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Pers


    Persbericht

    18/02/2010

    2009 jaarcijfer

    • Business resilience proven in tough conditions 
    • EBITA margin at 12.9% before restructuring and one-off gain¹ 
    • Record Free Cash Flow of €2.0 bn 
    • Productivity and structural adaptation drove cost down by €646m 
    • Target a return to growth and improving profitability in 2010


    Rueil-Malmaison (France), February 18, 2010 – Schneider Electric reported today its fourth quarter sales and full year results for the period ending December 31, 2009. 

    Key figures (€ million)

    Full Year 2009

     

     

    Sales

     

    15,793

    Organic growth vs. 2008

    -15.7%

     

     

    EBITA before restructuring costs

     and one-off gain¹,²

    2,044

    % of sales

    12.9%

    vs. 2008

    -3.1 pts

     

     

    Free cash flow

    1,971

    % of sales

    12.5%

    vs. 2008

    +13.6%

    ¹ Before one-off gain of €92 million related to pensions.  Including this one-off gain, EBITA margin before restructuring cost stands at 13.5%. 
    ² EBITA: EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill.
     After reclassification of the interest component of defined benefit plan costs – see appendix


    Jean-Pascal Tricoire, President and CEO, comments: “In 2009, against an unprecedented sales decline, we delivered record cash generation and defended our margin. Our business model has clearly demonstrated its resilience, with excellent free cash flow, strong execution on cost reduction and key positioning in new economies and other long term growth drivers.  While our cost base has been adjusted down structurally, we continue to invest massively in innovation and research and development to generate sustainable growth. 

    We will continue our strategic transformation with the One company program.  We’ll accelerate our move in energy management, drive excellence in both products and solutions offerings, and all this is to be supported by our new organization with 5 businesses.
     
    I’m also excited about the acquisition project of the Areva distribution business which will create a strong market player in medium voltage and further strengthen our smart grid offering.
     
    In 2010, we should benefit from improving market conditions in the new economies, in the data center and the industrial segments.  However, we expect the market environment in mature countries to remain uncertain.  In this context, we target a return to topline growth at low single-digit on organic basis and an improvement of profitability with an EBITA margin of around 14% before restructuring costs and impact of integration of Areva Distribution
    .”   


    I.  Q4 SALES CONFIRMED THE GOOD MOMENTUM IN NEW ECONOMIES AND REBOUND OF CRITICAL POWER 

    Fourth quarter 2009 sales reached €4,088 million, down 10.0% like-for-like compared with same period last year, a sequential improvement from previous quarters.  Sales were down 13.3% on a current structure and exchange rate basis.

    New economies were back to growth in the fourth quarter, up 1.1% compared with prior year quarter, confirming the rebound of economic activities in these markets.  Organic growth of Critical Power business was also up 1.1% in the fourth quarter, marking the strongest sequential improvement among all businesses.


    Growth by region for the fourth quarter

    The breakdown of sales by geographical region was as follows:

     

    € million

     

    Sales

    Full year
    2009

    % change
    Full year
    (organic)

    Sales
    Q4
    2009

    % change
    Q4
    (organic)

    Europe

    6,423

     -18.5%

    1,683

     -13.6%

    North America

    4,356

     -19.9%

    1,064

     -12.4%

    Asia-Pacific

    3,278

     -9.7%

    867

     -3.0%

    Rest of the World

    1,736

     -2.4%

    474

     -1.3%

    Total

    15,793

     -15.7%

    4,088

     -10.0%

    In Europe, fourth quarter organic sales were down 13.6%.  Sales decline slowed across Western Europe compared to the third quarter.  Significant rebound of the Critical Power activities and sustained demand in energy efficiency related projects and services were a support of revenues.  The construction markets remained however weak, while industrial demand started to show some improvement on third quarter.
     
    As for Eastern Europe, while Russia posted clear sequential improvement, the business environment was still challenging in the rest of the region. 
     
    In North America, organic sales in the fourth quarter fell 12.4% versus same period last year. The improving demand in datacenters and continuous success in securing projects related to energy efficiency in the healthcare, education, and infrastructure markets, such as water and waste-water, supported the topline.  On the other hand, the non-residential buildings continued to suffer from the lack of new capex, in particular in the commercial and office building segments.  Industrial demand was still weak but showed sequential improvement.

