full year results 2017: strong operational performance ... · full year results 2017: strong...
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Confidential Property of Schneider Electric
Full Year Results 2017: Strong operational performance yields record EPS
February 15, 2018
Page 2Confidential Property of Schneider Electric |
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.
This presentation includes information pertaining to our markets and our competitive positions therein. Such
information is based on market data and our actual revenues in those markets for the relevant periods. We obtained
this market information from various third party sources (industry publications, surveys and forecasts) and our own
internal estimates. We have not independently verified these third party sources and cannot guarantee their
accuracy or completeness and our internal surveys and estimates have not been verified by independent experts or
other independent sources.
Page 3Confidential Property of Schneider Electric |
FY 2017 Strategy Highlights
Full Year 2018 Targets
Appendix
FY 2017 Finance Presentation
4
24
36
39
XX
Page 4Confidential Property of Schneider Electric |
Strong Results in 2017 with All-time High Adj. EBITA, Net Income and Free Cash-Flow
• Q4 organic growth accelerating to
+4.6% with Energy Management
and Industrial Automation up
+4.3% and +5.6% respectively
• FY Group organic growth +3.2%
• FY org. growth in Low Voltage,
Secure Power and Industrial
Automation accelerated to +4.5%,
well above initial target of +1% to
+3%
Strong Revenues Growth
• FY adj. EBITA organic growth: +9%
• FY adj. EBITA margin: 14.8%, up
+90bps org.
• Continued expansion of Adj. EBITA
margin over past 10 quarters
Sustained Profit momentum
• All time-high Net Income: €2.15bn,
up +23%
• All time-high EPS of 3.85€ / share
• Record Free Cash Flow at €2.25bn
Free Cash Flow conversion: 105%
• Disciplined capital allocation:
ROCE up +1.3pt at 12%
• Dividend proposed: €2.20, up +8%
Record Earnings & Strong Cash
2016
13.7
14.814.1
2015
+1.1pt, c.+1.6pt org.
2017
Page 5Confidential Property of Schneider Electric |
Good progress in strategic priorities
Drive organic growth through more products and innovation
Push organic growth
on differentiated
business models
Improve margin
• Products revenues up +4.3%
org., accelerating in H2 at
+4.9%
• Final Distribution and Wiring
Devices activities: solid mid
single digit growth in 2017
(4+ years of consecutive
growth)
• Industrial Automation
products up high single
digit over 2017
Strong organic growth 100+ product launches in 2017 Recognition in innovation
SM6 ConnectedCompact NSXm
Masterpact MTZ Galaxy VX
Page 6Confidential Property of Schneider Electric |
Good progress in strategic priorities
Drive organic growth on differentiated business models
• Industrial software sales about flat impacted by O&G,
with Q4 revenues slightly up
• Acquisition of IGE+XAO to strengthen position in
electrical CAD for Energy Management
• Transaction with AVEVA awaiting completion, providing
unique software portfolio across asset lifecycle for
continuous & hybrid processes
• CFIUS approval obtained
• Closing expected by March 1st
• CEO on board 19 February
More Software
• High single-digit growth in FY orders
• +6% organic growth in Q4 revenues
• Services supported by Digitization
• Digitization of delivery for best-in-class
customer satisfaction leveraging IT tools
• Connecting critical customer infrastructure to
EcoStruxure Advisor (apps) for increased asset
performance
More Services
Page 7Confidential Property of Schneider Electric |
Good progress in strategic priorities
Cross selling accelerating
Steam Engineering
Customer
Germany
Water and waste
management facilities
Brazil
Global leader in
logistics
USA
MV Secure PowerLV Industrial Automation
Telco’s Data Center
China
Powering and Controlling
pumping system with industrial
automation and LV equipment
A complete panel with all
components and complete
wiring and application software
Distribution hubs with conveyor
sortation system having 5ms
Application Response time
Complete solution of MV
switchgear, power system and
relay protection
Page 8Confidential Property of Schneider Electric |
Good progress in strategic priorities
Digital Journey progressing
Connectivity Experience Scale Ecosystem
• 1.6 million of Assets
under Management,
+25% YoY
• New web experience, with
traffic up +15% YoY
• New Digital Catalog roll
out with traffic up +70%
• 650,000+ channel
