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Pers


    Persbericht

    21/02/2013

    Jaarresultaten 2012

    • Record high earnings and cash generation in mixed markets 
    • Adjusted EBITA up 10% at €3.5 billion, or 14.7% of sales 
    • EPS grew 11%, at €3.73 on adjusted basis(¹) 
    • Record free cash flow of €2.1 billion and dividend of €1.87 
    • Connect delivered solid results in line with 2014 ambition 

    Rueil-Malmaison (France), February 21, 2013 – Schneider Electric announced today the fourth quarter sales and full year results for the period ending December 31, 2012.

    Key figures (€ million)

    2011²

    2012

    %  change

     

     

     

     

    Sales

     

    22,345

    23,946

    +7%

    Organic growth

     

    -0.7%

     

     

     

     

     

    Adjusted EBITA

    3,190

    3,515

    +10%

    % of sales

    14.3%

    14.7%

    +0.4 pt

     

     

     

     

     

     

     

     

    Net income (Group share) 

    1,793

    1,840

    +3%

    Adjusted net income(1) (Group share)

    1,808

    2,023

    +12%

    Adjusted earnings per share(1) (€) 

    3.36 

    3.73 

    +11% 

     

     

     

     

    Free cash flow

    1,506

    2,082

    +38%


    Jean-Pascal Tricoire, President and CEO, said: “In 2012, we delivered 7% growth in sales, double-digit increase in earnings per share and record free cash flow in mixed markets. This illustrates once again the strength of our business model, the solid execution of the Connect company program, and the disciplined integration of our acquisitions. This strong performance allows us to propose a 10% increase in dividend to €1.87 per share this year.

    Our effort to improve the solutions performance is paying off and we continue to grow our strong new economies platform. Together with what we have achieved in product and software innovation, tailored supply chain and organization efficiency, we have laid a solid base for our long term growth and profit.

    For 2013, in an economic environment that remains mixed, we target a low-single digit organic growth in sales and a stable to slightly up adjusted EBITA margin.”

     

    I. FOURTH QUARTER SALES INCREASED 2% TO €6.4 BILLION, WHILE ORGANIC SALES DECLINED 1.2%

    Fourth quarter 2012 sales reached €6,439 million, up 2% on a current structure and exchange rate basis and down 1.2% on comparable basis.


    Organic growth analysis by business segment

     

    € million

    Q4 2012

    Full Year 2012

    Sales

    Organic growth

    Reported growth

    Sales

    Organic growth

    Reported growth

    Power

    2,227

    -0.3%

    +2.9%

    8,738

    +0.5%

    +5.8%

    Infrastructure

    1,686

    -2.2%

    -0.5%

    5,366

    -1.5%

    +9.6%

    Industry

    1,111

    +0.2%

    +2.9%

    4,483

    -3.8%

    +2.0%

    IT

    970

    -1.0%

    +2.9%

    3,677

    +2.7%

    +13.6%

    Buildings

    445

    -4.8%

    +3.2%

    1,682

    -3.1%

    +8.4%

    Group

    6,439

    -1.2%

    +2.0%

    23,946

    -0.7%

    +7.2%

    Power (35% of Q4 sales) growth was nearly flat at -0.3% on comparable basis, reflecting more favorable product dynamic but declining solutions business. The product business grew on better construction market in North America, natural resource and infrastructure investments, particularly in Russia, South America and South East Asia, and the success of mid-market offers. This offset lower demand in Western Europe, residential construction downturn in the Pacific and market softness in China. The solution business remained impacted mainly by the solar conversion and connection activity which suffered from substantial decline in investment, particularly in Italy, Germany and North America.

    Infrastructure (26% of group Q4 sales) sales declined 2.2% like-for-like, with similar trends in both products and solutions. The product business was helped by secondary distribution products growth and the recovery of transformer activity partially offsetting the drop in primary distribution components, impacted by challenging market conditions in some key new economies. The solution business benefited from broad based growth in installed base services and sustained investment in oil and gas, mining and utility markets, particularly in Russia, North America, South-East Asia and some Nordic countries. However, it was dragged down by the weak performance of substations and equipments, weighed down primarily by reduced utility spending in Western Europe and India and fewer opportunities in renewable projects.