    Asia Pacific was down 3.0% compared with prior year quarter.  China posted another quarter of double-digit growth, despite unfavorable working days effect, driven by strong order intakes from the energy and infrastructure segments, such as high speed railway, subway, water-treatment and renewable power, as well as improving industrial demand.  The trend in Asia as a whole improved with India already back to growth and data centers activities rebounding.        

    Sales in the Rest of the World were down 1.3% only compared with prior year quarter, supported by continuous wins in projects and services for infrastructure and oil and gas facilities in the Middle East and Africa, the rebound of data centers activities and a more resilient South America.


    Growth by business for the fourth quarter

    Electrical Distribution was down 13.0% versus same quarter last year. While low voltage and installation systems and controls continued to recover, market conditions of medium voltage remain challenging.  Sales of Automation & Control dropped 9.2% versus prior year period, but it was an improvement from third quarter as a result of the better underlying industrial demand and more favorable basis of comparison.  Critical Power & Cooling business was back to growth at +1.1% compared with prior year quarter, driven by rebound in demand for smaller systems across geographies and resilient service business.

     

    € million

     

    Sales

    Full year
    2009

    % change
    Full year
    (organic)

    Sales
    Q4
    2009

    % change
    Q4
    (organic)

    Electrical Distribution

    9,175

     -13.4%

    2,340

     -13.0%

    Automation & Control

    4,252

     -21.3%

    1,104

     -9.2%

    Critical Power & Cooling

    2,366

     -13.6%

    644

    +1.1%

    Total

    15,793

     -15.7%

    4,088

     -10.0%


    Consolidation and foreign exchange impacts

    Acquisitions contributed +0.8% or €39 million, which includes €13 million from acquisitions, €33 million linked to the proportional integration of the Delixi joint-venture and a negative €7 million impact from divestments. 

    The impact of foreign exchange fluctuations was a negative €217 million, which was primarily the result of the depreciation of the US dollar and the Chinese yuan against the euro compared to fourth quarter 2008. 


    II. FULL YEAR 2009 KEY RESULTS
     

    € million

    FY
    2008

    FY
    2009

    %
    Change

    EBITA before restructuring cost and

    one-off gain

     

    2,937

     

    2,044

     

    -30.4%

    % of sales 

    16.0%

    12.9% 

    -3.1pts 

     

     

     

     

    One-off pension gain

     

    92

     

    Restructuring costs

    (164)

    (313)

     

     

     

     

     

    EBITA

    2,773

    1,823

    -34.3%

     

     

     

     

    Adjusted net income¹

    1,806

    1,060 

    -41.3% 

    Net income (Group share)

    1,682

    852

    -49.3%

    Earnings per share (€)

    7.02

    3.43

     

     

     

     

     

    Free cash flow

    1,735

    1,971

    +13.6%

     

     

     

     


    ¹ Group share in net income adjusted for exceptional restructuring charges (above €100 million), exceptional pension gains/losses and charges for impairment of goodwill and purchase accounting intangibles, at the period’s underlying tax rate

     
    •  EBITA MARGIN AT 12.9% BEFORE RESTRUCTURING COSTS AND ONE-OFF GAIN OF € 92 MILLION

    Full year EBITA before restructuring costs and one-off gain reached €2,044 million, supported by the following key drivers:

    - Productivity and structural adaptation drove cost down by €646 million.  Support function costs were down by €541 million, thanks to simplification effort across geographies and businesses.  However, R&D spending was kept stable to support long term growth.  Strong ramp-up of industrial productivity in second half 2009 resulted in €105 million of full-year savings related to purchasing, rebalancing and lean manufacturing, despite the negative impact of fixed costs under-absorption linked to the volume decline

    - Positive pricing impact added €152 million of profit, partly offsetting the negative impact of currency fluctuations (-€88 million at group level),

    - Favorable raw material impact provided a benefit of €144 million, while labor inflation was limited at €50 million.

    The benefits of these actions substantially offset the following volume and mix related impact on margin:

    - Volume effect was a negative €1,305 million, as a result of the sharply lower volume in a tough business environment.