partners on our digital
portal
• Brand new EcoStruxure
Cloud Platform scaling
up: ~2,500 events per
second
• 20,000+ System
Integrators and
Developers working with
us
• X2 in connected
customers vs end of 2016
Page 9Confidential Property of Schneider Electric |
Baosteel: The world's leading
modern steel joint venture
• Up to 30% improvement on
productivity
• Cost savings of over 20
personnel
Future-ready hospital in USA
• Projected CAPEX Savings
up to 5%
• Flexible and upgradable
through next 15-20 years
• Improved patient experience
Integrated Data Center in China
• 60% reduction in maintenance
breakdown
• Automated operation for
quantifiable efficiency gains
• Migrating to Integrated,
Intelligent & Digital experience
Proven value for customers:
EcoStruxure wins in Q4 – some examples
City of Milford: Weather-proof
Microgrid
• 50% greater energy
efficiency for electricity &
heat generation
• 15 – 30% reduction in energy
spending
Page 10Confidential Property of Schneider Electric |
Proven value for customers: EcoStruxure in international retail chain Auchan
Maximize energy performance to reach COP21 commitments
Challenges Full EcoStruxure solution deployed Significant results
• Roll out in 10 out of 12 countries
• -20% targeted energy savings in 4 years
• Tens of m€ of annual energy bill
reduction achieved at the end of 2017
• Tailored Energy Procurement process
• Worldwide supervision through
Resource Advisor
• Tailored performance contracting model
• Remote monitoring and optimization services
• Adherence to COP21
commitments and protect
environment
• Manage costs and protect
margin
• Deploy at scale (3,000+ retail
sites potentially involved)
“Schneider Electric has a deep
business knowledge… a real value
add partnership based on a client
centric approach”
Sustainability is a growth pillar for Schneider
Electric.
Our sustainability strategy is integrated in the
Group strategy to meet the energy challenge.
Schneider Electric’s project for society is to act
to keep global warming below the 2°C limit
and to reduce the energy gap, with ethics and
responsibility.
Schneider Electric listed as 5th global
company with the most SRI funds in
its capital (365 funds)
(Ipreo report SRI Leaders Index Fall 2017)
Page 11Confidential Property of Schneider Electric |
Good progress in strategic priorities
Our Planet & Society barometer reaches 9.58/10 on Q4
Our vision for increased
long-term performance
● 100% of new large customer projects with CO2 impact
quantification
● All our entities pass our internal Ethics & Responsibility
assessment98.4%
100%
● 10% CO2 savings from transportation
● 100% of products in R&D designed with Schneider
ecoDesign WayTM
10.3%
100%
● 64% scored in our Employee Engagement Index
● 85% of employees work in countries with Schneider gender
pay equity plan
65%
89%
Q4 2017Indicators & objectives 2017 - selection
Page 12Confidential Property of Schneider Electric |
Good progress in strategic priorities
Our new 2018-2020 Planet & Society barometer drives further performance
Circular Economy
75% of sales under our new Green Premium
program
190 sites labeled towards zero waste to landfill
100% cardboard / pallets from recycled or certified
sources
100,000 metric tons of primary resource
consumption avoided through Ecofit, recycling,
and take-back programs
Climate
80% renewable electricity
10% CO2 efficiency in transportation
100 million metric tons customers CO₂ avoided
through our offers
25% increase in turnover for our Energy &
Sustainability Services
Development
x4 turnover of our Access to Energy program
350,000 underprivileged people trained in energy management
12,000 volunteering days thanks to our VolunteerIn global platform
Ethics
5 pts /100 increase in avg. ISO26000 assessment for strategic suppliers
300 suppliers received on-site Human Rights & Environment assessment
100% of sales, procurement, & finance employees trained on anti-corruption
Health and Equity
70% score in Employee Engagement Index
1 medical incident per million hours worked
90% of employees have access to well-being at work program
100% of employees in countries w/ fully deployed Family Leave policy
100% of workers received 12h learning in year (30% digital)
90% of white collars have an individual development plan
95% of employees in countries w/ commitment/process for gender pay equity
Page 13Confidential Property of Schneider Electric |
Recognition and Continuous Commitment in multiple areas
Sustainability
Human Resources
