ODDO Environment Forum

Transcription

1 ODDO Environment Forum E.Lepoutre A.Petitdemange June 10, 2016

2 Schneider Electric, a leader in energy transition technologies Page 2

3 A unique positioning to answer three long term trends Urbanization Industrialization Digitization > Increasing energy demand > Peaks in demand Challenges > Pollution > City congestion > Climate change > Resource scarcity Page 3

4 A highly integrated and synergic portfolio to serve our four diversified end markets END MARKETS 1 Buildings 2 (34% of group revenues) Industrial and Machines (Discrete and Process) (27% of group revenues) Utilities and Infrastructure (25% of group revenues) Data Centers and Networks (14% of group revenues) 1 Estimated based on 2015 revenues 2 Including residential and non-residential buildings 3 Including standalone software ENERGY ~65% of Group revenues AUTOMATION SOFTWARE 3 ~35% of Group revenues Page 4

5 A focused portfolio of 4 activities with worldwide leadership Key technologies Low voltage & Building automation Medium voltage & Grid automation Discrete & process industrial automation Critical power & cooling services Activity in Schneider Electric Buildings & Partner Infrastructure Industry IT 2015 revenues ( bn) Revenue share % % % % 2015 Adj. EBITA Margin (%) Worlwide position 18.0% 9.1% 17.1% 17.6% #1 #1 #2 discrete #4 process #1 Page 5

6 A model focused on its core activities through a constant portfolio optimization ACQUISITIONS STRENGTHENING OUR CORE DISPOSAL OF NON CORE ACTIVITIES DISTRIBUTION APPLIANCE Pipeline management / ADMS TRANSPORTATION Page 6

7 A growing investment in innovation ~5% of sales devoted to R&D Patents active or in application worldwide R&D andsolutions engineers 10,000+ Solution engineers ~5,000 Software engineers M Bn Dépense R&D sur 15 ans Page 7

8 Our balanced and robust model creates value for our shareholders Page 8

9 A balanced geography and end-market exposure, a leading position in new economies GLOBAL AND BALANCED FOOTPRINT 27% North America 18% Rest of World 26% Western Europe FY 2015 revenues 29% Asia- Pacific 43% of revenues in new economies ~ Employees in 100+ countries 4 DIVERSIFIED MARKETS FY 2015 revenues - estimated 14% 34% 25% 27% Data centers and networks Buildings Infrastructures Industries Page 9

10 2 balanced business models to serve our customers Products for small diffuse projects thanks to the largest global partner network Solutions to access mission critical customers needs 57% of 2015 revenues Products Solutions 43% of 2015 revenues Leverage our strengths Scale Products Low capital intensity Solutions Enhance our expertise Strong brand Global partner network Excellence of our products Differentiated software & services More projects with our partners Segment expertise Page 10

11 An integrated commercial setup, to supply more to each customer in each country Buildings & Partner Infrastructure Industry IT Low Voltage & Building Automation Medium Voltage & Grid Automation Discrete & Process Automation Critical Power & Cooling Structured commercial setup in each country to drive cross selling and maximize coverage Deliver value to the customer Non-residential & Residential Utilities & Infrastructure Industrial & Machines Data Centers & Networks Page 11

12 A flexible cost structure benefiting from our scale A FLEXIBLE STRUCTURE PROVEN RESULTS OVER YEARS Flexible Business Model Global supply-chain Strong scale effect Mutualized Back-Offices 1 Estimated end of 2015 ~70% of production costs are variable ~54% 1 of production costs located in new economies 12.6Bn of purchases Negotiation is our first productivity lever Efficient regional organization Customer care centers mutualized by zone Regional clusters in Accounting & payroll New One Connect Schneider is On 15 Average yearly industrial productivity (m ) Page 12

13 Sound cash generation and financial structure STRONG & CONSISTENT CASH GENERATION SOLID BALANCE SHEET & RATING Average cash conversion rate by company program (%) > A- rating > Rapid deleverage after the Invensys acquisition (2014) and solid balance sheet Net debt / Adj.EBITDA New One Connect Schneider is On Page 13

14 and our strong focus on shareholders returns PROGRESSIVE DIVIDEND SHARE BUYBACK > Dividend targeted at c.50% of net income > Progressive dividend policy with no year-onyear decline > In 2015,~11m shares bought back for ~ 0.6bn > Now target ~ 1.5bn share buy back by ,0 CAGR +12% ,5 1,0 0, DPS ( ) Shares count (adjusted for treasury shares) Page 14