    - Mix impact was at  -€244 million, reflecting the relative weakness of some more profitable product lines and geographies.

    Lastly, acquisitions net of divestments had a negative €3 million impact.

    A one-off gain of €92 million related to US pension curtailment was included in the EBITA before restructuring costs of €2,136 million, but was restated in the operating figures mentioned for better comparability.

    By region, Rest of the World and Asia-Pacific showed the best resilience with their EBITA margin before restructuring cost down 0.2 point only to 16.4% and 0.3 point to 16.0%, respectively.  Europe posted a margin of 15.1%, down 4.0 points versus prior year but showed sequential improvement in the second half 2009.  North America remained impacted by the downturn, with margin down 4.0 points to 12.9%.

    By division, Critical Power posted 1.0 point margin improvement over prior year, with margin at all time high of 15.8%.  Electrical Distribution profitability was 17.0%.  Automation & Control, still severely hit by the steep fall in industrial markets, posted a margin of 9.6% but improved in the second half of the year.

    •  EARNINGS PER SHARE AT 3.43 EUROS, IMPACTED BY EXCEPTIONAL ITEMS

    Adjusted net income was €1,060 million, down 41% compared to 2008.

    After non-recurring items, Group share in net income was €852 million.  Net earnings per share reached €3.43.

    The net income includes impairment of goodwill and intangibles for €120 million (€70 million in 2008), primarily related to the customized sensors (CST) business unit.

    Financial expenses amounted to €384 million, including the interest component of defined benefit plan costs (for €56 million).

    Income tax amounted to €293 million corresponding to an effective tax rate of 24.3% (24.5% in 2008). 

    • RECORD HIGH FREE CASH FLOW AT € 1,971 MILLION, UP 13.6%

    Free cash flow was at record high, exceeding prior year by 13.6% to €1,971 million, or 12.5% of sales (9.5% in 2008), reflecting the remarkable cash control under tough business conditions.

    Operating cash flow was €1,734 million.  Excellent working capital management resulted in a significant reduction of working capital requirements, freeing up €813 million of cash.  Net investment was €576 million, down €117 million compared to prior year.  While investment in research and development was kept stable, capital expenditure had been reduced by €133 million or 27%.


    III. BALANCE SHEET STRENGTHENED BY STRONG CASH GENERATION

    Strong cash generation reduced Schneider Electric’s net debt by 38% to €2,812 million (€4,553 million in 2008).  The net debt-to-equity ratio was 23.7% at December 31, 2009, a 17.5 point improvement compared to previous year.

    Therefore, despite lower profits, the Group’s net debt to EBITDA ratio further declined to 1.2x compared to 1.4x in 2008.

    Schneider Electric has total liquidity of €6.3 billion, including cash & cash equivalents of €3.5 billion as of year end 2009, in addition to available committed credit lines of €2.8 billion.  Therefore, the Group has ample liquidity to finance the €1.1 billion acquisition of the Areva distribution business and retire debt in 2010.


    IV. PROPOSED DIVIDEND OF 2.05 EUROS

    At the Annual Meeting on April 22, 2010, shareholders will be asked to approve a dividend of €2.05 per share, to be detached as from May 4 and paid as from June 1, 2010 in cash or in shares at shareholder’s option.  The dividend represents a payout of approximately 50% based on 2009 adjusted net income.  This proposal is based on the quality of results achieved in 2009 and notably the strong cash generation.


    V. NEW ORGANISATION TO RAISE VALUE CREATION POTENTIAL

    To accelerate its move in solutions and services, Schneider Electric decides to adapt its organization to align with end-user segmentation as announced under the One Company Program.  From 2010 onwards, Schneider Electric will be organized by 5 businesses: Power, IT, Industry, Buildings and CST.  With this change, the Group can better leverage its integrated portfolio of offers enabled by a common architecture (EcoStruxureTM) to address the specific needs of each of its key end-markets.

