presentation epg 2010 en - schneider electric · a 5-step planning model. schneider electric -...

EPG conference

May 2010

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.

Disclaimer

Schneider Electric 3- Investor Relations – EPG conference – 17 May 2010

Focus on Areva Distribution20

Review of 2009 Finance presentation

23

31 Outlook

Strategy and growth opportunities04

11 Focus on Data Centers

Strategy and growth opportunities


Schneider Electric – a global company positioned for long term sustainable growth

billion sales in 2009

% of sales in new economies

people in 100+ countries

in Fortune 500 ranking

of sales devoted to R&D

Sales by geography – FY 2009

North America

27%Asia

Pacific21%RoW

11%

WesternEurope

35%

EasternEurope

6%


We are the global specialist in energy management …

Energy production& transmission

Energy usage

Energy Management

Making energy:• Safe• Reliable• Efficient• Productive• Green


…present in diversified end markets

Buildings

Data Centers Energy &

Infrastructures

Industry

Residential

31%

Hospitals/administrations

Offices

Commercial

18%

25%

Electrical power

Oil & gas

Marine

10%

16%

Machinesconstruction

Mining, ores& metals

Water

Industrial

% of 2009 sales


We are a socially responsible company committed to sustainable development

A measurable commitment•The planet & society barometer

Environment•Apply standards like RoHS, REACH, WEEE

•Eco-design• ISO14001 certification

Access to energy•Provide access to electricity for 1.6 billion people

•Train disadvantaged young people in the field of energy

•Business angel for local entrepreneurs

Ethics•Global compact of the United Nations

•Principles of responsibility signed by every employee

Business•Head of Green Grid•Sign the Clinton Climate Initiative•Partner of Alliance to Save energy

BBop

I

P

6.0 /10 Q4 2009

3.0 /10 Grade in Jan. 2009

Target 8/10 by 31 Dec 2011


DistributionTransmission

Residential

Commercial

Industrial

Consumers

Transportation

Centralised Generation

Old-style power distribution: the good old Jurassic grid


Today, the electric grid is undergoing a major transformation and will be “smart”

Active Energy Efficiency: Energy visibility& means to act

2Active

Centralised Generation

DistributionTransmission

Distributed Generation1

Renewable Backup

Renewable Energy Generation1

Residential

Commercial

Industrial

ConsumersIntelligent Intelligent

4 Real-timeGrid management

ElectricVehicles & Energy Storage

3

ElectricVehicleTransportation

Focus on Data Centers


Our customers’ top challenges

IT density is increasing and challenging the traditional power and cooling infrastructure

Energy efficiency is now a global issue

Design & build cycle timeneeds to be faster and more predictable

all putting pressure onAVAILABILITY


Innovation making the connection from rack to building for total system efficiency and availability

Integrated energy management

IT floorThe “white space”

Server room supervision Capacity Management

Building management/security

Power Availability

Thought leader

our ideas steer the industry

Capex flexibility

scalable and modular systems

Interactive toolsmake informed

decisions before data center design

Optimised Opexreduced PUE and

eliminate inefficient power use


A unique set of tools in the industry to help our customer in data center planning

1. Determine IT parameters● Capacity

● Growth

● Criticality

2. Develop system concept

● Analyze high level trade-offs

● Evaluate examples

3. Determine user requirements● Evaluate preferences and

constraints

4. Generate specification

5. Generate detailed design

TradeOff Tools ™

Reference designs

Tools for analyzing trade-offs and priorities

(Data Center capital cost, Power/cooling efficiency, carbon footprint…)

A 5-step planning model


Scalable, integrated and energy efficient solutions & software suite for data centers

PowerProcess& machines

Whitespace

3rd partysystems & software

Metering

Sub-Metering

MV Distribution

Protection

LV Distribution

Generation

Metering for mechanical

loads

Pump Control

Cooling Towers, Pumps, Fans,

Heaters

Chillers

Buildingmanagement& security

Racks

UPS

Temperature Sensors & Rack

security

In Row Cooling

PDUs

COMPREHENSIVE MANAGEMENT SOFTWARE SUITE

Video surveillance

Central softwareBuilding management

softwarePower management

software


Boosting the availability and the efficiency of the data center while ensuring the reliability