2017 Gartner Supply Chain:
Europe Top 15
2017 Gartner Supply Chain
Top 25
Supply Chain
Page 14Confidential Property of Schneider Electric |
Good progress in strategic priorities
Driving continuous efficiency
• c.€1.9bn of gross costs savings in 3 years with c.€650m
achieved in 2017
• Cumulative savings since 2015:
• Tailored Supply Chain program delivered
• Customer Satisfaction in top quartile of industrial companies
• Network modelling and lead-time reduction
• End to end digitization powered by EcoStruxure
• Ambitious supplier concentration program
Productivity targets overachieved
•MV Adj. EBITA margin reached 10% in FY17
(up c.260bps organic since 2015)
•Selectivity1 ending in 2017. Q4 Org. growth was +2.2%
(c.+5% ex-selectivity)
• Implementation of specialized organization (“Power
System”) focused on greater agility, autonomy & focus
•FY18 Adj. EBITA margin for MV division targeted to
improve organically by +1pt to 1.5pts
Medium Voltage Rebound on track
1.3
0.7
0.8
2016
1.0
0.8
2017
1.9
1.2
0.5
0.4
2015
0.30.7
Target
1.8
Gross SFC savings
Industrial prod. 2014
8.6
20172016
9.79.1
2015
10.0
Factory visit in Wuhan (China) on March 26 1: MV Sales impacted by c. €195m of selectivity in 2017 and c.€40m in Q4 17
Reinforcing our core
Disposal of non-core assets
Page 15Schneider Electric – Investor Relations
We continue to optimize our portfolio
We continue to optimize our portfolio and focus on shareholder returns
…and generate attractive returns for our shareholders
Dividend up +8% in 2017
+
Share buyback of c.€1bn until mid-2019 launched
+
c.75% of FCF returned to shareholders over past 3 years
Page 17Confidential Property of Schneider Electric |
We are leading the digital transformation of Energy Management and Industrial Automation
Energy Management
c.+4% FY17 organic
excl. selectivity and with Delixi
Industrial Automation
+6% FY organic
With an Integrated and Digitized portfolio to
step up efficiency for our customers
Page 18Confidential Property of Schneider Electric |
Energy Management
Complete end-to-end offering addressing customer needs across segments
Delivering higher reliability and efficiency
combining Medium & Low Voltage, Secure Power
powered by EcoStruxure
… driving strong cross-sell in segments
Building
on Floor Space
in Data Center
Healthcare
Hotel
Data Center
F&B
MMM
O&G
WWW
Utilities
c.90% of MV packaged with LV outside of utilities
in Electrical Room
• IT racks, IT pods
• UPS
• Access floor
• PDU’s, rack PDUs
• CRAC and Air Containment
• Panels, Breakers
• Environmental and power
sensors
• Physical security
• UPS
• Switchboards & Switchgear
(MV, LV)
• Busway
• Power Meters and Sensors
• Breakers
• Transformers
• Automatic Transfer Switch
• Building Mgt system
• HVAC & Light controls
• Sensors
• Wiring devices
MV Secure PowerLV
Page 19Confidential Property of Schneider Electric |
Key macro drivers for Energy Management
North
America
Western
Europe
Asia-
Pacific
Resi. & Non-resi. Buildings Industry & Infrastructure UtilitiesData Center & Networks
• Continued capital
investment in Data center
& Edge computing
• Microgrids activity
ramping up
• Improving demand on CIB1
• Good demand in
residential markets
• Favorable Industry &
Infrastructure demand
• Good demand in
residential markets
• More focus on efficiency &
sustainability in CIB
• Growth in Data center
investment and in edge
computing
• Strong OEM demand
• Good trends in hybrid
industries
• Utilities challenged by
decentralized grid
creating opportunities in
digital
• Residential & CIB
markets up
• Increasing focus on
Energy Efficiency
• Data center investments
• Growth in Home Secure
Power in New eco.
End Market
1. Commercial & Industrial Buildings
• Investments in
Transportation
• End-users need for greater
efficiency
• Utilities investments
continued in the region
Rest of
the World
• Utilities investments
lower in the Middle-East
• Microgrids activity
ramping up
• Residential & CIB markets
grew
• Some improvement in
Mining demand
• O&G remains on low levels
• Data center investments
in the region
En
erg
y M
an
age
me
nt
~+2% excl.
selectivity1
Page 20Confidential Property of Schneider Electric |
Energy Management showed strong performance in 2017
FY2017 ORGANIC GROWTH, %
Energy Management: +3.4% org., ex-selectivity1
FY2017 Adj. EBITA, %
4,4
-2,2
2,1Secure
Power
Low
Voltage
Medium
Voltage
En
erg
y M
an
age
me
nt
9.7
20.6
16.8
16.6
10.0
Medium
Voltage2
Low
Voltage
Secure
Power
20.2
FY16 FY17
Energy Management: 17.3%, +40bps, +100bps org.
