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Pers


    Persbericht

    31/07/2013

    Halfjaarresultaten 2013

    • +2.6% organic growth in Q2 turns first half positive 
    • Gross margin¹ improves thanks to productivity and pricing 
    • Solid cash generation 
    • Full year targets maintained 


    Rueil-Malmaison (France), July 31, 2013 - Schneider Electric announced today its second quarter revenues and first half results for the period ending June 30, 2013.

    Key figures (€ million)

     

    Restated² H1

     2012

     

    H1

     2013

    %
    change

     

     

     

     

     

    Revenues

     

    11,408

    11,430

    0%

    Organic growth

    +0.2%

    +0.1%

     

     

     

     

     

     

    Adjusted EBITA

     

    1,556

     

    1,532

     

    -2%

     

    % of revenues

     

    13.6%

     

    13.4%

     

     

     

     

     

     

     

     

     

    Net income (Group share)

    876

    831

    -5%

     

     

     

     

    Free cash flow

    397

    339

     



    ¹ Excluding Electroshield-TM Samara
    ² 2012 figures restated for the application of IAS 19 Revised
     
    Jean-Pascal Tricoire, Chairman and CEO, said: “We deliver a solid performance in the first half of 2013. The second quarter is characterized by strong organic growth of 6.5% outside Western Europe. Growth in North America and China gains traction and new economies sustain their good momentum. In the second quarter, Asia-Pacific becomes the largest region of the company, ahead of Western Europe.

    I am also pleased with our operational efficiency as gross margin improves excluding the impact of Electroshield-TM Samara and cash generation is strong. Focused execution of growth and cost efficiency initiatives, including tailored supply chain, allow us to perform well in a low growth environment. In parallel, we continue to invest in R&D, new economies and services.

    Our second half priorities will be centered on profitable growth, operational efficiency and integration of acquisitions.

    Looking forward, while the world economy is still uncertain, we expect the first signs of sequential stabilization towards the end of the year in Western Europe and continuous growth in North America, China and new economies in the second half. We will also monitor the evolution of emerging market currencies and expect stabilization. In this context, we maintain our full year targets.”

    I. SECOND QUARTER REVENUES WERE UP 3% ORGANICALLY

    Second quarter 2013 revenues were €6,219 million, up 3.7% on a current structure and exchange rate basis. Like-for-like revenues were up 2.6% in this quarter.

    Organic growth by busines

    € million

    H1 2013

    Q2 2013

    Revenues

    Organic growth

    Revenues

    Organic growth

    Partner

    4,175

     -1.2%

    2,245

    +0.7%

    Infrastructure

    2,628

    +3.7%

    1,519

    +5.9%

    Industry

    2,164

    +0.0%

    1,152

    +3.5%

    IT

    1,686

     -0.6%

    893

    +1.3%

    Buildings

    777

     -1.9%

    410

    +3.6%

    Group

    11,430

    +0.1%

    6,219

    +2.6%

    Partner (36% of Q2 revenues) grew 0.7% like-for-like. The product business was slightly up, supported by fast-growing offers in new economies, improvements in the residential market in the US and construction in China. This growth compensated the continued weakness of Western Europe and soft residential market in Australia. The Solution business declined, as growth in North America could not offset the decline in Western Europe and Middle East.

    Infrastructure (24% of Q2 revenues) was up 5.9% like-for-like, as both products and solutions observed growth. Product business was driven by good performance in North America and utility in the Middle East, offsetting a soft utility market in Western Europe. Solution business saw good growth in both services and systems. Installed based services growth was driven by the US. Systems benefited from overall growth in North America, investments in infrastructure in Russia and oil & gas segment in Australia. This more than offset the decline in Western Europe.

    Industry (19% of Q2 revenues) turned positive, posting 3.5% organic growth. Both products and solutions business performed well. The product business reported moderate growth, helped by demand for contactors, drives and control & signalling products in North America and China. The solution business was driven by the continued success of SoMachine OEM solutions across the globe and the synergies from Leader & Harvest. The end-user solutions business was still impacted by reduced investments in mining in Australia and high comparables in the Middle East.

    IT (14% of Q2 revenues) was up 1.3% like-for-like. Product business continued to grow, supported by the demand in North America, success of Luminous in India and power reliability products in South East Asia. Solution business declined as the high comparables of projects in Western Europe could not be offset by the slight growth in North America and good execution of data center projects in China.

    Buildings (7% of Q2 revenues) was up 3.6% organically, driven by both Products and Solutions. Products renewed with growth this quarter due to good performance of video products. Solution business was up, driven by the success of services in the US and Western Europe. This offset the continued weakness of building management systems in most regions.

    Solutions business was up +2% organically in the second quarter and represented 40% of revenues.