    Industry (17% of Q4 sales) continued to improve sequentially, posting flat organic growth of 0.2%. The product business decreased on slower pace as some key markets in Western Europe and Asia stabilised. The solution business posted again double digit growth, lifted by the performance of services in all regions and the success of PlantStruxure enabled end user solutions in cement, mining, oil & gas and food & beverage sectors in South America, Africa and North America.

    IT (15% of Q4 sales) was down 1.0% like-for-like. Products grew, reflecting the healthy demand for secured power products in Asia, South America and Africa, offsetting market softness in the US and Western Europe and high comparison in Russia. The solution business growth turned slightly negative mainly due to cautious investment climate in key mature markets, particularly North America. However, it experienced sustained demand for datacenter projects in Asia-Pacific and South America, robust software sales, solid growth in both installed base and advanced design and build services.

    Buildings (7% of Q4 sales) was down 4.8% organically. Product sales decreased despite growth in building management products as the challenging video security market continued to weigh on business volume. In the solution business, advanced services in North America declined as caution in government spending persisted and the UK and Australia faced high comparison. This was not compensated by the growth in security systems for airports and educational institutions, particularly in the US.

    Solutions business was down 2% on a comparable basis in the fourth quarter and represented 43% of sales.

    Organic growth analysis by geography

    € million

    Q4 2012

    Full Year 2012

    Sales

    Organic growth

    Reported growth

    Sales

    Organic growth

    Reported growth

    Western Europe

    1,881

    -4%

    -2%

    7,073

    -5%

    -1%

    Asia-Pacific

    1,756

    -1%

    +4%

    6,507

    -1%

    +10%

    North America

    1,508

    -1%

    +3%

    5,949

    +2%

    +14%

    Rest of the World

    1,294

    +3%

    +5%

    4,417

    +4%

    +9%

    Group

    6,439

    -1.2%

    +2.0%

    23,946

    -0.7%

    +7.2%

    Western Europe (30% of Q4 sales) was down 4% year-over-year in the fourth quarter. Spain continued to decline double digit, while Italy and France decreased at a lower pace than the previous quarter. Germany turned negative, impacted by reduced investment by utilities and in renewable energy. The UK and the Nordics posted growth.

    Asia Pacific (27% of Q4 sales) was down 1% like-for-like with still mixed markets. China declined but was sequentially stable. South-East Asia grew double digit, boosted by investments in natural resources, infrastructure and construction. India experienced moderate growth, supported by demand for power reliability, but faced a tough utility market. Japan was stable while Pacific was impacted by residential construction downturn.

    North America (23% of Q4 sales) turned negative this quarter, down 1% like-for-like. The residential construction market in the United States and investment in manufacturing, mining and oil & gas segments supported the region. However, reduced investment in datacenters and government spending cuts in certain non-residential segments weighed on growth.

    Rest of the World (20% of Q4 sales) grew 3% like-for-like. Russia and South America posted strong growth resulting from continued investment in natural resources and infrastructure. Central Eastern Europe declined due to impact of the economic situation in Western Europe. Middle East dropped slightly due to mixed trends in the region whereas Africa was stable.

    Sales in new economies were up 2% on a comparable basis and represented 43% of total reported sales in the fourth quarter.

    Consolidation and foreign exchange impacts

    The impact of acquisition consolidation on fourth-quarter sales was limited to €31 million only, reflecting the Group’s focus on acquisition integration since mid 2011.

    Currency fluctuations generated a positive contribution of €174 million in the fourth quarter, due to the appreciation of most major currencies against the Euro, especially the U.S. dollar and Chinese yuan, while the depreciation of the Brazilian real had a slightly negative impact.

    II. FULL YEAR 2012 KEY RESULTS

    € million

    2011²

    2012

    %
    change

    Adjusted EBITA

    3,190

    3,515

    +10%

    % of sales 

    14.3%

    14.7%

     

    Restructuring costs 

    (145)

    (164)

     

     

     

     

     

    Other operating income

    & expenses

    (8)

    (10)

     

     

     

     

     

    EBITA

    3,037

    3,341

    +10%

     

     

     

     

    Amortization & impairment of purchase accounting intangibles

    (226)

    (475)

     

     

     

     

     

    Net income (Group share)

    1,793

    1,840

    +3%

    Adjusted net income³ (Group share)

    1,808

    2,023

    +12% 

    Adjusted earnings per share³ (€)

    3.36

    3.73

    +11%

     

     

     

     

    Free cash flow

    1,506

    2,082

     

     

     

     

     


    SOLID START OF THE CONNECT PROGRAM LEADING TO RECORD ADJUSTED EBITA OF €3.5 BILLION, DESPITE NEGATIVE VOLUME
     
    Full year adjusted EBITA increased 10% to €3,515 million, reflecting the solid execution of the Connect company program. The higher profitability, achieved despite negative volume and unfavorable mix, was driven by strong pricing discipline, continuous push for operational efficiency and improving margin of the solution business. As a result, adjusted EBITA margin improved 0.4 point to 14.7% of sales.
     
