JP Morgan Pan-European Capital Goods Conference

Transcription

1 JP Morgan Pan-European Capital Goods Conference June 2012 Jean-Pascal Tricoire President & CEO

2 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.

3 Schneider Electric at a glance A global company 2011 sales split number of employees end of 2011 bn of sales in 2011 % of sales in new economies North America 23% Rest of World 18% Western Europe 32% Asia Pacific 27% employees in 100+ countries Diversified end markets 2011 sales split Utilities & Infrastructure 24% Industries & Machine 22% Data centers 16% of sales dedicated to R&D Non-residential building 29% Residential 9% 3

4 We deployed our long-term strategy consistently in the past decade Leverage the world s new energy challenges > Energy Management Build 2 complementary business models > Product leadership > Solutions excellence Leverage opportunity arising from geographical shift > Develop new economies Invest in profitable growth while driving efficiency > Customer focused > Simplification 4

5 and balanced our geographical and endmarket footprint A balanced global presence A strong footprint in new economies Serving 5 diversified end-markets 100% 80% 60% 40% 20% 0% % 27% 23% 32% 100% 80% 60% 40% 20% 0% Sales 9.7bn Sales 22.4bn Sales 9.7bn Sales 22.4bn Sales 9.7bn Sales 22.4bn 10% 9% 35% 46% 100% 80% 60% 40% 20% 0% ~20% 39% 14% 34% 8% 44% 16% 24% 22% 9% 29% Rest of World Asia Pacific North America Western Europe New Economies Mature Data Centres Utilities & Infrastructure Industrial & Machines Residential Non-residential Buildings 2011 end market data include acquisitions on a full-year basis 5

6 We have a growth model that is flexible and resilient in profit and cash generation Market structure Cost structure Multiple channels to market Pricing power ~50% through distribution + installers + contractors + direct sales Offset all raw material inflation since 2005 Flexible Cost competitive Low capital intensity 70% COGS variable 46% of COGS in new economies ~3% capex to sales 6

7 Robust financial performance despite historical economic downturn Sales (in bn) Adjusted EBITA 1 (in bn) yr CAGR +8.6% ~50% was organic 10-yr CAGR +11.2% Margin up 3 pts to 14.4% Free cash flow (in bn) Net income (in bn) 1.3bn p.a. on avg. 1.7bn p.a. on avg bn p.a. on avg yr cash conversion² 105% One conversion² of 106% yr CAGR +16% new 2004 new² One see appendix for definition 7 2 conversion = free cash flow / net income

8 Sustainable development is part of our DNA Jan Planet Selected indicators Reduction of our CO 2 equivalent emissions Green Premium products (% of sales) 0 160kT 0% 64% One barometer Exceeded our target of Profit Selected indicators BoP access to energy (# households) Global Compact (% of purchase) People Selected indicators Employee recommendation score (vs. start of period) BoP young people trained to energy management 0 1.3m 30% 50% k Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Global Global Awards and rankings 26th Most Sustainable 26th Most Sustainable Corporation in the World Corporation in the World (2012) (2012) Gigaton award for leadership in energy efficiency and development of the smart grid Zayed Future Energy Prize (ZFEP 2012) Top 52 in Carbon Disclosure Leadership Index Top 29 in Carbon Performance Leadership Index BoP: Base of the Pyramid 8 (least favoured socio-economic group)

9 our company program

10 Our new program Connects all to the potential of One Everywhere Make stronger New Economies Bring further Mature Economies Customers Solution Partner People One Team Our Way for Efficiency One Organization One Efficient Enterprise 10

11 Connect to Customers Partner Excellence Solution Excellence Connect Everywhere Grow in new economies Grow in mature countries Tailored Supply Chain Connect to People Engaging leaders Engaged individuals Engaging workplace Connect for Efficiency Industrial productivity SFC savings Planet & Society barometer Growth Margins/cash Long-term view 11

12 Set the course for solution excellence Solutions in 2011 ( m and % of sales) 2011 Operational Assets Efficiency (Operational Assets* / Sales, internal estimates) 8,372 9% margin Solutions Products 30% more efficient Sales Adjusted EBITA (before corporate cost) Lower EBITA margin partly offset by a better operational assets efficiency More improvement expected Services to outgrow rest of group by 5 points At least 2 points improvement of the adjusted EBITA margin by At least 20% improvement of the operational assets efficiency through mix and WCR optimization Solution ROA to reach the same level as Product ROA * Operational Assets = Property, Plant and Equipment + Inventories + Trade receivables Trade payables 12

13 Raise supply chain efficiency further 0.9bn 1.0bn 1.1bn Purchasing Absorption of fixed costs Rebalancing Lean manufacturing Purchasing 0.9bn Footprint optimization Supply chain flow re-design One target Transportation rationalization Sustained productivity savings cumulative target Gross industrial productivity savings of 0.9bn-1.1bn Reduce inventory to sales ratio by ~ 2 points 13