    Organic growth by geography

    € million

    H1 2013

    Q2 2013

    Revenues

    Organic growth

    Revenues

    Organic growth

    Western Europe

    3,264

     -7%

    1,675

     -6%

    Asia-Pacific

    3,115

    +4%

    1,720

    +5%

    North America

    2,912

    +3%

    1,581

    +10%

    Rest of the World

    2,139

    +2%

    1,243

    +4%

    Group

    11,430

    +0.1%

    6,219

    +2.6%

    Western Europe (27% of Q2 revenues) was down 6% year-on-year in the second quarter. Spain and Italy continued to post double-digit decline, impacted by the economic crisis in southern Europe. France continued to be difficult on the back of low business confidence. Germany was impacted by lower utility spending. UK and Ireland were stable while the Nordics posted positive growth, supported by a steady economy.

    Asia-Pacific (28% of Q2 revenues) was up 5% year-on-year in the second quarter, becoming the largest region of the Group in second quarter. China posted good growth, benefiting from improvements in construction and data centers. South East Asia continued to grow driven by investment in mining, utility and oil & gas. India still posted good growth in IT but was weighed down by difficulty in financing for infrastructure projects. Australia was impacted by the slowdown in mining and construction, which offset performance in oil & gas.

    North America (25% of Q2 revenues) was up 10% like-for-like. The performance was driven by continued recovery in the residential market and investment in oil & gas in the region. Industry business was a support to the growth. Data centers were positive while non residential market showed limited signs of growth.

    Rest of the World (20% of Q2 revenues) reported 4% growth. CIS posted double digit growth due to good execution of infrastructure projects. Middle East and South America were a support to the growth of the region. Central and Eastern Europe weighed down on the performance due to a slowdown in regional economy.

    Revenues in new economies were up 7% organically and represented 44% of total second quarter 2013 revenues, up 3 points compared to same period previous year. New economies outperformed mature countries by 7 points.

    Consolidation and foreign exchange impacts

    Net acquisitions contributed €150 million or +2.5% of growth. This includes mainly Electroshield-TM Samara (in Infrastructure business) and M&C Energy Group (in Buildings business).

    The impact of currency fluctuations was negative at €84 million, primarily the result of the depreciation of some emerging market currencies, U.S. Dollar, Japanese Yen and British Pound against the Euro over the second quarter. The impact of currency depreciation was sharpened towards the end of second quarter.

    II. FIRST HALF 2013 KEY RESULTS

    € million

     

    Restated³ H1

     2012

     

    H1

     2013 

    %
    change

    Gross Margin

    37.7%

    37.9%*

     

    Adjusted EBITA

    1,556

    1,532

    -2%

    % of revenues 

    13.6%

    13.4%

     

    Restructuring costs 

    (43)

    (62)

     

     

     

     

     

    Other operating income

    & expenses

    (8)

    12

     

     

     

     

     

    EBITA

    1,505

    1,482

    -2%

     

     

     

    Amortization & impairment of purchase accounting intangibles

    (118)

    (109)

     

     

     

     

     

    Net income (Group share)

    876

    831

    -5%

     

     

     

     

    Free cash flow

    397

    339

     

     

     

     

     

    ³2012 figures restated for the application of IAS 19 Revised
    *Excluding Electroshield-TM Samara

    • ADJUSTED EBITA MARGIN AT 13.4%, GOOD PRODUCTIVITY AND PRICE

    Gross margin improved +0.2 points excluding Electroshield-TM Samara. In a low growth environment, the resilient performance was driven by operational efficiency and pricing actions which offset lower volume, negative mix effect and increased R&D spend.

    First half adjusted EBITA was €1,532 million, representing 13.4% of revenues

    The key drivers contributing to the earnings change were the following:

    - Pricing actions during the first half paid off, adding €48 million to revenues in a favorable raw materials environment with a slight tailwind of €17 million.

    - Despite a slow growth environment with negative volume impact of €14 million, solid execution of tailored supply chain initiatives under the “Connect” program helped achieve €168 million of industrial productivity.

    - Support function costs had a negative impact of €39 million in the first half as the Group continued to invest in R&D and other growth initiatives in new economies and services. Excluding R&D expense, support function to revenues ratio was stable compared to same period last year.

    - The depreciation of some emerging market currencies, British Pound and Australian Dollar against the Euro reduced the EBITA by €38 million.

    - Contribution from acquisitions, net of divestments, amounted to €14 million.

    - Mix was negative at €114 million, mainly due to one off impact from some projects, relative weakness of some more profitable product lines and geographies.

