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    Persbericht

    29/07/2011

    Halfjaarlijkse resultaten 2011 - Sterke stijging van de omzet dankzij Industry en nieuwe economische sectoren

    Strong topline growth fuelled by Industry and new economies
    Record H1 EBITA at €1.4 billion, up 14%
    2011 targets: strong sales growth and EBITA margin of around 15.0%¹ 

    Rueil-Malmaison (France), July 29, 2011 – Schneider Electric announced today its second quarter sales and first half results for the period ending June 30, 2011.

     Key figures (€ million)

    First Half 2010
    Reported

    First Half 2010
    Comparable²

    First Half 2011
    Reported

    % change  vs.
    Reported

     Sales
     Organic growth

    8,571

    9,389

    10,336
    +10.2%

    +21%

     EBITA³  before acquisition and
     integration costs
     % of sales

    1,243

    14.5%

    1,252

    13.3%

    1,413

    13.7%

    +14%


     Net income (Group share)

    735

     

    802

    +9%

    Jean-Pascal Tricoire, President and CEO, said: “We delivered a strong first half 2011 with double-digit growth in both sales and operational profitability. This was achieved despite significant inflation headwind and investment for strategic growth priorities.

    Solutions delivered superior growth in the first half, the result of our effort to develop dedicated and integrated solutions for our customers, particularly in the area of energy efficiency and the smart grid, We furthered expanded our footprint in the new economies which represent about 40% of our sales today. The acquisitions announced in the first half significantly reinforce our positions in these two strategic areas.

    Second half priority will be integration of the acquisitions and synergy generation. In addition, we’ll continue to focus on operational efficiency on both productivity and support functions, accelerate price increases to partly offset the strong raw material inflation, and drive cash conversion. 

    Looking forward, taking into account the solid topline progression in the first half, we confirm the full year organic growth target of 6% to 9% and aim for a solid EBITA progression and an EBITA margin of around 15%¹”

    ¹EBITA margin before acquisition and integration costs and consolidation impact of 2011 acquisitions
    ²Comparable: including Areva Distribution in H1 2010 in the Energy business
    ³EBITA: EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill

    I.   Q2 SALES UP 8.8% LIKE-FOR-LIKE, FUELLED BY SOLID TREND IN INDUSTRY AND IT, ALONG WITH A STRONG QUARTER FOR ENERGY

    Second quarter 2011 sales reached €5,392 million, up 15.7% on a current structure and exchange rate basis.  Like-for-like sales were up 8.8%.

    Growth by businesses in the second quarter

     

    € million

     

    Sales

    First Half
    2011

    % change
    First Half
    (organic)

    Sales
    Q2
    2011

    % change
    Q2
    (organic)

    Power

    3,936

    +8.5%

    2,027

    +6.7%

    Energy

    2,029

    +5.4%

    1,121

    +9.0%

    Industry

    2,227

    +17.8%

    1,122

    +14.2%

    IT

    1,412

    +9.8%

    749

    +8.5%

    Buildings

    732

    +7.0%

    373

    +5.6%

    Total

    10,336

    +10.2%

    5,392

    +8.8%

     
    Power (37% of Group Q2 sales) like-for-like sales grew 6.7%.  Product business continued to be robust, 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 in this quarter, reflecting tougher comparison, particularly for renewable energy.  By region, Asia-Pacific and Rest of World (despite challenging market conditions in Africa) delivered strong growth.  North America continued its recovery while Western Europe was still impacted by Spain and slower solutions business.
     
    Energy (21% of Group Q2 sales) reported a strong quarter as sales grew 9.0% like-for-like, fuelled by a strong solutions business, reflecting mainly the improving demand from utilities, growing investment in oil and gas and infrastructure, particularly in the new economies, and a robust services activity. The product business was in slight decline as the improvement in primary distribution was offset by a weak transformer activity. By region, Asia-Pacific and Rest of World grew double-digit.  Western Europe and North America were stable.  Areva Distribution was reported under scope impact in this quarter and generated sales of €484 million.
     