Real-time energy efficiency

monitoring

Integratedenergy

management

Availability monitoring


Project management● Equipment Sourcing & Scheduling ● Construction ● Installation● Assembly & Start-up ● Commissioning ● Integration

A service offering spanning the full lifecycle of the data center

Project initiation● Analysis● Assessment ● Planning & Consulting ● Design ● Architecture

Engineering support

Asset management● Operations, Maintenance & Repair● Remote Monitoring - building automation,

IT floor, power quality, security● Training● Asset Planning


Complete data center solution for Switch Communications in Nevada, US

PowerProcess& machines

Whitespace

3rd partysystems

Buildingmanagement& security

• 407,000 sq foot co-location facility

• Designed to handle super-high densities (up to 1,500 watts / sq foot)

• Relying on Schneider Electric's portfolioAPC critical power & coolingSquare D switch gear TAC building management Pelco security cameras

• Life-cycle servicesArchitecture engineering design & supportand project management


IT business delivering profitable growth

2006 2007 2008 2009 Q1 2010Proformaincl APC

+14% +7% -14% +6%

6.9%

12.5%

15.2%16.0%

Organic growth

EBITA before restructuring (in $bn)

0.2

0.5

2009 sales breakdown

Home and Business networks

Services~15%

Enterprise systems

SalesUSD3.2bn

� Record margin in 2009

� Back to growth since Q4 2009

More opportunities to come from demand for integrated energy management from rack to building

Margin

Focus on the acquisition project of Areva Distribution


Areva Distribution business is a perfect fit to our medium voltage business

~billion sales in 2008

~people

Areva DistributionWorld #4 in medium voltage

Geographical fit

Balanced end-markets

Technological fit and smart grid

Reinforced presence with utilities

� Technology leader in primary + secondary MV distribution

� Enhanced smart grid capability

Excellent complementarities in new economies

We will become world leader in MV after the acquisi tion with combined sales of ~€4.5 bn, 45% of which in new economies


Areva Distribution acquisition is a key industrial project with high synergy potential

Timeline

~ €120M/year on EBITA in year 5

On EPS* from year 1 and ROCE from year 3

Cash impact ~ €1.1 billion for Schneider Electric

� Signing on 20 January� EU antitrust approval on 26 March� A few regulatory approvals still required

Accretive transaction

Highly synergetic

Areva D + Schneider Medium Voltage

• Closing expected by end of Q2

• “Energy” business to be created upon closing* Excluding one-off items

2009: We delivered in a tough business environment while preparing our future


A strong execution of program One priorities to face unprecedented downturn

Managementresponse

-15.7%

EconomicEnvironment

-5% to-15%

Financial milestones

To drive resilience in a crisis• Support function cost

reduction• Drive productivity• Strict cash management

January 2009

indication

Full-year 2009

outcome

Group:

Of which:• Solutions

• New economies

Organic sales declinein 2009

-10%

-9%

Cost savings from SFC and productivity

Capex(excl. R&D)

Trade workingcapital

�27%

€646m

�20%

12%

Min. EBITAmargin beforerestructuringin 2009

Cash focus

Achieved(before one-off gain)

Record highfree cashflow

Conversion ofadjusted net income

€2bn

12.9%

186%


R&D spending maintained despite tough market conditions

Commitment to innovation and R&D in products and solutions to support future growth

4.6%4.5% 4.2%

4.2%

764723

542

2005 2006 2007 2008 2009

% of sales

€m

4.8%

R&D budget

Harmony™Biometric Switch

Wireless systems for home automation

Sarix IP security systems

Innovation for products and solutions

SoMachine: One single software to reduce time to market


Program One is at work to lay a strong base for sustainable growth and profitability

� EcoStruxure: already in the market with key architectures providing best Energy Efficiency

� Green is a reality: Renewables – Low-consumption buildings – Smart Grid – more to come…

� Innovation in offers and solutions

� Accelerating penetration thanks to local R&D and marketing

� On track to reach 50% of low-cost production

� Leaner supply chain and supplier concentration

� Simplification of SG&A functions

� Brand simplification to boost marketing efficiency

� New organization to raise value creation potential

World GDP + 5pts

Organic growthacross the cycle

World GDP + 6pts

Lesscomplexity

2009 Financial Results


Margin resilience to 12.9% thanks to active cost management

In m€ 2008 2009 Change

-16%6,2217,432Gross margin

-1.2pt39.4%40.6%Margin %

-30%2,0442,937EBITA1,2 before restructuring and one-off gain

-3.1pts12.9%16.0%Margin %

-15.7%Organic growth

18,311 -13.8%15,793Sales

1 After reclassification of the interest component of defined benefit plan costs (see appendices for details)2 Excluding €92m one-off pension gain in 2009