14 Drive savings from scale and invest for tomorrow s growth Savings Support function costs net of investment (in m and % of sales) Achieve significant operational leverage 24.7% 26.4% 24.1% 23.2% At least -1 point* by 2014 Rationalize non-production purchases Simplify our presence in key geographies Review global functions set-up for increased efficiency Deliver synergies from recent acquisitions Investment R&D to sales to move towards 5% Commercial investment for Partner Excellence, accelerated investments in Service engineers, geographical expansion in new economies 2014 target (vs 2011) Support function costs to sales ratio reduced by at least 1 point* net of investments *(excl. scope & currency impact) 14

15 Our long-term targets

16 Drive profitability along with capital efficiency Across the cycle organic growth drivers ROCE drivers Solutions (incl. services) New economies Products and Partners Smart Grid & new markets World GDP + 3 points Reference is world real GDP growth at market FX Across the cycle adjusted EBITA & beyond Growth and Cost efficiency Better Capital Employed mix with solutions Tailored supply chain External growth Synergies Short term dilution on Capital Employed Target margin range across a business cycle 13% - 17% (2011: 14.4%) Cash focus: target a conversion of 100% of our net income in free cash flow Across the cycle ROCE target 11% - 15% (2011: 12.9%) 16

17 2011 highlights and 2012 outlook

18 2011: Good results in a difficult environment Strong raw material inflation Supply shortage following the natural disaster in Japan Political instability in North Africa European debt crisis Growth Adj. EBITA Net income 8.3% organic growth 14.3% total growth 22.4bn of sales Adj. EBITA up 7%, reaching a record of 3.2bn, 14.4% of sales Net income up 6% at 1.8bn Earnings per share of 3.39 Globally fragile macro-economic context Cash Free cash flow of 1.5bn 18

19 Balance sheet remains solid, cash generation is not cyclical Net debt / Adj. EBITDA Cash generation past 10 years - in bn Cash flow from operations x 0.8x Change in WCR Capital expenditures NB: Adjusted EBITDA of 3,852m in 2011 ( 3,603m in 2010) 19

20 We executed our strategic priorities with acquisitions that complement organic growth M&A target areas & transformation accomplished since 2009 Local businesses in new economies Skills and services geared towards energy management Businesses that could reinforce our global leadership Brazil India bn in annual sales # Infrastructure Medium Voltage & Grid Automation China Russia 1 Energy Efficiency Solutions Smart Grid and infrastructure Services Industry boosted its solutions capability Increase in size vs 2009 (measured by sales) Maintain strict M&A discipline Boost growth and shareholder returns Target quick EPS accretion ROCE above WACC beyond year 3 Maintain a solid credit rating 1 Excluding Electroshield Samara consolidated under the equity method 20

21 We built a global leader in efficient infrastructures through strategic acquisitions 2009 Reinforced capabilities 2011 Size 2.3bn sales 5.3bn* sales Market Position Offering #3 worldwide in medium voltage Secondary medium voltage Distribution assets #1 worldwide In medium voltage & grid automation + Primary & secondary MV + Substation automation + Real-time management of extended networks End Markets Buildings Industries Utilities Oil & Gas Buildings Industries Energy business renamed Infrastructure following the integration of Telvent * On proforma basis including Telvent on a 12-month basis 21

22 Continued solid sales growth in Q1: +9.4% driven by acquisitions Sales organic growth by business Sales organic growth by region In m Q In m Q Power % Western Europe % Infrastructure Industry IT Buildings % -6.8% +6.5% -0.9% Asia Pacific North America Rest of World % +8% +5% Group % Group % Organic growth slightly up with strong contrast by business and region 22

23 2012 outlook We We believe believe that that the the uncertainty uncertainty surrounding surrounding the the global global economy economy continues continues to to limit limit visibility visibility In In this this context context and and assuming assuming no no major major change change in in economic economic conditions, conditions, we we continue continue to to expect: expect: flat flat to to slightly slightly positive positive organic organic sales sales growth growth an an adjusted adjusted EBITA EBITA margin margin between between 14% 14% and and 15% 15% 23

24 Appendices

25 Definitions EBITA: Adjusted EBITA: Adjusted EBITDA: Cash conversion: Free cash flow: ROCE: Capital Employed: EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill EBITA before restructuring and other operating income and expenses Adjusted EBITA before depreciation and amortization Free cash flow / net income Operating cash flow change in working capital net capital expenditures After-tax adjusted EBITA / Average Capital Employed Shareholders equity + Net financial debt + adjustment for associates and financial assets (at historical value) 25

26 Help people make the most of their energy