    Industry (21% of Group Q2 sales), up 14.2% like-for like, reported the strongest growth, despite higher basis of comparison. Demand continued to develop positively across the board.  All product categories showed good growth, with particularly strong momentum in drives and motion control.  New product introductions also continued to generate extra market opportunities.  The trend of solutions business remained very high, sustained not only by demand for OEM solutions, energy efficiency solutions for mining, oil and gas, and cement sectors but also the need for industrial services.  The growth was balanced across all regions.  CST, which has been grouped under Industry from this year on, also delivered good growth.
     
    IT (14% of Group Q2 sales) reported solid organic growth, up 8.5% compared to the strong second quarter in 2010, on robust solutions business which grew double-digit. This reflected the sustained demand for complete data center projects and services.  Small systems also grew, benefiting from the good demand in Asia-Pacific, in particular Japan, which offset the weaker trends in mature markets.  By region, Asia Pacific and Rest of the World reported the highest growth, followed by North America.  Western Europe was negative in the quarter.
     
    Buildings (7% of Group Q2 sales) sales grew 5.6% year-on-year.  As in the previous quarter, solution business 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.  Growth of product business was more moderate in this quarter.  By region, while demand in new economies developed very positively, the underlying demand in mature markets continued to be soft.    
     
    Growth by geography in the second quarter
     

     

    € million 

     

    Sales 

    First Half
    2011
     

    % change
    First Half
    (organic)

    Sales
    Q2
    2011

    % change
    Q2
    (organic)

    Western Europe

    3,467

    +4%

    1,759

    +2%

    Asia-Pacific

    2,668

    +17%

    1,433

    +15%

    North America

    2,391

    +11%

    1,228

    +8%

    Rest of the World

    1,810

    +12%

    972

    +14%

    Total 

    10,336

    +10.2%

    5,392

    +8.8%

     
    Western Europe (32% of Group Q2 sales) grew 2% year-on-year in the second quarter.  The solid performance of Germany, the Nordic countries and Italy was offset by the double-digit decline of Spain.
     
    Asia Pacific (27% of Group Q2 sales), now the second largest region of the Group, was up 15% year-on-year, despite much tougher comparison.  The trend across the region continued to be robust and most countries reported high growth. 
     
    North America (23% of Group Q2 sales) further recovered and was up 8% year-on-year. Healthy industrial demand, good growth in datacenters and energy efficiency projects more than offset weaker trends in the construction-related activity and utility market.
     
    Rest of the World (18% of Group Q2 sales) region was up 14%.  Momentum was particularly strong in Russia and Latin America, followed by Middle East and Central Europe, while Africa stabilised.
     
    Sales in new economies were up 17% like-for-like in the second quarter, or 39% of reported sales. 
     
    Consolidation and foreign exchange impacts
     
    Acquisitions contributed €543 million or +11.6%.  This includes mainly Areva Distribution for €484 million4, Uniflair, Lee Technologies (both in the IT business) and several smaller entities including Summit Energy.
     
    Impact of foreign exchange fluctuations turned significantly negative at -€205 million, primarily due to the appreciation of the Euro against the US dollar and the Chinese yuan.
     
    II. FIRST HALF 2011 KEY RESULTS
     
     € million

    First Half 2010
    Reported

    First Half 2010
    Comparable5

    First Half 2011
    Reported

    % change  vs.
    Reported

     EBITA before acquisition and
     integration costs
     % of sales
     Acquisition and integration costs

    1,243

     14.5%
    (18)

    1,252

     13.3%
    (18)

    1,413

    13.7%
    (41)

    +14%

     EBITA
     Amortization & impairment of purchase accounting 
     intangibles

    1,225
    (90)

    1,234


    1,372
    (98)

    +12%


     EBIT

    1,135

     

    1,274

    +12%

     Net income (Group share)
     Earnings per share (€)

    735
    2.86

     

    802
    3.00

    +9%

     Free cash flow

    457

     

    (159)

     
     
    4Including the month of June 2011. June 2010 sales of Areva Distribution were integrated in the third quarter 2010 sales of Schneider Electric and will be considered as a negative scope impact in the Q3 2011 reporting
    5Comparable: including Areva Distribution in H1 2010 in the Energy business
     
