Half-year 2011 Results. July 29, 2011

Transcription

1 Half-year 2011 Results July 29, 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 26 Outlook 29 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 1 25m 80m Telvent 1 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 Asia-Pacific and Rest of the World continued to lead the growth Analysis of change in Group sales (in m) 8,571 West. Europe +4% Asia Pacific +17% Organic +10.2% North America +11% Rest of World +12% Change in scope +11.4% Fx (1.0%) 10, % % of H1 sales West. Europe 33% Asia Pacific 26% North America Rest of World 23% 18% H H

19 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 19

20 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 Inflation cost 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:

21 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 21

22 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 % 1 EBIT before amortization and impairment of purchase accounting intangibles 22

23 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 23

24 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

25 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 25

26 Outlook

27 2011 H2 priorities 1 Continue to drive organic growth strategic opportunities in energy efficiency, smart grid and new economies 2 Ramp-up price actions 3 Operational efficiency industrial productivity, SFC/sales ratio 4 Reduce inventories and drive cash conversion 5 Integration of acquisitions and deliver synergies 27

28 2011 outlook Topline Most of the Group s end-markets expected to continue to develop positively Residential and non-residential buildings markets in mature markets expected to remain weak Robust momentum in the new economies expected to continue Higher basis of comparison in H2 Profitability H2 profitability higher than H1 due to seasonality and better raw material pass-through Negative solution/product mix on gross margin Accelerate price actions and target price increases of ~1% of sales to partly offset raw material headwind of ~ 400m Industrial productivity in excess of 400m Reduce support function costs to sales ratio Taking into account the strong H1 topline performance, Schneider Electric confirms its organic growth target of 6% to 9% The Group now targets solid EBITA progression and an EBITA margin of around 15%, before acquisition and integration costs and consolidation impact of 2011 acquisitions, in particular Telvent 28

29 Appendices

30 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 30

31 Segment information: Q1 and Q2 sales First-quarter 2011 sales by business were as follows: million Sales Q % change Q1 constant Changes in scope of consolidation Currency effect % change Q1 current Power 1, % -0.2% +3.7% +14.1% Energy % +71.8% +2.6% +75.8% Industry 1, % +3.7% +3.8% +29.4% IT % +2.8% +3.9% +17.8% Buildings % +6.2% +3.8% +18.5% Total 4, % +11.1% +3.6% +26.5% Due to a change of responsibility, first-quarter 2010 organic growth of the Power and Building businesses have been modified compared to the data set provided in the 20 April release. Second-quarter 2011 sales by business were as follows: million Sales Q % change Q2 constant Changes in scope of consolidation Currency effect % change Q2 current Power 2, % -0.2% -4.2% +2.3% Energy 1, % +79.2% -4.3% +83.9% Industry 1, % -0.6% -4.4% +9.2% IT % +6.6% -6.8% +8.3% Buildings % +7.0% -6.1% +6.5% Total 5, % +11.6% -4.7% +15.7% 31

32 Segment information: H1 sales First-half 2011 sales by business were as follows: million Sales H % change H1 constant Changes in scope of consolidation Currency effect % change H1 current Power 3, % -0.2% -0.6% +7.7% Energy 2, % +75.8% -1.0% +80.2% Industry 2, % +1.3% -0.8% +18.3% IT 1, % +4.9% -2.1% +12.6% Buildings % +6.7% -1.6% +12.1% Total 10, % +11.4% -1.0% +20.6% 32

33 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) 33

34 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 of EBITA) 34

35 Q2 sales details

36 Solid topline momentum continued, Industry still leading Analysis of change in Group sales (in m) 4,661 Power +6.7% Energy +9.0% Organic +8.8% Industry +14.2% IT +8.5% Buildings +5.6% Change in scope +11.6% Fx (4.7%) 5, % Q Q

37 Power Business Solid growth led by progression of products sales Analysis of change: Power (in m) 1,980 Organic +6.7% Change in scope (0.2%) Fx (4.2%) 2, % By activity Robust growth continued in products supported by strong industrial demand, infrastructure investment and wider geographical coverage in new economies, more than offsetting the weak construction markets Solutions business was softer due to tougher comps, particularly for renewable energy Q % of Q2 sales Q By region Asia-Pacific and Rest of the World (despite challenging market conditions in Africa) delivered strong growth North America continued its recovery while Western Europe was still affected by Spain and solution business NB: Power includes from 2011 onwards the activities of Low Voltage (electrical distribution), LifeSpace (electrical interface for individuals) and Renewables (conversion and connection to the grid) following the transfer of Medium Voltage to the Energy business 37

38 Energy Business Strong quarter, driven by solutions and new economies Analysis of change: Energy (in m) Areva Distribution sales of 484m, reported under scope impact Change in scope Fx (4.3%) 1, % By activity 610 Organic +9.0% Areva Distribution 484m Slight decline in products, improvement in primary distribution offset by weak transformer activity Solutions were strong, due to improving demand from utilities, growing investment in oil and gas and infrastructure, particularly in the new economies, and a robust services activity By region Asia-Pacific and Rest of World grew doubledigit Q % of Q2 sales Q Western Europe and North America were stable NB: Energy created in 2011 combines all Medium Voltage activities including those from Areva Distribution 38

39 Industry Business Demand continued to develop positively across the board Analysis of change: Industry (in m) 1,028 Organic +14.2% Change in scope (0.6%) Fx (4.4%) 1, % By activity Products showed good growth across all categories. Momentum particularly strong in drives and motion control. Additional market opportunities generated by new products Trend in solutions continued to be very high, sustained by demand for OEM solutions, energy efficiency solutions for mining, oil and gas, and cement sectors but also the need for industrial services. CST also delivered good growth By region The growth was balanced across all regions. Q % of Q2 sales Q

40 IT Business Solid organic growth, driven mainly by solutions 692 Analysis of change: IT (in m) Organic +8.5% Change in scope +6.6% Fx (6.8%) % By activity Small systems grew, benefiting from the good demand in Asia-Pacific, in particular Japan, which offset the weaker trends in mature markets The solutions business grew double-digit, reflecting the sustained demand for complete data center projects and services By region Rest of the World and Asia-Pacific reported the highest growth followed by North America Western Europe was negative in the quarter Q % of Q2 sales Q

41 Buildings Business Recovery continued, but at lower pace than Q1 Analysis of change: Buildings (in m) 351 Organic +5.6% Change in scope +7.0% Fx (6.1%) % By activity Moderate products growth in the quarter Solutions continued to lead the growth; supported by strong advanced and installed base services in addition to security systems and energy efficiency projects in new economies By region New economies developed very positively Underlying demand in mature markets continued to be soft Q % of Q2 sales Q

42 Asia-Pacific and Rest of the World continued to lead with double-digit growth Analysis of change in Group sales (in m) 4,661 West. Europe +2% Asia Pacific +15% Organic +8.8% North America +8% Rest of World +14% Change in scope +11.6% Fx (4.7%) 5, % % of Q2 sales West. Europe Asia Pacific 32% 27% North America Rest of World 23% 18% Q Q

43 Contacts & agenda Carina Ho Head of Investor Relations Tel: Grégoire Rougnon Investor Relations Manager Tel: October Q Sales Conference call 43

44 Help people make the most of their energy