 Appendices

29 Definitions EBITDA: EBITA: Cash conversion: Free cash flow: EBIT before net depreciation and amortization EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill Free cash flow / net income Operating cash flow change in working capital net capital expenditures 29

30 Segment information: H1 EBITA Results breakdown by division million Sales EBITA before acquisition and integration charges Margin in % of sales Acquisition and integration charges H Power 3, % 0 Energy 2, % (15) Industry 2, % (5) IT 1, % (3) Buildings % (3) Holding - (252) - (15) Total 10,336 1, % (41) H (comparable 1 ) Power 3, % 0 Energy 1, % 0 Industry 1, % (3) IT 1, % 0 Buildings % 0 Holding - (239) - (15) Total 9,389 1, % (18) 1 Comparable: including Areva Distribution in H in the Energy business ( 818 million of sales and 9 million of EBITA) 30

31 Segment information: 2010 EBITA Results breakdown by division million Sales EBITA before acquisition and integration charges Margin in % of sales Acquisition and integration charges FY 2010 Comparable 2 Power 7,755 1, % 0 Energy 4, % 0 Industry 3, % (3) IT 2, % 0 Buildings 1, % (3) Holding - (437) - (25) Total 20,228 2, % (31) FY 2010 Reported Power 7,755 1, % 0 Energy 3, % 0 Industry 3, % (3) IT 2, % 0 Buildings 1, % (3) Holding - (437) - (25) Total 19,580 2, % (31) 2 Comparable: including Areva Distribution over 12 months in the Energy business ( 1878 million of sales and 94 million o EBITA) 31

32 Contacts & agenda Carina Ho Head of Investor Relations Tel: Grégoire Rougnon Investor Relations Manager Tel: February FY 2011 results 32

33 Help people make the most of their energy