    RECORD FIRST HALF EBITA AT €1.4 BILLION BEFORE ACQUISITIONS AND INTEGRATION COSTS
     
    EBITA before acquisition and integration costs reached €1,413 million in the first half, an increase of 14% year-on-year, on strong topline growth and continuous operational efficiency,  despite significant inflationary headwinds and higher investment to tap growth. This represented a margin of 13.7% of sales, up 0.4 point compared to first half 2010 on comparable basis (including Areva Distribution first half 2010 in the Energy Business).
    • Volume growth generated a strong positive effect of €355 million, partially offset by an unfavorable business mix effect of -€51 million
    • Price increases initiated during the first half started to pay off, adding €46 million to sales. As expected, this could not fully offset the -€214 million raw material inflation immediately, and more price increases are being implemented.
    • Industrial productivity continued to be very strong, improving profitability by €233 million, primarily due to purchasing savings and procurement concentration, as well as lean manufacturing, rebalancing to lower cost countries and fixed costs absorption.
    • Research and development, selling and administrative costs increased ~7% organically, or €175 million, to be compared with organic sales growth of 10% in the first half.  This was in line with the Group’s ambition to reduce the support function costs to sales ratio while at the same time take the opportunity to invest for growth (better geographical coverage in new economies, faster deployment of energy management solutions) and technological edge.
     
    EBITA also includes a contribution from acquisitions of €9 million (excluding impact of Areva Distribution given the analysis on a comparable basis) and restructuring costs of €43 million.
     
    Lastly, the evolution of currencies reduced EBITA by €7 million, notably due to the dollar’s significant decrease against the Euro in the second quarter.
     
    A non-recurring charge of €41 million related to acquisition and integration costs was incurred in the first half, of which €16 million was related to Areva Distribution integration.  Additional charge is to be expected for the second half of 2011. Reported EBITA after acquisition and integration costs reached €1,372 millions, up 12% year-on-year.
     
    The Energy Business was created in 2011 which combines all the Medium Voltage activities of the Group, including those from Areva Distribution.  The following profitability information by business, at EBITA level, is provided in line with the new organization in place and is before acquisition and integration costs.  For the Energy business, the variation over the same period in 2010 is provided on a comparable basis, including Areva Distribution in the first half of 2010.
     
    Power EBITA increased 7% year-on-year and reached 20.9% of sales, down 0.1 point.  Energy profitability was at 8.2% of sales, stable compared to same period last year. Industry profitability jumped 34% year-on-year, with record margin at 19.6% of sales, up 2.3 points.  IT business reported profit progression of 4% year-on-year, at 13.3% of sales. Profitability of Building was down 1.3 points at 7.4% of sales.
     
    Total corporate costs in first half 2011 amounted to €252 million or 2.4% of sales (excluding acquisition and integration costs), slightly below the level last year.
     
    NET INCOME IMPROVED,  EARNINGS PER SHARE OF €3.0
     
    The net income reached €802 million, up 9% year-on-year.
     
    It includes the amortization and depreciation of intangibles of €98 million.
     
    Financial expenses amounted to €184 million, including the interest component of defined benefit plan costs (for €24 million) and a negative currency impact of €19 million (compared with a positive impact of €37 million in the first half 2010). Interest expenses on financial debt decreased year-on-year to €130 million.
     
    Income tax amounted to €262 million corresponding to an effective tax rate of 24.0%.
     
    FREE CASH FLOW LIMITED BY WORKING CAPITAL CONSUMPTION AND TEMPORARY INVENTORY BUILD-UP TO ENSURE CUSTOMER DELIVERIES
     
    Operating cash flow was stable compared to last year, at €1,146 million.
     
    Free cash flow was negative, at -€159 million, reflecting not only the high trade working capital consumption (at €772 million) due to strong sales progression and seasonality, but also the temporary build-up of safety stocks to secure customer deliveries and minimize the supply chain disruption caused by the Japan natural disaster.  Non-trade working capital consumption also increased (to €204 million) mainly related to employees accrued wages and bonuses, VAT and other taxes, and prepaid expenses.
     
    As expected, net investment increased €111 million year-on-year, and reached €329 million, as the Group accelerated investment to generate future growth.
     
    SOLID BALANCE SHEET AND LOW NET DEBT TO EBITDA RATIO
     
    Schneider Electric’s net debt amounted to €4,474 million (€4,013 million in June 2010).  The increase was primarily the result of €856 million dividend payment and €642 million of acquisitions.  The net debt-to-equity ratio stayed low at 31% as of June 30, 2011 and the Group’s net debt to EBITDA ratio was solid at 1.2x.  The balance sheet is expected to remain strong at the year end after the payment of acquisitions already announced, in particular Telvent and Leader and Harvest. 
     
