SCHNEIDER ELECTRIC (EPA:SU) - Strong start to 2019. Growth momentum continues in Q1. Revenues up +9% reported. Full Year Target reaffirmed.
Directive transparence : information réglementée Information financière du premier trimestre
18/04/2019 07:00
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Financial Information
Strong start to 2019. Growth momentum continues in Q1. Revenues up +9%
reported. Full Year Target reaffirmed.
* Org. growth +6%; North America up +9% org., Asia-Pacific up +7% org.
* Energy Management up +7% org., growing in all regions
* Industrial Automation up c.+4%(1) org., mid/late cycle revenues growing
strongly
* Good dynamic on strategic priorities: Services, Software, EcoStruxure
Rueil-Malmaison (France), April 18, 2019 - Schneider Electric announced today
its first quarter revenues for the period ending March 31, 2019.
Jean-Pascal Tricoire, Chairman and CEO, commented: "We start the year 2019 with
a solid momentum and continued growth. We execute our strategy to provide our
customers energy and automation digital solutions for efficiency and
sustainability. Energy Management delivers a strong performance, benefitting
from its complete power management solutions in its four end-markets.
Industrial Automation grows benefitting from its balanced exposure, strong
growth in process & hybrid and its integrated software portfolio while discrete
markets are moderating in specific geographies. AVEVA concludes a remarkable
first year and confirms the strategic rationale of the transaction. We keep
pushing our strategic initiatives for more products, more software, more
services and better systems as well as cross selling to our targeted segments.
We are confirming our objective for 2019."
I. FIRST QUARTER REVENUES WERE UP +5.9% ORGANICALLY
2019 Q1 revenues were EUR6,307 million, up +5.9% organically and up +8.7% on a
reported basis.
Across the Group in Q1, Products were up +3% org., benefitting from offers for
Residential & small buildings, as well as offers for Commercial & Industrial
Buildings (CIB), while demand from discrete industrial markets moderated. The
Group continues to focus on leveraging its unrivalled network of partners and
on new innovative products.
Systems (projects and equipment) grew +10% org., reflecting the growth in
mid/late cycle demand. The Group continues to work on ensuring profitable
growth in its systems business.
Services growth was +11% org., with strong performance in field services,
growing across geographies, and in Energy & Sustainability Services, driven by
projects in North America.
Software grew double-digit including AVEVA.
(1) Excluding the impact from the phase down of the non-core lower margin panel
offer in North America
The breakdown of revenue by business and geography was as follows:
EUR million Q1 2019
Revenues Organic Growth Reported Growth
Energy Management
North America 1,516 11.6% 20.3%
Western Europe 1,204 2.9% 3.0%
Asia Pacific 1,293 8.2% 10.2%
Rest of the World 725 3.7% 0.4%
Total Energy
Management 4,738 7.1% 9.6%
Industrial Automation
North America 323 -3.9%(2) 2.5%
Western Europe 506 4.9% 9.1%
Asia Pacific 497 3.3% 8.7%
Rest of the World 243 3.1% 1.7%
Total Industrial
Automation 1,569 2.3%(3) 6.4%
Group North America 1,839 8.7% 16.7%
Western Europe 1,710 3.5% 4.7%
Asia Pacific 1,790 6.8% 9.8%
Rest of the World 968 3.6% 0.7%
Total Group 6,307 5.9% 8.7%
STRONG PERFORMANCE IN ENERGY MANAGEMENT UP +7.1% ORG., UP C.+7.4% INCLUDING
DELIXI
The Group delivered strong performance in Energy Management leveraging its
complete end-to-end technology offering enabled by EcoStruxure. The Group's
go-to-market is oriented to address customer needs across its four end-markets,
supported by a worldwide partner network. This enabled the Group to deliver
growth across all regions. Residential and small building offers grew
mid-single digit, with good traction from recent launches. Offers for
Commercial & Industrial Buildings developed well. EcoStruxure provided a
differentiated value proposition for customers across targeted segments,
including electro-intensive industries and infrastructure. Data centers
continued to be an area of strong growth for all technologies of Energy
Management growing double-digit in Q1.
Trends for Energy Management, by geography:
(2) North America Industrial Automation excluding panels offer c.+2%; U.S.
Industrial Automation excluding panels offer c.+5%
(3) Industrial Automation excluding panels offer c.+4%.
North America (32% of Q1 revenues) Energy Management was up +11.6% organic for
the quarter, with good performance in both Residential and Commercial &
Industrial Buildings offers, benefitting from roll-out of recent launches and
strong channel initiatives. The Group continued to leverage its complete
portfolio of data center offers to win projects in a favorable investment
environment. The Group continued to see traction on its compelling value
proposition for microgrid solutions. Services grew strongly in the region, led
by the Group's Energy & Sustainability Services. Both the U.S. and Canada were
up, while Mexico was down.
Western Europe (25% of Q1 revenues) Energy Management grew +2.9% organic in Q1.
The Group continued to see good development in its offers for Commercial and
Industrial buildings while Residential and small buildings offers were stable.