    The key drivers contributing to the earnings progression were the following:
     
    • Pricing actions undertaken by all businesses continued to yield results, adding €226 million to the full year profit. Raw material price evolution became a tailwind in the second half of 2012, contributing €73 million to earnings, excluding foreign exchange impact. Over a two-year period, total price increases fully covered the raw material inflation.
    • Industrial productivity gains were in line with expectations, reaching €289 million despite negative production volume. As in previous quarters, this was primarily the result of purchasing savings, procurement concentration, lean manufacturing and continued industrial footprint rebalancing.
    • Support function costs decreased €56 million, excluding scope and currency impact. The support function costs to sales ratio dropped 0.2 point as efficiency gains offset wage inflation and investment for future growth.
    • The depreciation of the Euro against most major currencies, in particular the U.S. dollar and the Chinese yuan, added €171 million to the profit.
    • Contribution from acquisitions, net of divestments, amounted to €74 million.

    The benefits of the above drivers were partially offset by the following impacts on profit:

    • Volume decreased 1.7%, reducing profit by €185 million. This reflected the challenging business conditions of some of the Group’s key end markets and regions.
    • Mix impact remained negative at €241 million due primarily to the relative weakness of geographies with higher profitability, the stronger growth of solutions versus products and the costs related to major new product launches in 2012 (including the innovative Acti9 low voltage breaker range and Premset medium voltage switchgear).
    • Production labor inflation reduced profit by €84 million, a level similar to previous year.

    In line with the ambition set under the Connect program, the profitability of the solutions business improved. The Group estimates that the adjusted EBITA margin before corporate cost was up by 1 point to about 10% of sales in 2012. Higher selectivity, focused execution on offer simplification, reference designs by end-market segment, solution centers set-up and strong push on services contributed to the improvement.

    By business, four businesses reported margin progression in 2012. Adjusted EBITA of Power amounted to €1,813 million, or 20.7% of sales, up 0.1 point year-on-year due to sustained pricing and productivity gains, offsetting negative geographical mix and costs related to new product launches. Despite negative growth, Infrastructure reported 13% increase in adjusted EBITA to €575 million, or 10.7% of sales, up 0.3 point year-on-year, reflecting strict cost control and synergies delivered by acquisition integration. Industry demonstrated strong resilience to negative volume and unfavorable mix, generating an adjusted EBITA of €823 million, or 18.4% of sales, up 0.8 point thanks to pricing discipline, productivity and good cost control. IT achieved the highest improvement with adjusted EBITA margin up 2.8 points to 19.0% of sales, or €698 million, helped by positive volume, price actions, productivity gains, and improved solutions profitability. Adjusted EBITA of Buildings was €107 million, down 2.9 points at 6.4% of sales, reflecting the softness of the construction markets in its key countries and difficulties of the video security activity.
     
    Corporate costs amounted to €501 million or 2.1% of sales, a stable ratio compared to previous year.
     
    The intensification of restructuring efforts resulted in total restructuring costs of €164 million, in line with the initiatives outlined under Connect.
     
    Reported EBITA reached €3,341 million, after accounting for the above restructuring costs and €10 million of other operating income and expenses.

    ADJUSTED NET INCOME EXCEEDED THE €2 BILLION MARK, RESULTING IN 11% GROWTH OF EARNINGS PER SHARE ON AN ADJUSTED BASIS
     
    The net income adjusted for non-recurring impairment charge reached €2,023 million for the first time, up 12% year-on-year. This resulted in earnings per share of €3.73 on an adjusted basis, up 11% compared to previous year.
     