~+130 bps
~+flat
Strong recovery
in H2
~+80 bps
FY organic
improvement
1. Revenues in Medium Voltage impacted by c. €195m of selectivity in 2017
2. FY17 Scope Impact -50bps (mainly DTN)
~+5.3% with
Delixi
Energy Management – Performance Highlights
Low Voltage
• All 4 regions grew. Strongest growth in North America, China and Rest of the World
• Final Distribution & Wiring Devices continued strong +6% org. growth, in line with past trends
• Good growth in Commercial and Industrial buildings (incl. Data centers)
• EcoStruxure Power / Building connected points growing double-digit
Medium Voltage
• Power System2 margin improving strongly, driving business margin improvement
• Services revenues were stable but orders up mid single-digit
• More EcoStruxure – ADMS ranked Leader in 2017 Gartner Magic Quadrant;
Secure Power
• Strong growth in New Economies, up +7%
• Distributed IT up low single digit / Good performance in non-IT end-markets
• Group sales in Datacenter up mid single-digit with: Secure Power sales up low single-digit,
MV/LV sales up double-digit
• Services up mid single-digit
€18.9bn76% of Group 2017 revenues
Energy Management
Energy Management
Execution priorities
• Maximize Group’s growth through every
channel
• Continue to deliver margin improvement
• Accelerate sales through partners
• Grow EcoStruxure: New connected offers,
Analytics & Digital Services
Organic
growth
+3.41%Adj. EBITA
margin
17.3%/ +0.4pt
Performance in 2017
1: excluding selectivity of c. €195m in 2017
2. activity focused on projects & equipment primarily for utilities and electro-intensive end-users
Page 22Confidential Property of Schneider Electric |
Industrial Automation – Growth at the Core
Application knowledge for
greater conversion of machines
EcoStruxure Machine is growing 4x
faster than the market*
We lead at the Edge w/ EcoStruxure
Plant & differentiated software
Synergies w/ Energy Management
driving customer value in Industry
& Infrastructure end-markets
F&B
MMM
O&G
WWW
Utilities
Energy ManagementIndustrial Automation
Power & Automation awards
won based on refinery domain
expertise in automation
The customer
• The largest silicone materials production
facilities in the world
The solution
• EcoStruxure Plant deployed, incl.
Foxboro DCS and modernization services
• Deployment of renewed Edge Control
portfolio
The results
• Reduced project risk and cost due to
preservation of infrastructure
• Executed jobs 50% faster than expected
• Reduced CAPEX by 50%
• Added 2 extra days of production, leading
to a faster time to profit
Conversion of machines from
packaging to hoisting to HVAC
Selected segments
2006 2008 2010 2012 2014 2016 2018
200 k
0 k
800 k
1.000 k
1.200 k
600 k
400 k
(*) Machine CAGR = 4.1% (source IHS)
machines >1.000.000
Page 23Confidential Property of Schneider Electric |
Industrial Automation - Strong performance growing top line and margin with +90bps organic
improvement on Adj. EBITA margin
Organic growth
+5.9%Adj. EBITA margin
17.6%/ +0.9pt
Performance in 2017
€5.8bn24% of Group 2017 revenues
Industrial Automation
#2 worldwide
Performance highlights
• Growth across all 4 regions
• Strong Products (Contactors, HMI, Drives and Signaling) performance driven by
channel initiatives
• EcoStruxure Machine growing double-digit
• End-user automation boosted by Industry 4.0
• Process Automation revenues up low single-digit
• Software revenues about stable org. and grew in H2
• Adj. EBITA margin +90bps organic with improved volume and productivity
Execution priorities
• Grow business through distributors & partners
• Continue roll-out of EcoStruxure Plant & EcoStruxure Machine
• Drive growth through industrial software platform
#4worldwidediscrete automation process
ANALYSIS OF CHANGE IN GROUP REVENUES (in €m)
Based on current rates, the FX impact on FY 2018 revenues is estimated to be between -€1.0bn to -€1.1bn. The FX impact at current rates on
adjusted EBITA margin is expected to be around -20bps
12,570
-1.2%
North America
+3%
H2 2016
restated
H2 2017
12,717
Western Europe
+3%
Asia-Pacific
+6%
Fx
-4.6%
Rest of World
+3%
Scope
-0.3%
Group Q417: +4.6% org
Group H217: +3.7% org
Group FY17: +3.2% org
Mainly DTN sale, consolidation
of Asco for 2 months
Mainly due to the USD, CNY
and some new economies’
currencies decline vs. EUR
Page 25Confidential Property of Schneider Electric |
Revenues accelerating to +4.6% in Q4, leading to +3.7% organic in H2 17, with growth across regions
En
erg
y M
ana
ge
me
nt
Indu
str
ial
Au
to.