The division benefitted from its full power management capabilities in the data
center market to record strong growth. Spain posted good growth, with channel
initiatives delivering results in favorable markets. Italy continued to deliver
solid performance, with strong growth across Residential and CIB markets, while
Germany declined. France was down in the quarter impacted mainly by lower sales
on offers for utilities and to distributors following some restocking in Q4
2018. The U.K. was up, but with uncertainty in coming quarters as a consequence
of potential Brexit scenarios.
Asia-Pacific (27% of Q1 revenues) Energy Management posted strong growth at
+8.2% organic. China delivered a solid performance as construction markets
remained positive, though could moderate in coming quarters. The Group
delivered good growth in projects and equipment, in particular in data centers
and infrastructure projects. The performance was enhanced by distributor
restocking driven in part by uncertainty on the impact of VAT changes. South
East Asia posted strong growth and delivered on data center projects, with good
trends in construction markets. In Australia, strong performance was driven by
data center delivery and smart grid projects while residential market was
difficult. India delivered good growth on high base of comparison. In a
positive environment, the Group drove products growth through expansion of
partner coverage.
Rest of the World (16% of Q1 revenues): Energy Management made an encouraging
start to 2019 in the region, with a good level of growth overall, up +3.7%
organic, however contrasted between countries as expected. South America,
Africa and Central Europe all delivered strong growth; South America was
assisted by a buoyant economy in Brazil notably in respect of Industrial
end-users and Utilities, while Africa saw strength in both the north and south
of the continent, benefitting from project execution particularly where the
Group's Energy Management technologies are bundled and sold together. Middle
East was down, with Saudi Arabia continuing to see lower demand from Utilities
while construction markets in the Gulf were also weak. CIS was also down
overall.
BALANCED PORTFOLIO IN INDUSTRIAL AUTOMATION RESULTS IN c.+4%(4) ORG. GROWTH
The Group delivered +2.3% organic growth in Industrial Automation, c.+4%
excluding the phase down of the non-core lower margin panel offer in North
America. Core offers for discrete and OEM were slightly up despite a slowdown
in some markets, as anticipated. These offers will face a high base of
comparison in Q2. The Group benefitted from its balanced portfolio, providing
through-cycle resilience and generating strong growth in process and hybrid
industries, notably Oil & Gas (O&G), Water and Waste Water (WWW) and Food &
Beverage (F&B). Process Automation grew in all regions. The Group is well
positioned to leverage its unique end-to-end offering for process and hybrid
industries together with AVEVA.
(4) Excluding the impact from the phase down of the non-core lower margin panel
offer in North America.
Trends for Industrial Automation, by geography:
North America (21% of Q1 revenues) was up c.+2% excluding the phase down of the
non-core and lower margin panels offer. The U.S. was up c.+5% on the same
basis. Process industries were up, with increased capital expenditures for
efficiency contributing to growth in O&G markets. Discrete automation was
stable, excluding the phase down of the panels offer. Process & Hybrid
industries were up overall in the region, with increased expenditure in O&G,
WWW and F&B.
Western Europe (32% of Q1 revenues) was up +4.9% organic with growth in offers
for both discrete industries and for Process & Hybrid industries. All large
markets except Italy grew. France benefitted from continued growth in
industrial investment. Spain, Nordics and the UK grew thanks to Machine
Solutions initiatives. Germany was up with growth in OEM and in offers for
Process & Hybrid.
Asia-Pacific (32% of Q1 revenues) was up +3.3% organic in the quarter. China
grew with both discrete and process contributing. Offers for discrete
industries were up, though impacted by a slowdown on expected lines following
U.S./China trade disputes. The Group delivered strong growth on projects for
process industries. South East Asia was stable, with strong project delivery
for process industries balancing the decrease in OEM markets, which were
impacted by the trade tensions causing delay in some investments. Japan was
down as growth in process industries could not compensate for short-cycle
decline. India grew across discrete and process & hybrid industries.
Rest of the World (15% of Q1 revenues): Industrial Automation saw 3.1% organic
growth overall in the region, up across South America, CIS, Africa and Central
Europe, with only the Middle East showing a decline. Within the region, the
revenue growth profile across discrete and process industries was broadly
balanced, although with a notable building of backlog on the process side.
South America saw strong growth helped by good demand for equipment in Chile.
CIS saw strong demand across Industrial markets in Russia. Middle East was
down, impacted by project phasing in some Gulf countries and a slow start to
the year in Turkey.
Performance of AVEVA:
AVEVA (included for 2 months in scope effects and for 1 month in organic
growth) delivered double-digit organic growth in Q1. AVEVA benefitted from
sales in conjunction with Schneider Electric's automation offers through a
coordinated go-to-market approach. This performance highlights the good
traction for its end-to-end digital solution from design and build to operation
and maintenance for operators in hybrid and process end-markets.