    The Group share in reported net income reached €1,840 million. This included in particular:
     
    • a non-recurring non-cash charge of €250 million related to the impairment of goodwill in the Buildings business. This charge resulted in a net impact after tax of €183 million, in line with the announcement made in the third quarter sales release.
    • amortization and depreciation of intangibles of €224 million, compared with €208 million in 2011.
    • financial expenses of €405 million, including the interest component of defined benefit plan costs (for €43 million) and negative currency differences of €21 million.
    • income tax of €568 million, corresponding to an effective tax rate of 23.1%. The amount included €67 million of tax credit related to the above mentioned non-recurring charge.

    RECORD CASH GENERATION DRIVEN BY GOOD WORKING CAPITAL MANAGEMENT AND THE ROLL-OUT OF TAILORED SUPPLY CHAIN

    Operating cash flow was up 10% year-on-year and reached €2,802 million.
     
    Free cash flow ended up at a record €2,082 million due to strict working capital management and higher inventory efficiency achieved by the implementation of tailored supply chain, one of the key initiatives under the Connect program. Change in trade working capital requirement added €78 million to free cash flow, driven primarily by inventory reduction of 210 million, or 1 point* drop in inventories to sales ratio. Non-trade working capital increased by €79 million. The capital expenditures amounted to €719 million in 2012, or 3.0% of sales, which was slightly lower than the amount in 2011.

    SOLID BALANCE SHEET, NET DEBT TO ADJUSTED EBITDA RATIO DROPPED TO 1.1x
     
    Schneider Electric’s net debt amounted to €4,395 million (€5,266 million in December 2011) after the dividend payment of €919 million and acquisition spending of €242 million. The net debt-to-equity ratio was low at 26% as of December 31, 2012. The Group’s net debt to adjusted EBITDA ratio was down from 1.4x to 1.1x in 2012 (based on an adjusted EBITDA at the record high of €4,155 million).

    III. PROPOSED DIVIDEND OF 1.87 EURO, UP 10%

    At the Annual Meeting on April 25, 2013, shareholders will be asked to approve a dividend of €1.87 per share, compared with €1.70 last year. The proposed dividend will be paid fully in cash on May 7, 2013.
     
    The dividend corresponds to a payout of 50% of the 2012 adjusted net income, which neutralizes the negative effect of the non-recurring charge.

    IV. 2013 OUTLOOK

    Schneider Electric expects the economic environment to remain mixed in 2013 with continued challenges in Western Europe, opportunities for acceleration in the new economies and a slow recovery in North America.
     
    Based on current market conditions, the Group targets a low-single digit organic growth in sales and a stable to slightly up adjusted EBITA margin for the year 2013.
     
    ¹Adjusted for the non-recurring goodwill impairment charges
    ²The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statements
    ³Adjusted for the non-recurring goodwill impairment charges
    *Based on average monthly inventory
     
    *******************

    The financial statements of the period ending December 31, 2012 were established by Management Board on February 18, 2013, reviewed by the Supervisory Board of Schneider Electric and certified by the Group auditors on February 20, 2013.
     
    The annual 2012 consolidated financial statements and the full year result presentation are available at www.schneider-electric.com
     
    First-quarter 2013 sales will be released on April 23, 2013.

    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, efficient, productive and green, the company's 140,000 plus employees achieved sales of 24 billion euros in 2012, through an active commitment to help individuals and organizations “Make the most of their energy.”
     
    Appendix – Sales breakdown by business

    Fourth-quarter 2012 sales by business were as follows:
     

     

    € million

     

    Sales
    Q4
    2011**

    Sales
    Q4
    2012

    Organic growth

    Changes in scope of consolidation

    Currency effect

    Reported growth

    Power

    2,164

    2,227

    -0.3%

    +0.1%

    +3.1%

    +2.9%

    Infrastructure

    1,694

    1,686

    -2.2%

    -0.2%

    +1.9%

    -0.5%

    Industry

    1,080

    1,111

    +0.2%

    +0.3%

    +2.4%

    +2.9%

    IT

    943

    970

    -1.0%

    +1.0%

    +2.9%

    +2.9%

    Buildings

    431

    445

    -4.8%

    +4.3%

    +3.7%

    +3.2%

    Total

    6,312

    6,439

    -1.2%

    +0.5%

    +2.7%

    +2.0%

    Full-year 2012 sales by business were as follows:

     

    € million

     