    From 2010, Schneider Electric will report sales and results under the new organization.  The key 2009 figures by business are as follows:

    € million

    Sales

    Full year
    2009

    EBITA before restructuring costs and one-off gain

    EBITA margin before restructuring costs and one-off gain (%of sales)

    Power

    9,137

    1,558

    17.1%

    Industry

    2,665

     255

    9.6%

    IT

    2,366

     375

    15.8%

    Buildings

    1,268

    132

    10.4%

    CST

    357

    20

    5.6%

    Holding

     

    -297

     


    VI. UPDATE ON AREVA DISTRTIBUTION ACQUISITION PROJECT

    Alstom and Schneider Electric signed on January 20, 2010 the agreement with Areva for the acquisition of Areva T&D, its transmission and distribution business.  This agreement came after Areva’s decision to enter into exclusive negotiations with Schneider Electric and Alstom on November 30, 2010 and the completion of the consultation of the relevant employee representatives.

    The closing of the transaction remains subject to the approvals of the relevant competition authorities and of the French Commission des Participations et des Transferts (CPT), and could occur in Spring 2010.


    VII. 2010 OUTLOOK

    The improving market dynamic of the new economies and the rebound of the industry and data centers activities should support growth in 2010.  However, the market environment in the mature markets remains uncertain and demand in these markets is expected to remain relatively soft. 

    Assuming current economic conditions, Schneider Electric targets a return to topline growth in 2010 at low single-digit (on organic basis) and an improvement of profitability with an EBITA margin of around 14% before restructuring cost (and before any impact of integration of Areva Distribution upon closing).

    *******************

    The financial statements of the year ending December 31, 2009 were established by Management Board on February 12, 2010, reviewed by the Supervisory Board of Schneider Electric and certified by the Group auditors on February 17, 2010. 

    First-quarter 2010 sales will be released on April 21, 2010.


    About Schneider Electric
    As a global specialist in energy management with operations in more than 100 countries, Schneider Electric offers integrated solutions across multiple market segments, including leadership positions in energy and infrastructure, industrial processes, building automation, and data centres/networks, as well as a broad presence in residential applications. Focused on making energy safe, reliable, and efficient, the company's 100,000 plus employees achieved sales of 15.8 billion euros in 2009, through an active commitment to help individuals and organizations “Make the most of their energy.”
    www.schneider-electric.com

     

    Appendix – Sales breakdown by geography

    Fourth-quarter 2009 sales:

    € million

    Sales
    Q4
    2009

    % change
    Q4
    (organic)

    Changes in scope of consolidation

    Currency effect

    % change
    Q4
    (current)

    Europe

    1,683

     -13.6%

     -0.2%

     -1.7%

     -15.5%

    North America

    1,064

     -12.4%

    +0.3%

     -9.5%

     -21.6%

    Asia-Pacific

    867

     -3.0%

    +3.4%

     -1.9%

     -1.5%

    Rest of the World

    474

     -1.3%

    +2.2%

     -2.7%

     -1.8%

    Total

    4,088

     -10.0%

    +0.8%

     -4.1%

     -13.3%



    Full-year 2009 sales:

     

    € million

     

    Sales
    FY
    2009

    % change
    FY
    (organic)

    Changes in scope of consolidation

    Currency effect

    % change
    FY
    (current)

    Europe

    6,423

     -18.5%

     0.0%

     -2.2%

     -20.7%

    North America

    4,356

     -19.9%

    +2.1%

    +4.0%

     -13.8%

    Asia-Pacific

    3,278

     -9.7%

    +2.9%

    +3.4%

     -3.4%

    Rest of the World

    1,736

     -2.4%

    +1.5%

     -0.6%

     -1.5%

    Total

    15,793

     -15.7%

    +1.3%

    +0.6%

     -13.8%


    Appendix – Sales breakdown by business

    Fourth-quarter 2009 sales:

    € million

    Sales
    Q4
    2009

    % change
    Q4
    (organic)

    Changes in scope of consolidation

    Currency effect

    % change
    Q4
    (current)

    Electrical Distribution

    2,340

     -13.0%

    +1.2%

     -3.2%

     -15.0%

    Automation & Control

    1,104

     -9.2%

    +0.1%

     -4.4%

     -13.5%

    Critical Power & Cooling

    644

    +1.1%

    +0.6%

     -7.6%

     -5.9%

    Total

    4,088

     -10.0%

    +0.8%

    -4.1%

    -13.3%


    Full-year 2009 sales:

    € million

    Sales
    FY
    2009

    % change
    FY
    (organic)