CONSOLIDATION(5) AND FOREIGN EXCHANGE IMPACTS IN Q1
Net acquisitions had an impact of +EUR44 million or +0.8%. This includes mainly
the consolidation of AVEVA (Industrial Automation), and IGE-XAO (Energy
Management), and some minor acquisitions / disposals.
(5) Changes in scope of consolidation also include some minor reclassifications
of offers among different businesses.
The impact of foreign exchange fluctuations was positive at +EUR116 million or
+2.0%, primarily due to the strengthening of the U.S. Dollar against the
Euro.
Based on current rates, the FX impact on FY 2019 revenues is estimated to be
between +EUR300 million and +EUR400 million. The FX impact at current rates on
adjusted EBITA margin could be around -10bps.
II. SCHNEIDER SUSTAINABILITY IMPACT
The Schneider Sustainability Impact 2018-2020 is the Group's transformation
plan and steering tool measuring progress towards its ambitious sustainability
commitments. Details can be found at:
https://www.schneider-electric.com/en/about-us/sustainability/
sustainable-performance/barometer.jsp
Following the excellent progress on SSI in 2018, objectives for 9 indicators
out of 21 have been raised.
In Q1, the Schneider Sustainability Impact reaches a score of 6.23 out of 10,
as the Group continues to execute its three-year sustainability plan.
III. 2019 TARGET REAFFIRMED
In its main markets, the Group currently expects the following trends:
* China faces a high base of comparison and softening OEM demand but remains a
growth market in aggregate with dynamism in many end-markets including
construction, infrastructure and parts of industry; though construction
end-markets could moderate in coming quarters
* In North America, the Group anticipates a continuing favorable environment
* Other large countries in Asia Pacific continue good momentum
* The Group expects Western Europe to grow at a moderate pace and the Rest of
World economies to be contrasted based on country
Following the strong start to the year, and taking into account developing
macro-economic trends, the Group continues to expect good growth in aggregate
in 2019 as it continues to deploy its strategic priorities in key markets.
The Group reaffirms its target for 2019. The Group targets 2019 Adj. EBITA
growth between +4% and +7% organic. This would be achieved through a
combination of organic revenue growth and margin improvement, expected to be:
* Revenue growth of +3% to +5% organic
* Adjusted EBITA margin up +20 to +50 bps organic.
Further notes on 2019 available in appendix
The 2019 Q1 revenues presentation is available at www.schneider-electric.com
The Annual General Meeting will take place on April 25, 2019.
The Group will hold an investor day in Paris on June 26, 2019.
The 2019 Half-Year Results will be presented on July 25, 2019.
Disclaimer: All forward-looking statements are Schneider Electric management's
present expectations of future events and are subject to a number of factors
and uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements. For a detailed description
of these factors and uncertainties, please refer to the section "Risk Factors"
in our Annual Registration Document (which is available on
www.schneider-electric.com). Schneider Electric undertakes no obligation to
publicly update or revise any of these forward-looking statements.
About Schneider Electric: Schneider Electric is leading the Digital
Transformation of Energy Management and Automation in Homes, Buildings, Data
Centers, Infrastructure and Industries. With global presence in over 100
countries, Schneider is the undisputable leader in Power Management - Medium
Voltage, Low Voltage and Secure Power, and in Automation Systems. We provide
integrated efficiency solutions, combining energy, automation and software. In
our global Ecosystem, we collaborate with the largest Partner, Integrator and
Developer Community on our Open Platform to deliver real-time control and
operational efficiency. We believe that great people and partners make
Schneider a great company and that our commitment to Innovation, Diversity and
Sustainability ensures that Life Is On everywhere, for everyone and at every
moment.
www.schneider-electric.com
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blog.scneider-electric.com
Appendix - Further notes on 2019
* Foreign Exchange impact: Based on current rates, the FX impact on FY 2019
revenues is estimated to be between +EUR300 million and +EUR400 million. The
FX impact at current rates on adjusted EBITA margin could be around -10bps.
* Industrial Productivity: While the increased level of inflation and tariffs
will weigh on productivity in 2019, the Group continues to expect a strong
level of gross industrial productivity.
* Tax rate: The ETR is expected to be in a 22-24% range in 2019.
* Restructuring: Restructuring costs in 2019 are expected to be around the same
level as those in 2018, c. EUR200 million
* Working days: The Group expects a negative working day impact of c. -1pt in
H1 2019 that will reverse during the balance of the year.
Appendix - Q1 Revenues breakdown by business
EUR million Q1 2019
Revenues Organic Changes in Currency Reported
growth scope of effect growth
consolidation
Energy Management 4,738 +7.1% +0.0% +2.5% +9.6%
Industrial Automation 1,569 +2.3% +3.0% +1.1% +6.4%
Group 6,307 +5.9% +0.8% +2.0% +8.7%
Appendix - Consolidation
In number of months 2018 2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
AVEVA
Industrial Automation
Business
GBP216 million revenues
in FY2017
(ending March 2017) 1m 3m 3m 3m 2m
IGE-XAO
Energy Management Business
EUR29 million revenues in
FY2017 (ending July 2017) 2m 3m 3m 3m 1m
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