    Sales
    Full-year
    2011**
     

    Sales
    Full-year
    2012

    Organic growth

    Changes in scope of consolidation

    Currency effect

    Reported growth

    Power

    8,262

    8,738

    +0.5%

    +0.5%

    +4.8%

    +5.8%

    Infrastructure

    4,897

    5,366

     -1.5%

    +8.5%

    +2.6%

    +9.6%

    Industry

    4,397

    4,483

     -3.8%

    +1.6%

    +4.2%

    +2.0%

    IT

    3,237

    3,677

    +2.7%

    +5.3%

    +5.6%

    +13.6%

    Buildings

    1,552

    1,682

     -3.1%

    +5.6%

    +5.9%

    +8.4%

    Total

    22,345

    23,946

     -0.7%

    +3.5%

    +4.4%

    +7.2%


    **The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statements
     
    Appendix – Breakdown by geography 

    Fourth-quarter 2012 sales by geographical region were as follows:

     

    € million

     

    Sales
    Q4
    2011***

    Sales
    Q4
    2012

    Organic growth

    Reported growth

    Western Europe

    1,920

    1,881

     -4%

     -2%

    Asia-Pacific

    1,689

    1,756

     -1%

    +4%

    North America

    1,465

    1,508

     -1%

    +3%

    Rest of the World

    1,238

    1,294

    +3%

    +5%

    Total

    6,312

    6,439

     -1.2%

    +2.0%


    Full-year 2012 sales by geographical region were as follows:

     

    € million

     

    Sales
    Full-year
    2011***

    Sales
    Full-year
    2012

    Organic growth

    Reported growth

    Western Europe

    7,142

    7,073

     -5%

     -1%

    Asia-Pacific

    5,933

    6,507

     -1%

    +10%

    North America

    5,208

    5,949

    +2%

    +14%

    Rest of the World

    4,062

    4,417

    +4%

    +9%

    Total

    22,345

    23,946

     -0.7%

    +7.2%


    ***The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statements

    Appendix – Consolidation impact on sales and EBITA

    In number of months

     

    2012

    Q1

     

    Q2

     

    Q3

     

    Q4

    2013

    Q1

     

    Q2

     

    Q3

     

    Q4

     

     

     

     

     

     

     

     

     

    Lee Technologies 

    IT business
    2010 sales $140 million

    3m

     

     

     

     

     

     

     

    Summit Energy 

    Buildings business
    2011e sales $65 million

    3m

     

     

     

     

     

     

     

    Digilink

    Power business
    2010 sales c. €25 million

    3m

    3m

    -1m

     

     

     

     

     

    APW President

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

    3m

    3m

    -1m

     

     

     

     

     

    Luminous

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

    3m

    3m

    -1m

     

     

     

     

     

    Steck Group

    Power business

    2011e sales €80 million

    3m

    3m

    1m

     

     

     

     

     

    Telvent

    Infrastructure business

    2010 sales €753 million

    3m

    3m

    2m

     

     

     

    Leader & Harvest

    Industry business
    2011e sales $150 million

    3m

    3m

    3m

     

     

     

     

     

    M&C Energy

    Buildings business
    FY 30/6/12e sales £35 million

     

     

    3m

    3m

    3m

    3m

     

     

     
    Appendix - Results breakdown by division
     

     € million

    2011

    Restated

    2012

    Reported

    Sales

    22,345

    23,946

    Power

    8,262

    8,738

    Infrastructure

    4,897

    5,366

    Industry

    4,397

    4,483

    IT

    3,237

    3,677

    Buildings

    1,552

    1,682

    Corporate

    -

    -

    Adjusted EBITA

    3,190

    3,515

    Power

    1,705

    1,813

    Infrastructure

    511

    575

    Industry

    774

    823

    IT

    523

    698

    Buildings

    145

    107

    Corporate

    (468)

    (501)

    - Other operating income and expenses

    (8)

    (10)

    Power

    49

    17

    Infrastructure

    (27)

    (6)

    Industry

    4

    (2)

    IT

    (17)

    (3)

    Buildings

    (8)

    (3)

    Corporate

    (9)

    (13)

    - Restructuring

    (145)

    (164)

    Power

    (75)

    (84)

    Infrastructure

    (19)

    (32)

    Industry

    (24)

    (21)

    IT

    (9)

    (4)

    Buildings

    (11)

    (12)

    Corporate

    (7)

    (11)

    EBITA

    3,037

    3,341

    Power

    1,679

    1,746

    Infrastructure

    465

    537

    Industry

    754

    800

    IT

    497

    691

    Buildings

    126

    92

    Corporate

    (484)

    (525)

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