15 Sustainability at Schneider Electric Page 15

16 Why is sustainability critical for our business? THE ENERGY DILEMMA* THE ENERGY GAP** THE RISE OF AWARENESS The facts x2 Energy demand vs The need 2 CO 2 emissions Billion people have no access to electricity Million people live in fuel poverty in Europe Culture and values Customer & public Regulation & ratings Energy efficiency and resources efficiency are a must for the planet... and the bottom-line Sources: * IPCC report / IEA World Energy Outlook ** SE4All - Global tracking framework 2015 report / Ashoka poverty study 2013 Find business solutions for long-term development collaborating with public and private actors Build a culture and a comprehensive disclosure on environmental, social and governance data not only to comply but make it a competitive advantage and a transformation driver Page 16

17 Our sustainability strategy in a nutshell: sustainability as a competitive advantage and in our values CONTRIBUTING TO SOLVE THE ENERGY DILEMMA WITH Solutions for Efficiency Solutions for the energy gap Ethics & Responsibility Active Energy efficiency, Energy management & Sustainability services Smart grid Investment People Offers Fostering energy access Fighting fuel poverty Business practices Products and sites Employees Smart cities Training Communities Page 17

18 A recognized commitment ( ) : Industry Leader in DJSI for the 3rd consecutive year and Industry Mover (best progress in its Industry) Climate Leader by CDP Highest rating of 100 out of 100 and member of the Climate A list for the 5 th consecutive year Ethisphere, world's most ethical companies listed for the 6 th consecutive year Most sustainable company of CAC40 for the 2 nd consecutive year by Enjeux Les Echos and Institut RSE (Ernst & Young) 12 th most sustainable company in the world in Global 100 most sustainable corporations 10 th greenest company in the world in Newsweek Green Ranking Page 18

19 An integrated approach for sustainability Sustainability: a growth pillar for the Group Sustainability at the heart of our business strategy The vision of Schneider Electric, the global specialist in energy management and automation, is to help its customers achieve more with less resources. A structured and consistent sustainability strategy to meet the energy challenge Our societal project: act to keep global warming below a 2 C limit and to reduce the energy gap, with ethics and responsibility. At the communication level: integrated and reliable processes The Planet & Society Barometer, commented by the CFO and the CEO Non-financial quarterly results are presented together with financial information to institutional investors. Audited non-financial results Non-financial information, including Barometer s indicators, receive moderate or reasonable assurance. Confidential Property of Schneider Electric Page 19 An integrated approach for sustainability Schneider Electric integrates sustainability into its overall performance and its decision making & execution processes At the strategic level: sustainability is integrated in the company program Sustainability in the initiative Innovate to support growth Goal: be a partner of choice in sustainability in our innovations and our operations. 5 sustainability megatrends Climate, circular economy, development, ethics, and health & equity. 16 sustainability progress plans The Planet & Society Barometer is a golden KPI of our company program's dashboard. At the operational level: an integrated governance involving every level Board of Directors The HR & CSR Committee approves the sustainability strategy, and analyzes policies and practices. Executive committee The sustainability executive committee challenges, aligns with strategy and decides. Corporate functions and Businesses, specific committees, employees They contribute to sustainability objectives (Planet & Society Barometer, CSR criteria in variable compensation) and participate in mobilization programs. 19

20 Our Planet & Society barometer, an innovative tool to drive sustainability performance The Barometer is an index composed of a series of Key Performance Indicators It provides an overall measure of Group improvement in sustainability using a scoring scale of 10 It comprises its key sustainability objectives, is tracked quarterly, published externally and internally for all stakeholders, commented by our CFO and CEO It is annually audited by an external party (limited and reasonable assurance) and provides assurance on our commitments and progress It is linked to EVPs /SVPs remuneration It also enables us to anticipate and effectively manage our sustainability risks and opportunities by mobilizing key stakeholders around specific, measured objectives and reliable results Page 20

21 The Planet & Society barometer: redesigned in each company program 10 4 th quarter New² Company program ( ) One Company program ( ) Connect 4 Company program 2 ( ) 8 Target Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Page 21 Remarkable example of a track-record: in 10 years (2005 to end-2014), the Frequency Rate of Accidents has decreased by 96%