    III. 2011 OUTLOOK
     
    Taking into account the solid topline progression in the first half, Schneider Electric confirms its full year organic growth target of 6% to 9%.  Most of the Group’s end-markets continue to develop positively which should make up for the still weak demand of the residential and non-residential buildings segments in mature markets. The robust momentum in the new economies is also expected to continue.
     
    Schneider Electric expects second half profitability to be higher than first half due to seasonality and better raw material pass-through.  Price actions initiated during the first half will accelerate to reach ~1% of sales to partly offset the raw material headwind of ~€400m.  Negative solution/product mix on gross margin is expected to continue in the second half. The Group’s continuous focus on operational efficiency should result in strong productivity in excess of €400 million and lower support function costs to sales ratio.
     
    Consequently, Schneider Electric targets a solid EBITA progression and an EBITA margin of around 15%, before acquisition and integration costs and consolidation impact of acquisitions announced this year, in particular Telvent.

    *******************
     
    The financial statements of the period ending June 30, 2011 were established by Management Board on July 26, 2011, reviewed by the Supervisory Board of Schneider Electric and certified by the Group auditors on July 28, 2011.
     
    The half year 2011 consolidated financial statements and the interim result presentation are available at www.schneider-electric.com
     
    Third-quarter 2011 sales will be released on October 20, 2011.
     
    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 110,000 plus employees achieved sales of 19.6 billion euros in 2010, through an active commitment to help individuals and organizations “Make the most of their energy.”
     
     
    Appendix – Sales breakdown by business

    First-quarter 2011 sales by business were as follows:
     

     

     € million 

     

    Sales
    Q1
    2011

    % change
    Q1
    constant

    Changes in scope of consolidation

    Currency effect

    % change
    Q1
    current

    Power

    1,909

    +10.6%

     -0.2%

    +3.7%

    +14.1%

    Energy

    908

    +1.4%

    +71.8%

    +2.6%

    +75.8%

    Industry

    1,105

    +21.9%

    +3.7%

    +3.8%

    +29.4%

    IT

    663

    +11.1%

    +2.8%

    +3.9%

    +17.8%

    Buildings

    359

    +8.5%

    +6.2%

    +3.8%

    +18.5%

    Total

    4,944

    +11.8%

    +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 provided in the first quarter 2011 release.

    Second-quarter 2011 sales by business were as follows:

     

     € million 

     

    Sales
    Q2
    2011

    % change
    Q2
    constant

    Changes in scope of consolidation

    Currency effect

    % change
    Q2
    current

    Power

    2,027

    +6.7%

     -0.2%

     -4.2%

    +2.3%

    Energy

    1,121

    +9.0%

    +79.2%

     -4.3%

    +83.9%

    Industry

    1,122

    +14.2%

     -0.6%

     -4.4%

    +9.2%

    IT

    749

    +8.5%

    +6.6%

     -6.8%

    +8.3%

    Buildings

    373

    +5.6%

    +7.0%

     -6.1%

    +6.5%

    Total

    5,392

    +8.8%

    +11.6%

     -4.7%

    +15.7%

    First-half 2011 sales by business were as follows:

     

     € million 

     

    Sales
    H1
    2011

    % change
    H1
    constant

    Changes in scope of consolidation

    Currency effect

    % change
    H1
    current

    Power

    3,936

    +8.5%

     -0.2%

     -0.6%

    +7.7%

    Energy

    2,029

    +5.4%

    +75.8%

     -1.0%

    +80.2%

    Industry

    2,227

    +17.8%

    +1.3%

     -0.8%

    +18.3%

    IT

    1,412

    +9.8%

    +4.9%

     -2.1%

    +12.6%

    Buildings

    732

    +7.0%

    +6.7%

     -1.6%

    +12.1%

    Total

    10,336

    +10.2%

    +11.4%

     -1.0%

    +20.6%

    Appendix - Results breakdown by division

     

    € million

     

    Sales

    EBITA before acquisition and integration charges

    Margin in % of sales

    Acquisition and integration charges

    H1 2011

     

     

     

     