    By business, adjusted EBITA of Partner in the first half amounted to €875 million, or 21.0% of revenues, up 1.0 point year-on-year due to positive pricing and productivity. Infrastructure adjusted EBITA was €190 million, or 7.2% of revenues, down 1.2 point affected by unfavorable mix due to growth in solutions and one off impact from some projects. In spite of a flat growth environment, Industry showed resilience by generating an adjusted EBITA of €423 million, or 19.5% of revenues which was up 0.9 point, thanks to productivity and good control of commercial actions. IT business reported an adjusted EBITA of €289 million, 17.1% of revenues, down slightly by 0.4 points due to commercial investment. Profitability of Buildings was down 2.1 points at 4.4% of revenues, or €34 million, due to negative volume and one-off elements not reflecting the underlying trend.

    Corporate costs in the first half 2013 amounted to €279 million or 2.4% of revenues, same level as the previous year.

    Reported EBITA reached €1,482 million, after accounting for €62 million of restructuring costs and a positive impact of €12 million of other operating income and expenses. The restructuring costs in the second half of 2013 are expected to increase in line with the “Connect” initiatives.

    • NET INCOME IMPACTED BY INCREASED TAX AND FOREIGN EXCHANGE IMPACT 

    The amortization and depreciation of intangibles was €109 million, compared to €118 million in the first half of last year.

    Financial expenses were up year-on-year at €242 million, of which net interest expenses on financial debt amounted to €166 million at a lower cost of debt. Foreign exchange losses of €31 million were a negative impact in first half this year.

    Income tax amounted to €283 million corresponding to an effective tax rate of 25.0%, up 1.7 points compared to the previous year primarily due to the impact of French tax law evolution, in line with the Group’s anticipation.

    The net income was €831 million for the first-half 2013, down 5% mainly due to the impact of foreign exchange losses and increased taxation.

    • GOOD CASH GENERATION IN FIRST HALF 2013 

    Free cash flow was €339 million, in line with the Group’s normal cash flow seasonality. The increase in receivables due to high Q2 growth was partially offset by improved inventory to revenues ratio leading to an increase of €322 million in the trade working capital. Non-trade working capital increase was €122 million.

    The free cash flow included €286 million of net capital expenditure, representing 2.5% of revenues.

    On a twelve-month rolling basis the free cash flow conversion reached 114% of net income.

    • SOLID BALANCE SHEET, NET DEBT TO ADJUSTED EBITDA RATIO REMAINED LOW 

    Schneider Electric’s net debt amounted to €5,276 million (€4,395 million in December 2012). The increase was primarily the result of €1,025 million of dividend payment and €309 million of acquisitions. The Group’s net debt to LTM adjusted EBITDA ratio was solid at 1.3x.

    III. CORPORATE GOVERNANCE

    On July 30, 2013, the board of directors recorded the resignation of Mrs. Domninique Senequier from her office on June 25, 2013, as a member of the board of directors.

    IV. 2013 OUTLOOK

    The first half showed confirmation of growth in North America and China, continued good momentum in new economies and overall weakness in Western Europe. While the worldwide economy is still uncertain, the company expects first signs of sequential stabilization towards the end of the year in Western Europe and continuous growth in North America, China and new economies in the second half. The company will also monitor the evolution of emerging market currencies and expects stabilization.

    In this context, the company maintains its targets of a low-single digit organic growth in revenues and of a stable to slightly up adjusted EBITA margin for the year 2013.

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

    The financial statements of the period ending June 30, 2013 were established by Board of directors on July 30, 2013 and certified by the Group auditors on July 30, 2013.

    The half year 2013 consolidated financial statements and the interim result presentation are available at www.schneider-electric.com

    Third quarter 2013 revenues will be released on October 25, 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 Utilities & Infrastructure, Industries & Machines Manufacturers, Non-residential Building, Data Centers & Networks and in Residential. Focused on making energy safe, reliable, efficient, productive and green, the Group's 140,000 plus employees achieved revenues of 24 billion euros in 2012, through an active commitment to help individuals and organizations make the most of their energy.
    www.schneider-electric.com

    Appendix – Revenues breakdown by business

    Second quarter 2013 revenues by business were as follows:

    € million

    Q2 2013

    Revenues

    Organic growth

    Changes in scope of consolidation

    Currency effect

    Reported growth

    Partner

    2,245

    +0.7%

     -0.4%

     -1.1%

    -0.8%

    Infrastructure

    1,519

    +5.9%

    +13.5%

     -1.2%

    +18.2%

    Industry

    1,152

    +3.5%

     -0.8%

     -1.8%

    +0.9%

    IT

    893

    +1.3%

    +0.3%

     -2.3%

    -0.7%

    Buildings

    410

    +3.6%

     -1.6%

     -1.0%

    +1.0%

    Group

    6,219

    +2.6%

    +2.5%

     -1.4%

    +3.7%

    First half 2013 revenues by business were as follows:

    € million

    H1 2013

    Revenues

    Organic growth

    Changes in scope of consolidation

    Currency effect

    Reported growth

    Partner

    4,175

     -1.2%

     -0.1%

     -1.1%

     -2.4%

    Infrastructure

    2,628

    +3.7%

    +8.3%

     -1.2%

    +10.8%

    Industry

    2,164

    +0.0%

     -0.9%

     -1.6%

     -2.5%

    IT

    1,686

     -0.6%

    +0.1%

     -2.4%

     -2.9%

    Buildings

    777

     -1.9%

     -0.5%

     -0.9%

     -3.3%

    Group

    11,430

    +0.1%

    +1.5%

     -1.4%

    +0.2%

    Appendix – Breakdown by geography

    Second quarter 2013 revenues by geographical region were as follows:

    € million

    Q2 2013

    Revenues

    Organic growth

    Reported growth

    Western Europe

    1,675

    -6%

    -6%

    Asia-Pacific

    1,720

    +5%

    +4%

    North America

    1,581

    +10%

    +9%

    Rest of the World

    1,243

    +4%

    +13%

    Group

    6,219

    +2.6%

    +3.7%

    First half 2013 revenues by geographical region were as follows:

    € million

    H1 2013

    Revenues

    Organic growth

    Reported growth

    Western Europe

    3,264

    -7%

    -6%

    Asia-Pacific

    3,115

    +4%

    +2%

    North America

    2,912

    +3%

    +2%

    Rest of the World

    2,139

    +2%

    +6%

    Group

    11,430

    +0.1%

    +0.2%

    Appendix – Consolidation impact on revenues and EBITA

    In number of months

     

    2012

    Q1

     

    Q2

     

    Q3

     

    Q4

    2013

    Q1

     

    Q2

     

    Q3

     

    Q4

     

     

     

     

     

     

     

     

     

    Lee Technologies 

    IT business
    2010 revenues $140 million

    3m

     

     

     

     

     

     

     

    Summit Energy 

    Buildings business
    2011e revenues $65 million

    3m

     

     

     

     

     

     

     

    Digilink

    Partner business
    2010 revenues c. €25 million

    3m

    3m

    -1m

     

     

     

     

     

    APW President 

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

    3m

    3m

    -1m

     

     

     

     

     

    Luminous

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

    3m

    3m

    -1m

     

     

     

     

     

    Steck Group

    Partner business

    2011e revenues €80 million

    3m

    3m

    1m

     

     

     

     

     

    Telvent

    Infrastructure business

    2010 revenues €753 million

    3m

    3m

    2m

     

     

     

    Leader & Harvest

    Industry business
    2011e revenues $150 million

    3m

    3m

    3m

     

     

     

     

     

    M&C Energy Group

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

     

     

    3m

    3m

    3m

    3m

     

     

    Electroshield-TM Samara

    Infrastructure business

    Average annual revenues of more than RUB 20 billion since acquisition of 50% stake in 2010

     

     

     

     

     

    3m

    3m

    3m

    Appendix - Results breakdown by division

     € million

    H1

    2012

    H1

    2013

    Revenues

    11,408

    11,430

    Partner

    4,278

    4,175

    Infrastructure

    2,372

    2,628

    Industry

    2,219

    2,164

    IT

    1,736

    1,686

    Buildings

    803

    777

    Corporate

    -

    -

    Adjusted EBITA

    1,556

    1,532

    Partner

    855

    875

    Infrastructure

    199

    190

    Industry

    412

    423

    IT

    304

    289

    Buildings

    52

    34

    Corporate

    (266)

    (279)

    - Other operating income and expenses

    (8)

    12

    Partner

    8

    12

    Infrastructure

    (8)

    (11)

    Industry

    (7)

    2

    IT

    3

    (1)

    Buildings

    (1)

    (1)

    Corporate

    (3)

    11

    - Restructuring

    (43)

    (62)

    Partner

    (25)

    (23)

    Infrastructure

    (4)

    (8)

    Industry

    (5)

    (8)

    IT

    (2)

    (3)

    Buildings

    (2)

    (6)

    Corporate

    (5)

    (14)

    EBITA

    1,505

    1,482

    Partner

    838

    864

    Infrastructure

    187

    171

    Industry

    400

    417

    IT

    305

    285

    Buildings

    49

    27

    Corporate

    (274)

    (282)

    Investor Relations:
    Schneider Electric
    Anthony Song
    Press Contact:
    Schneider Electric
    Véronique Roquet-Montégon
    Press Contact:
    DGM
    Michel Calzaroni
    Olivier Labesse
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