Organic growth

Free cash flowas % of sales

EBITA marginbefore restructuring costand one-off gain

-17.9%-13.6%

H107 H207 H108 H208 H109 H209

Sequential improvement through the year

11.6%

14.2%

9.4%

15.5%


IT business margin ahead of last year, weak industry demand affecting Industry and CST

Power

Buildings

CST

1,5712

2552

132

20

17.0%2

363

2009 €m and as % of sales

1 Corporate costs of €297m in 2009 (€317m in 2008)2 Before one-off gain from US pension curtailment

2009 EBITA before restructuring by business(before corporate costs1)

Sales€15,793m

Industry

IT

9.6%2

16.0%

10.4%

5.7%

Buildings8%

CST2%

Power59%

IT14%

Industry17%


Net debt reduced by over €1.7bn thanks to robust free cash flow

1 Including R&D capitalization of €211m (€195m in 2008)2 Dividends paid in 2009 amount to €837m, of which €520m have been paid in shares (at shareholders’ option)

813(72)Change in working capital

(2,812)1,741

32158

(103)(317)2

1,971(576)

1,734(4,553)

411

726

770

(4,553)383(85)144

(615)(796)1,735(693)

2,500(4,936)

Net debt at December 311,330Decrease in net debt

OtherCapital increaseAcquisitionsDividends

1,245Free cash flow

964Operating cash flow

Capital expenditure – net1

Net debt at January 1

Analysis of debt change in €m 2008 2009 H1 H2

-38%

2010 Outlookfor Schneider Electric


Sales organic growth by business

Sales organic growth by region

Q1 2010

3,910

90303542764

2,211

+6.4%IT

+2.3%Group

+6.3%-3.6%

+18.7%

-2.7%

CST

Industry

Buildings

Power

Q1 2010

-2%973North America+23%888Asia-Pacific

3,910

645

1,404

+2.3%

-1%

-4%

Rest of World

Group

Western Europe

€ m € m

Q1 sales renewed with growth at +2.3%, like-for-like


2010 outlook

Q1 sales performance supports Schneider Electric targets for 2010:

• a return to growth : low single-digit organic sales growth

• a profitability improvement : EBITA margin of around 14% pre-restructuring costs(before Areva Distribution integration impact)

Industry and data-center end-markets first to return to growth

New economies boosting Group sales

Non-residential buildings slowdown to continue for some more months

Business environment in mature countries still uncertain

Industrial productivity and support function costs savings continuing

Risks on raw material inflation ~€150m

Restructuring charges expected at €150-200m

Business trends Profitability


We are ideally positioned to capture the major growth opportunities of our time

• Renewable energies

• Energy efficiency• Electric vehicle charging infrastructure

• Grid automation

• BRICs to be 4 of the top 5 world

economies by 2050

• 1.6 bn people have no access to energy

Smart Grid New economies (34% of sales)

Power

Industry

Buildings

IT

Our strength

Complete solutions for the smart grid

Our strength

Strong presence in new economies (44,000 employees)

CST

Appendices


● EBITDA: EBIT before net depreciation and amortization

● EBITA: EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill

● Adjusted net income: Group share in net income adjusted for exceptional restructuring costs (above €100m), one-offpension gains/losses and impairment of goodwill and intangibles, at the period’s underlying tax rate

● Cash conversion: Free cash flow / net income

● Free cash flow: Operating cash flow – change in working capital – net capital expenditures

Definitions


Contacts & agenda

30 July

20 October

2010 Half-YearResults

Q3 2010 Sales

Conference callVideo webcast9:00am (CET)

Conference call9:00am (CET)

Carina Ho – Head of Investor RelationsTel: +33-1-41-29-83-29

[email protected]

Grégoire Rougnon – Investor Relations Manager Tel: +33-1-41-29-81-25

[email protected]

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presentation epg 2010 en - schneider electric · a 5-step planning model. schneider electric -...

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