Page 26Confidential Property of Schneider Electric |
Strong performance in H2 with all businesses accelerating organic growth and improving Adj.
EBITA margin organically
H2 ORGANIC GROWTH, % Group: acceleration to +4.6% on Q4
with all businesses growing
H2 Adj. EBITA, %
1. Selectivity estimated at c.€40m on Q4 and c.€95m on H2;
2. Restated from Solar deconsolidation
En
erg
y M
ana
ge
me
nt
Indu
str
ial
Au
to.
Secure
Power
17.5
Low
Voltage
17.8
Medium
Voltage
Industrial
Automation
20.0
20.5
12.2
11.5
18.6
18.4
Group: +40bps
+100bps org.
-0,7
Low
Voltage
2.2
Medium
Voltage
Secure
Power
Industrial
Automation
5.4
5.6
4.9
2.2
4.0
6.2
Q4 17 H2 17 H2 17H2 16 rest.H2 organic
improvement
MV Excl. selectivity
Q4: ~+5.3%
H2: ~+3.3%~+140 bps
~+100 bps
~+120 bps
~+100 bps
GROSS MARGIN: ANALYSIS OF CHANGE (%)
1,8
Mix H2 2017
38.1
FXR&D & Prod.
Labor infl.
ProductivityNet price11VolumeH2 2016
restated
0.0
-0.6
-0.1-0.4
-0.2
-0.5
38.1
Scope &
Others
Page 27Confidential Property of Schneider Electric |
Gross Margin up +50bps organically on H2
• H2 Raw Material Impact on products more than
covered outside China. In China, volume growth,
strong productivity and cost efficiency enabled good
evolution of the margin, despite price investments,.
• Raw material impact in H2: -€116m. RMI expected
around -€200m in 2018 at current prices
• Pricing actions will continue in order to compensate
for raw material inflation in 2018
• R&D increase
impacted c. -0.2pt
• Scope impact of c. -0.3pt
mainly linked to DTN
deconsolidation
1. Price less raw material impact
Page 28Confidential Property of Schneider Electric |
Strong H2 performance with +11% organic growth in Adj. EBITA, leading to Adj. EBITA of
€3.7bn and FY +90 bps organic improvement, exceeding the high end of revised guidance
In €m H2 2017Organic change
2016restated
2017Reportedchange
Organic change
Revenues 12,570 +3.7% 24,459 24,743 +1.2% +3.2%
Gross Profit 4,783 +5.1% 9,358 9,498 +1.5% +4.2%
Gross margin
(%)38.1% +50 bps 38.3% 38.4% +10bps +40bps
SFC1 (2,850) +1.3% (5,860) (5,847) -0.2% +1.3%
SFC1 ratio (% Revenues) 22.7% +60 bps 24.0% 23.6% +40bps +40bps
Adjusted EBITA 1,933 +11.2% 3,498 3,651 +4.4% +9.2%
Margin % 15.4% +100 bps 14.3% 14.8% +50 bps +90 bps
1: Support function cost
SFC to Revenues improves by 40bps
due to disciplined SFC management
involving simplification and selected
reinvestments
Gross profit improved organically
through improved volumes and
strong productivity, and with
improving net pricing in H2
Above objective of 4 to 7% organic
growth
Page 29Confidential Property of Schneider Electric |
We delivered the highest industrial productivity in past 7 years and continued our disciplined
SFC management
Key Actions Over 2017
Industrial productivity (c. €430m)
• Ranked #17 Top Global Supply Chain by Gartner
• Purchasing & lean manufacturing results boosted by
volume
• Reached €1.2bn over 3 years
SFC Savings (c.€220m Gross savings)
• Cumulative savings: c. €760m over 3 years
• Finance/ Marketing simplification
• Real Estate cost reduction
• Optimization levers on operations per region
Reinvestments (>€100m)
• Digital customer experience
• Digital and mobile tools
• Services & marketing capabilities
• Platform for EcoStruxure development
SFC to Sales ratio (%)
Industrial productivity (€m)
20172016
380
430
20172016
24.0
23.6
-40bp
Target to sustain good
level of industrial
productivity in 2018
Continue to invest in
core priorities – Digital,
Services and Marketing
Targeting an organic
improvement in SFC to
Sales ratio
Page 30Confidential Property of Schneider Electric |
Accelerating profit growth: EBIT grew by +8% and Net income up +23%, thanks to improved
financial costs and lower tax rate
