Connect - Schneider Electric

Interview with
Schneider Electric reached a new record in sales in
2011. How was this performance achieved?
Indeed, we generated record high sales of EUR22.4 billion in 2011,
in comparison with less than EUR14 billion fi ve years ago. This is
the result of a successful long term strategy built upon balancing
organic growth and acquisitions, and on our leading position in high
growth geographies as well as in energy management solutions.
Schneider Electric has fi rst of all delivered solid organic growth
at +8.3%: growth in new economies reached +15%, as in 2010,
and solutions growth accelerated to +12%. These trends were
seen across the Group’s businesses, with growth around +10%
for Industry and IT, and between +7% and +8% for Power and
Infrastructure.
Finally, the deployment of our strategy has been reinforced by
acquisitions such as Telvent for real-time critical infrastructure
management, but also with Luminous, Steck, or Leader & Harvest
in new economies. Acquisitions brought additional growth of 7%
this year.
Is your growth strategy comforted by the fi nancial
results?
Yes, because Schneider Electric also achieved record high results.
Our EBITA* before acquisition and integration costs reached
EUR3.2 billion, up 7%.
However we faced a diffi cult environment, notably with political
instability in Africa and the Middle East, and above all with the
natural disaster in Japan in March and its terrible consequences.
We always privileged our employees’ security but our local
operations were disrupted and our electronic purchases impacted.
The steep raw material infl ation entailed additional costs of over
EUR400 million. These diffi culties penalized our margin evolution.
We have nevertheless put in place strong actions to offset these
headwinds by raising the sales prices and controlling our costs. Our
free cash fl ow generation amounting to EUR1.7 billion in the second
half was a record.
Over the full year, our Group share net income was up 6% at
EUR1,820 million, the highest ever achieved by Schneider Electric.
We will therefore offer a dividend of EUR1.70 per share to our
shareholders, fully paid in cash.
INTERVIEW WITH EMMANUEL BABEAU
EXECUTIVE VICE PRESIDENT FINANCE, MEMBER OF THE MANAGEMENT BOARD
Emmanuel Babeau
EXECUTIVE VICE PRESIDENT FINANCE,
MEMBER OF THE MANAGEMENT BOARD
Our net fi nancial debt amounts to EUR5.3 billion, up mainly due
to the dividend pay-out of EUR0.9 billion and to acquisitions for
EUR2.9 billion. Our balance sheet is particularly strong, with a solid
net debt to adjusted EBITDA ratio at 1.4x and a free cash fl ow
generation capacity maintained at a very high level.
How do you consider the Group’s outlook for 2012?
The uncertainty surrounding the global economy limits our visibility.
We see continued strength in new economies and opportunities
from a recovering North America, while Western Europe is expected
to weigh on growth.
In this context we foresee fl at to slightly positive organic growth
for sales and an adjusted EBITA margin between 14% and 15%.
But the Group enters 2012 with the strength of its well diversifi ed
geographic and end-market exposure, leadership position across
its businesses that will continue to be very promising in the years
to come, and a clear advantage of its unique organization model
built for excellence in our commercial effi ciency and fi nancial
performance.
What are your ambitions for Connect, the new
company program?
We have just launched Connect which was successively presented
to our teams, our shareholders and investors and to our stakeholders
generally. This company program will obviously be key to accelerate
the development of Schneider Electric by 2014, on all dimensions
including customers, markets and development of our teams. We
have also expressed our ambition to drive the improvement of our
fi nancial results. We therefore reiterate our target of an average
organic growth at world GDP + 3 points across the economic
cycle. This growth should allow us to generate an adjusted EBITA
margin between 13% and 17%, depending on the global economic
conditions and our effi ciency initiatives. Additionally, the quality of
our cash generation and our discipline in terms of industrial and
fi nancial investments should allow us to generate a Return on
Capital Employed (ROCE) between 11% and 15%. Our ambition
is therefore to put Schneider Electric in a dynamic of continuous
profi table growth, consistent with our commitment to sustainable
development.
*EBITA: EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill
2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
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