22 5 sustainability megatrends most impacting Schneider Electric for the years Climate Increase in temperatures is projected to likely exceed 1.5 degree by 2100, up to 4.8 degrees (IPCC fifth report). COP21 (Dec. 2015) must lead to a legally binding climate agreement, applicable to all countries from 2020, to maintain global warming below 2 degrees. Health & Equity Health determines an individual's ability to produce and consume. In developing countries, human health will be increasingly affected by climate change (heat waves, floods) & rapid urbanization (e.g. in Asia). Other countries will face increased stress and lifestyle-based disorders such as cardiovascular diseases, obesity and diabetes. Ethics The OECD has published the Anti-Bribery Convention, the first multilaterally agreed code of business conduct that governments have committed to promoting. The UN Ruggie Framework states the companies responsibility to respect human rights and avoid causing or contributing to adverse human rights impacts. Circular economy The decline in ecosystems is making natural resources scarcer, more expensive and less diverse (KPMG Expect the unexpected ). A circular economy seeks to restore capital, applies to entire systems -not only products-, and e.g. sells performances instead of goods with a higher profit margin (Ellen MacArthur Foundation). Development End poverty in all its forms everywhere and Ensure access to affordable, reliable, sustainable, and modern energy for all are two of the UN Sustainable Development Goals to succeed the UN Millennium Development Goals after Page 22

23 The Planet & Society barometer as of Q Planet & Society barometer (objectives for 2017) Start 01/2015 Results Q Results Q Target 12/2017 Overall score (out of10) /10 10% energy savings - 4.5% 4.5% 10% 10% CO 2 savings from transportation - 8.4% 8.4% 10% Towards zero waste to landfill for 100 industrial sites % of products in R&D designed with Schneider ecodesign Way TM % 8.9% 100% 75% of product revenue with Green Premium TM eco-label 60.5% 67.1% 66.7% 75% 100% of new large customer projects with CO 2 impact quantification % 120,000 tons of CO 2 avoided through maintenance, retrofit and end-of-life services - 44,777 56, ,000 x5 turnover of Access to Energy program to promote development - x2.07 x3.04 x5 100% of our recommended suppliers embrace ISO guidelines 48% 64.7% 65.2% 100% All our entities pass our internal Ethics & Responsibility assessment - 88% 88% 100% 30% reduction in the Medical Incident Rate (MIR) - 17% 37% One day training for every employee every year 79% 85.6% 85.6% 64% scored in our Employee Engagement Index 61% 61% 61% 85% of employees work in countries with Schneider gender pay equity plan - 57% 57% 150,000 underprivileged people trained in energy management 73, , ,365 1,300 missions within Schneider Electric Teachers NGO 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 8/10. 30% 85% 64% 85% 150,000 1,300

24 Q1 revenues performance and 2016 targets Page 24

25 Products, Software and Services driving Q1 Group revenues up +0.1% organically in a mixed environment By activity Q Revenues (million ) Organic growth By geography Q Revenues (million ) Organic growth Buildings & Partner 2, % Industry 1, % Infrastructure 1, % IT % Group 5, % Western Europe 1,643 +1% Asia-Pacific 1,577-2% North America 1,597 +1% Rest of World % Group 5, % Buildings & Partner continued to grow, driven by Retail business. IT was up thanks to growth in North America Higher project selectivity began to impact Infrastructure. Industry down in weak markets North America and Western Europe grew. China declined at a slower pace. Rest of the World was mixed Strategic initiatives progressing well: growth in Products, Services & Software, continued focus on costs and increased project selectivity Page 25

26 2016 targets confirmed As expected, the Group observed growth in Western Europe and in the construction market in the U.S., continued weakness in O&G and its related segments, and a mixed picture in new economies outside China. China declined at a slower pace with early signs of improvement in tier 1 city construction markets, however these signs of improvement need to be further confirmed. Increased project selectivity started to impact revenues in Q1 as planned and the Group anticipates this impact will accelerate through the year. Moving forward, the Group s priorities remain cost optimization, growth in Products, Software and Services and improvement in Solutions margin. Based on these trends, the Group confirms its 2016 targets of: > Organic revenue growth to be flat to down low single-digit, impacted by the Group s higher selectivity on project activities. > +20bps to +60bps improvement on adjusted EBITA margin before FX. The negative FX impact on margin is estimated at -40bps to -50bps at current rates. Page 26

27