In €m 2016 restated 2017 % change
Adjusted EBITA 3,498 3,651 +4%
Other income and expenses (63) (15)
Restructuring (309) (286)
Amortization & depr. of purchase accounting intangibles (151) (140)
EBIT 2,975 3,210 +8%
Financial costs (462) (367)
Income tax (719) (600)
Discontinued operations (17) (94)
Equity investment & Minorities (27) 1
Net income (Group share) 1,750 2,150 +23%
Adjusted Net income1 2,134 2,378 +11%
Adjusted Earning per share1 3.80 4.26 +12%
Concluding the 3 year adjustment of our structure and
costs. Restructuring costs expected to be €150m to
€200m going forward to generate industrial productivity
Including €53m lower Finance costs. Avg. cost of debt
improved due to new issuance at favorable rates
Increase mainly due to asset depreciation in Solar activity
Includes Group share of Delixi Net income for €39m, up
c.€14m.
1: Adjusted net income and EPS calculation in appendix
2017 ETR 21.1%, Normative Tax rate of 21.5% with higher
tax synergies from Invensys & favorable profit mix.
ETR expected at 22-24% in 2018 & medium-term.
Page 31Confidential Property of Schneider Electric |
Strong Free Cash Flow generation at €2.25bn
Analysis of debt change in €m 2016
restated2017
Net debt at opening Dec 31 (4,631) (4,824)
Operating cash flow 2,956 3,020
Capital expenditure – net (741) (688)
Change in trade working capital 55 (126)
Change in non-trade working capital (54) 47
Free cash flow 2,216 2,253
Dividends (1,227) (1,197)
Acquisitions – net 47 (557)
Net capital increase (689) (10)
FX & other (540) 39
(Increase) / Decrease in net debt (193) 528
Net debt Dec 31 (4,824) (4,296)
Mainly Asco acquisition and Luminous
minority interest acquisition, balanced by
DTN disposal
Working capital growth driven by inventory
and receivables, a result of topline
expansion
Page 32Schneider Electric – Investor Relations
1051182
2015 2017
100 long-term objective
2016
1131
1,01,1
2015 2016 2017
<1.0
CASH CONVERSION, % NET DEBT/ ADJ. EBITDA
1: Based on Net income adjusted for business disposals impact and Pelco impairment
2: Based on Net income adjusted for non-cash c.€120m income tax increase due to deferred tax assets adjustment
Strong cash conversion and solid balance sheet
IMPROVING CAPITAL
EFFICIENCY
ROCE IMPROVEDHIGH LEVEL OF RETURN ON
OPERATIONAL ASSETS
Operational Assets / Revenues (%)1
1. Operational assets: Tangible assets + Net working capital (Inventories + Accounts receivables less payables)
2. Adjusted EBITA / Operational assets (year-average)
3. Pro forma including Invensys
40
37
20172014
Return on Operation Assets (Post-tax) 2
2014 2017
31
2810.7
20162013 pro-
forma3
2017
15
1111.0
12.0Target range
Strong improvement of ROCE thanks to higher margin, capital efficiency and lower taxes
Disposal of non-core activities
APPLIANCE
TRANSPORTATION
~€2.2Bn generated through disposals
of non-core activities since 2014
Page 34Schneider Electric – Investor Relations
DTN
Reinforcing our coreFocusing on integration
c.€130m cost synergies
achieved by 2016
c. €400m revenue synergies
generated in 2017 (1 year
early)
Tax synergies increase by
€100m to c. €600m
2017 main disposals
2014-2016 main disposals
M&A on the core, adding value
Page 35Schneider Electric – Investor Relations
Proposed dividend: €2.20 per share, up +8%
2013
1.87 1.92
2014
2.042.00
2015 20171
2.20
2012 2016
1.87
2011
1.70
2010
1.60
2009
1.03
Dividend (€ per share)
1: Subject to shareholder approval in AGM
Progressive dividend policy
Page 37Confidential Property of Schneider Electric |
2018 Targets
In a positive environment, the Group targets to deliver strong organic growth of Adjusted EBITA in
2018, around the high-end of the +4% to +7% bracket earlier communicated as the average
yearly objective for 2017-2019.