    Changes in scope of consolidation

    Currency effect

    % change
    FY
    (current)

    Electrical Distribution

    9,175

     -13.4%

    +2.1%

    0.0%

     -11.3%

    Automation & Control

    4,252

     -21.3%

    +0.6%

    +0.7%

     -20.0%

    Critical Power & Cooling

    2,366

     -13.6%

     -0.5%

    +3.2%

     -10.9%

    Total

    15,793

     -15.7%

    +1.3%

    +0.6%

     -13.8%



    Appendix – Full-year results breakdown by geography

     

    € million

     

    Sales

    EBITA¹ before restructuring and one-off gain

    Margin in % of sales

    EBITA¹

    Margin in % of sales

    2009

     

     

     

     

     

    Europe

    6,423

    967

    15.1%

    776

    12.1%

    North America

    4,356

    5642

    12.9%

    595

    13.7%

    Asia-Pacific

    3,278

    526

    16.0%

    500

    15.3%

    Rest of the World

    1,736

    284

    16.4%

    273

    15.7%

    Holding

    -

    (297)

    -

    (321)

    -

    Total

    15,793

    2,044²

    12.9%

    1,823

    11.5%

    2008

     

     

     

     

     

    Europe

    8,101

    1,550

    19.1%

    1,423

    17.6%

    North America

    5,053

    856

    16.9%

    821

    16.2%

    Asia-Pacific

    3,395

    555

    16.3%

    539

    15.9%

    Rest of the World

    1,762

    293

    16.6%

    291

    16.5%

    Holding

    -

    (317)

    -

    (301)

    -

    Total

    18,311

    2,937

    16.0%

    2,773

    15.1%

     
    ¹  EBIT before amortization of purchase accounting intangibles
    ²  Before a one-off profit from pension curtailment of €92 million (fully in North America)


    Appendix – Full-year results breakdown by division

     

    € million

     

    Sales

    EBITA¹ before restructuring and one-off gain

    Margin in % of sales

    EBITA¹

    Margin in % of sales

    2009

     

     

     

     

     

    Electrical Distribution

    9,175

    1,5562

    17,0%

    1,490

    16.2%

    Automation & Control

    4,252

    4102

    9.6%

    308

    7.2%

    Critical Power & Cooling

    2,366

    375

    15.8%

    346

    14.6%

    Holding

    -

    (297)

    -

    (321)

    -

    Total

    15,793

    2,044² 

    12.9%

    1,823

    11.5%

    2008

     

     

     

     

     

    Electrical Distribution

    10,343

    2,043

    19.8%

    1,925

    18.6%

    Automation & Control

    5,313

    818

    15.4%

    771

    14.5%

    CriticalPower & Cooling

    2,655

    393

    14.8%

    378

    14.2%

    Holding

    -

    (317)

    -

    (301)

    -

    Total

    18,311

    2,937

    16.0%

    2,773

    15.1%

     
    ¹ EBIT before amortization of purchase accounting intangibles
    ² Before a one-off profit from pension curtailment of €92 million, of which €75 million in Electrical Distribution and €17 million in Automation & Control


    Appendix – Reclassification 
    Schneider Electric has decided to reclassify the interest component of defined benefit plan costs from operating expenses (cost of goods sold, SG&A costs and other operating expenses) to net financial expenses.  This reclassification is consistent with IFRS standards and in line with best practices.

     € million

    FY 2008

    FY2009

    Interest cost

    -123

    -130

    Expected return on assets

    104

    74

    Interest component of defined benefit plan costs

    -19

    -56



    The impact is neutral on pre-tax and net income.
    The details of the impact on EBITA before restructuring costs and Finance costs are the following:

    € million

     

    FY 2008

    FY2009

    Initial presentation

    EBITA before restructuring costs

    2,918

     

     

    As a % of sales

    15.9%

     

     

    Finance costs, net

    -314

     

     

    Profit for the period (group share)

    1,682

     

     

     

     

     

    New presentation

    EBITA before restructuring costs

    2,937

    2,044¹

     

    As a % of sales

    16.0%

    12.9%

     

    Finance costs, net

    -333

    -384

     

    Profit for the period (group share)

    1,682

    852

    ¹ Before a one-off profit from pension curtailment of €92 million

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