    Power

    3,936

    821

    20.9%

    0

    Energy

    2,029

    166

    8.2%

    (15)

    Industry

    2,227

    436

    19.6%

    (5)

    IT

    1,412

    188

    13.3%

    (3)

    Buildings

    732

    54

    7.4%

    (3)

    Holding

    -

    (252)

    -

    (15)

    Total

    10,336

    1,413

    13.7%

    (41)

    H1 2010 (comparable¹)

     

     

     

     

    Power

    3,654

    769

    21.0%

    0

    Energy

    1,944

    159

    8.2%

    0

    Industry

    1,882

    325

    17.3%

    (3)

    IT

    1,255

    181

    14.4%

    0

    Buildings

    654

    57

    8.7%

    0

    Holding

    -

    (239)

    -

    (15)

    Total

    9,389

    1,252

    13.3%

    (18)

    ¹Comparable: including Areva Distribution in H1 2010 in the Energy business (€818 million of sales and €9 million of EBITA)
     

     

    € million

     

    Sales

    EBITA before acquisition and integration charges

    Margin in % of sales

    Acquisition and integration charges

    FY 2010 Comparable²)

     

     

     

     

    Power

    7,755

    1,660

    21.4%

    0

    Energy

    4,341

    456

    10.5%

    0

    Industry

    3,984

    701

    17.6%

    (3)

    IT

    2,746

    453

    16.5%

    0

    Buildings

    1,402

    138

    9.8%

    (3)

    Holding

    -

    (437)

    -

    (25)

    Total

    20,228

    2,971

    14.7%

    (31)

    FY 2010 Reported

     

     

     

     

    Power

    7,755

    1,660

    21.4%

    0

    Energy

    3,693

    447

    12.1%

    0

    Industry

    3,984

    701

    17.6%

    (3)

    IT

    2,746

    453

    16.5%

    0

    Buildings

    1,402

    138

    9.8%

    (3)

    Holding

    -

    (437)

    -

    (25)

    Total

    19,580

    2,962

    15.1%

    (31)

    ²Comparable: including Areva Distribution over 12 months in the Energy business (€1878 million of sales and €94 million of EBITA)

    Appendix – Consolidation impact on sales and EBITA

    In number of months

     

    2010

    Q1

     

    Q2

     

    Q3

     

    Q4

    2011

    Q1

     

    Q2

     

    Q3

     

    Q4

     

     

     

     

     

     

     

     

     

    SCADAgroup 

    Industry business
    2010 sales €68 million

     

     

    3m

    3m

    3m

    3m

     

     

     

    Cimac 

    Industry business

    2009 sales €40 million

     

     

    ~5m

    3m

    3m

    3m

    -2m

     

     

    Zicom 

    Buildings

    2009 sales €30 million

     

     

    2m

    3m

    3m

    3m

    1m

     

     

    Areva Distribution 

    Energy business
    2010 sales €1.9 billion

     

     

     

    4m

    3m

    3m

    3m

    -1m

     

    50% of
    Electroshield TM Samara

     

     

     

     

     

    EM

    EM

    EM

    EM

    Uniflair 

    IT business

    2010e sales €80 million

     

     

     

     

     

    3m

    3m

    3m

    3m

    Vizelia- D5X 

    Buildings business
    2010e sales €8 million

     

     

     

     

     

    3m

    3m

    3m

    3m

    Lee Technologies 

    IT business
    2010 sales $140 million

     

     

     

     

     

     

    3m

    3m

    3m

    Summit Energy 

    Buildings business
    2011e sales $65 million

     

     

     

     

     

     

    3m

    3m

    3m

    Digilink

    Power business
    2010 sales c. €25 million

     

     

     

     

     

     

     

    3m

    3m

    APW President (75% owned)

    IT business
    FY 31/10/10 sales €18 million

     

     

     

     

     

     

     

    3m

    3m

    Luminous

    IT business
    FY 31/3/11 sales c€170 million

     

     

     

     

     

     

     

    3m

    3m

     
    The acquisitions of Telvent, Leader & Harvest and Steck Group have yet to be finalized.
    EM: Accounted for with the equity method (in profit/loss of associates)

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    Schneider Electric
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    Schneider Electric
    Véronique Roquet-Montégon
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    Olivier Labesse
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