To deliver this strong performance the Group will balance both levers of organic top line growth and
Adj. EBITA margin expansion. Therefore, for 2018, the Group will target:
• An organic top line growth between +3% to +5%; and
• An organic Adj. EBITA margin expansion towards the upper end of the +20bps to +50bps range
targeted as yearly average improvement for 2017-2019.
Further notes on 2018 in the next page
Page 38Confidential Property of Schneider Electric |
2018 additional notes
• Exchange rates impact: Based on current rates, the FX impact on FY 2018 revenues is estimated to be between -
€1.0bn to -€1.1bn. The FX impact at current rates on adjusted EBITA margin is expected to be around -20bps
• Scope: Based on FY17 financials for acquisitions, scope impact is currently estimated around +€200 million in
revenues and expected to be about neutral at the level of the Group Adj. EBITA margin. This does not include
AVEVA which would be fully consolidated in the financial statements at completion. For FY2017 (March year-end),
AVEVA revenues and operating profit amounted to £216m and £55m respectively.
• Tax rate: Thanks to the positive evolution of the corporate income tax rates in several countries where the Group
operates, the ETR is expected to be in a 22-24% range in 2018 and in the medium term.
• Restructuring: Restructuring costs are expected in the foreseeable future to be back to a normative recurring
amount of €150m to €200m corresponding in majority to the costs required to generate the manufacturing
productivity and to continue to drive simplification.
• Working days: The Group expects a negative working day impact of c. -1.5pts in Q1 2018 that will reverse during
the balance of the year.
Page 40Confidential Property of Schneider Electric |
Definitions
EBITA EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill
Adjusted EBITA EBITA before restructuring and other operating income and expenses
EBITDA EBIT before depreciation, amortization, provisions and before share-based compensation cost
Adjusted EBITDA Adjusted EBITA before depreciation, provisions and before share-based compensation cost
Cash Conversion Free cash flow / Net income (Group share)
Free Cash Flow Operating cash flow less change in working capital less net capital expenditures
ROCE Return On Capital Employed
The arrow shows if the indicator has risen, stayed the same or fallen compared to the previous quarter. The colour shows if the indicator is above or below the objective of 9/10.
