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    Connect - Bedrijfsprogramma voor 2012 -2014

    Rueil-Malmaison (France), February 22, 2012 – Schneider Electric is hosting today a Capital Market Day in Paris, France during which Jean-Pascal Tricoire, President and CEO, and Emmanuel Babeau, CFO and member of the management board, will present together with other members of the Executive Committee the Group’s strategic ambition, operational priorities and financial targets under the Connect program for the period 2012 – 2014.  

    A big step forward in the Group’s transformation with One company program (2009-2011) 

    With One, Schneider Electric was re-organized into 5 customer-focused businesses and strengthened its integrated portfolio to establish itself as the global reference in energy management.  The Group became a leading provider of high value-added solutions and developed great positions in new economies which respectively represented 37% and 39% of Group sales in 2011, a significant jump from 2008.  The Group emerged from One leaner, simpler and more agile.  Under One, it simplified its supply chain, reduced the number of its brands, generated about €1 billion of productivity and drove operational efficiency by reducing support functions costs to sales ratio by 1.5 points.

    “Our company program “One” was a success and a big step forward in the transformation of the Group’s profile.  It also laid a very solid foundation for our future: One brand, One company for our customers and employees, One organization everywhere, and a far higher efficiency than in 2008.”, said Jean-Pascal Tricoire, President and CEO

    “Connect, our new company program, is another major step in the consistent deployment of our strategy. With Connect, we will extend the strong foundation of One to all our strategic levers: products and solutions, mature and new economies, our people, while continuing to drive efficiency at all levels”.

    Connect: four major initiatives to reach a new high in performance

    The new 3-year plan covering 2012 – 2014 announced today includes four major initiatives:

    • Connect to Customers: Further improve the performance of its business models and be a leader in products and in solutions.

    Partner excellence: Continue to grow in products in a win-win relationship with partners by creating new opportunities for Distributors and Partners, leveraging the strength of “One” Schneider Electric and leading product innovation.  This initiative will further reinforce the Group’s leadership position in the Product Business.

    Solution excellence: Leverage the Group’s unique value proposition with its solution capabilities, improve equipment cost competitiveness, reinforce execution while being more selective on projects, and boost service sales.  This initiative will temporarily impact the Solution Business’s growth but will raise significantly its profitability and return profile.

    Tailored supply chain: Bring the supply chain to a new level of excellence by aligning organization to customer needs and providing differentiated manufacturing and delivery models for each customer segment.  This initiative should lead to higher customer satisfaction and inventory efficiency.

    • Connect Everywhere: Identify key investment areas in new economies and create new opportunities in mature countries to be a leader in both mature and new economies

    Grow in new economies: Expand geographical coverage by increasing the Group’s presence in the fast-growing second-tier cities and further penetrate these markets with mid-market segment offerings supported by strong brands with wide local coverage. The initiative will continue to support the long term growth potential of new economies in Schneider Electric’s portfolio.

    o Grow in mature countries: Grow activities that develop independently from traditional capex trends with a focus on opex-driven opportunities and new businesses. This includes developing installed base and energy management services, capturing the smart grid opportunity while investing in new businesses in areas such as electric vehicle charging infrastructure, home automation and carbon management.  With this initiative, the Group aims to create its own growth momentum in the mature countries.

    • Connect People: Create a culture and an environment for the Group’s employees’ development and performance:

    Engaged leaders: Train leaders with Schneider Electric University and promote Diversity

    Engaged individuals: Support employee development via training, empowerment and cross-business mobility

    Engaged workplace: Step-up collaboration & communities, regroup locations, ensure safety at work, develop the Schneider Way

    • Connect for Efficiency: A new chapter in the Group’s history of profitable and responsible growth:

    Industrial Productivity:  Raise the bar with tailored supply chain and drive significant industrial productivity through purchasing, footprint optimization, supply chain flow re-design and transportation rationalization.  This will be supported by a best-in-class planning process by customer segment and an IT system aligned with supply chain segmentation. 

    Support Functions Efficiency: Leverage scale to drive savings on support functions, through non-production purchases rationalization, more globalization of corporate functions, simplification of business and country level set-up, and implementation of acquisition synergies. At the same time, the company will continue to invest in commercial presence and R&D to support future growth. Total R&D expenses to sales ratio is expected to move towards 5 % of sales going forward.

    Planet & Society Barometer:  Maintain best-in-class standard in environmental sustainability and social responsibility.  Management compensation is partly tied to barometer performance.

    Connect:  Key financial benefits for 2012-2014

    With Connect, Schneider Electric expects to raise group performance to a new level of excellence by 2014.

    Key targets


    By 2014

    Services growth


    Outgrow the rest of group by more than 5 points (on organic basis)

    Solutions profitability


    At least 2 points improvement on the adjusted EBITA margin

    Industrial productivity


    €0.9bn to €1.1bn of cumulated gross productivity

    Support functions efficiency


    At least 1 point decrease of support functions costs/sales ratio*  (excl. scope and currency, net of investments)

    Inventory efficiency


    Inventory to sales ratio reduced by ~2 points

    * Assuming no severe disruption of the global economy

    Ambitious long term financial targets for attractive shareholder returns

    Over the long term, the key company priorities remain focused on profitable growth, cash conversion and capital efficiency.  The management views the Connect program as another opportunity to improve the Group’s through cycle performance on those metrics.  With Connect, the Group is setting the course for solution excellence, with an aim to raise profitability and to lower capital employed. Consistent deployment of Group strategy with disciplined and synergistic acquisitions to complement organic growth should bring forward long term value creation.

    Performance targets


    Across a business cycle



    Average organic growth of GDP + 3 points

    ·       Products: GDP + 1 to 3 points

    ·       Solutions: GDP + 3 to 5 points

    ·       New economies: GDP + 6 to 8 points

    Adjusted EBITA


    Margin between 13% and 17% of sales

    Cash conversion


    ~100 % of net profit converted into free cash flow

    Capital efficiency targets


    Across a business cycle

    Return on Capital Employed


    Between 11% to 15%



    50% payout of net income

    Capital structure


    Retain a strong investment grade credit rating

    The management is confident that Schneider Electric will continue its transformation with Connect and emerge from it leaner, more efficient, and well positioned to respond to customer challenges in a fast-changing world. 


    For more information, please visit

    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 130,000 plus employees achieved sales of 22.4 billion euros in 2012, through an active commitment to help individuals and organizations “Make the most of their energy.”

    Appendix – Adjusted EBITA definition

    Adjusted EBITA is defined as

    • = EBITA
    • +  restructuring costs
    • +/- other operating income and expenses

    Please find the reconciliation to EBITA and information relating to prior periods in the 2011 annual results financial release on our website:

    Appendix – ROCE definition

    ROCE is defined as: Adjusted EBITA after tax / Average Capital Employed

    Roce Calculation board 

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