10% energy savings
10% CO2 savings from transportation
Towards zero waste to landfill for 100 industrial sites
100% of products in R&D designed with Schneider ecoDesign WayTM
30% reduction in the Medical Incident Rate (MIR)
One day training for every employee every year
64% scored in our Employee Engagement Index
85% of employees work in countries with Schneider gender pay equity plan
150,000 underprivileged people trained in energy management
1,300 missions within Schneider Electric Teachers NGO
75% of product revenue with Green PremiumTM eco-label
100% of new large customer projects with CO2 impact quantification
120,000 tons of CO2 avoided through maintenance, retrofit and end-of-life services
x5 turnover of Access to Energy program to promote development
100% of our recommended suppliers embrace ISO 26000 guidelines
All our entities pass our internal Ethics & Responsibility assessment
-
-
34
-
10%
10%
100
100%
60.5%
-
-
-
48%
-
75%
100%
120,000
x5
100%
100%
30%
85%
64%
85%
150,000
1,300
-
79%
61%
-
73,339
460
9.2%
11.6%
116
100%
75.9%
16%
148,415
x2.09
84.6%
88.7%
37%
85%
64%
75%
143,756
1,289
10.3%
10.3%
130
100%
80.1%
100%
168,400
x2.21
87.9%
98.4%
38%
92%
65%
89%
148,145
1,347
Planet & Society barometer
Overall score (out of 10)
Start
01/2015
3.00
Target
12/2017
9/10
Results
Q4 2017
9.58
Results
Q3 2017
9.01Our megatrends 2015-2020 and our targets 2015-2017
The Planet & Society barometer 2015-2017 - Results as of Q4 2017
Page 42Confidential Property of Schneider Electric |
FY Adj. EBITA up +9% organic thanks to strong productivity and volume
Analysis of change of adjusted EBITA (in €m)
430
233-119
ScopeNet price1
3,498
Volume
-97
FY 2016
restated
-124-30
Other
-77
COGS
(Inflation
& R&D)
3,651-51
-12
FXProductivityMix FY 2017SFC
1. Price less raw material impact
Page 43Confidential Property of Schneider Electric |
H2 Adj. EBITA up +11% organic
Analysis of change of adjusted EBITA (in €m)
224
139
OtherCOGS
(Inflation
& R&D)
SFC
-35
-143
-53
ScopeProductivityNet price1
-30
-44 1,933
Mix
-3
Volume FX H2 2017
1,911
H2 2016
restated
-33
1. Price less raw material impact
In €mFY2016restated
FY2017
Net income (group share) 1,750 2,150
Impact of business disposals (in OOIE, share of profit
on associates & discontinued ops)27 (7)
Integration costs post-tax1 - 23
Restructuring charges post-tax1 238 224
Tax rate: deferred tax net assets depreciation2 119 (12)
Adjusted Net income 2,134 2,378
Adjusted EPS (€) 3.80 4.26
Page 44Schneider Electric – Investor Relations
Adjusted net income calculation
1. Calculated post-tax at the year effective tax rate (ETR)
2. see Press release from 9 January 2017 for 2016 amount
ROCE calculation
2017
P&L items Reported
EBITA (1) 3,350
Restructuring costs (2) -286
Other operating income & expenses (3) -15
= Adjusted EBITA (4) = (1)-(2)-(3) 3,651
x Effective tax rate of the period1 (5) 21.5%
= After-tax Adjusted EBITA (A) = (4) x (1-(5)) 2,865
2016 2017 2017
Balance sheet items Adjusted reported Avg of 4
quarters
Shareholders' equity 20,653 19,941 (B) 19,994
Net financial debt2 4,824 4,295 (C) 4,598
Adjustment for Associates and Financial assets (fair value) -762 -709 (D) -733- Sunten Electric Equipment (25% stake) 52 48 50
- Fuji Electric FA Components & Systems (36.8% stake) 115 116 116
- NVC Lighting (8.9% stake) 35 23 29
- Delixi (50% stake) 279 278 279
- CST Holding (30% stake) 77 35 56
- Other non-current financial investments 204 209 203
= Capital Employed 24,715 23,527 (E) = (B)+(C)+(D) 23,859
= ROCE² (A) / (E) 12.0%
1. Effective tax rate before exceptional items
2. Average Net debt adjusted from the carrying value of ASCO for 1 month as acquisition consolidated for 2 months
ROCE Calculation
Page 46Confidential Property of Schneider Electric |
Investor Relations ready to engage
Upcoming events:
08 March
20 March
31 May
07/08 June
14/15 June
Industrials day (IR), Paris, Morgan Stanley
Conference, London, BoAML
Digital conference, Paris, BoAML
ESG/SRI conference, Paris, ODDO
CEO Conference London, JP Morgan
Information on www.schneider-electric.com/finance
Consensus available on http://www.schneider-electric.com/en/about-us/investor-relations/share-information/share-price.jsp
26 March
5/6 April
19 April
24 April
25 April
Smart Supply Chain site visit in Wuhan (China)
Innovation Summit, Paris
Q1 2018 Revenues
Shareholders’ meeting, Paris La Défense
Hannover Automation Fair
Conferences Schneider Electric events
Proposing quarterly interaction with investors
showcasing specific businesses, geographies
or functions
Page 47Confidential Property of Schneider Electric |
Contact
Amit Bhalla– Head of Investor Relations
Tel: +44-20-7592-8216
Alexis Denaud – Senior Investor Relations Manager
Tel: +33-1-41-29-51-24