SCHNEIDER ELECTRIC (EPA:SU) - Strong start to 2018: Q1 Group organic revenue growth of +6.2%

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19/04/2018 07:30

Financial Information

Strong start to 2018: Q1 Group org. revenue growth of +6.2% driven by strong
growth in both Energy Management & Industrial Automation

* Energy Management up +5.2% (c.+6% incl. Delixi), with strong growth in
  residential, CIB(1), industry, infrastructure and data center end- markets
* Industrial Automation up +9.2% with great performance in discrete and machine
  automation
* AVEVA deal closes in Q1; Good top line growth momentum
* Strong growth across regions with Asia-Pacific up +14% org. with a great Q1
  in China. North America and Rest of World both up +5% org.
* EcoStruxure orders growth outpacing Group as digital initiatives gain
  momentum
* Full year objectives re-affirmed

Rueil-Malmaison (France), April 19, 2018 - Schneider Electric announced today
its first quarter revenues for the period ending March 31, 2018.

Jean-Pascal Tricoire, Chairman and CEO, commented: "We begin the year 2018 with
strong performance in Q1, confirming accelerated momentum across 2017. Our two
businesses, Energy Management and Industrial Automation, deliver strong organic
growth with +6% and +9% respectively. We progress well on our initiatives of
more products through our partners, more software, more services, and
EcoStruxure deployments accelerate. We see growing traction for our efficiency
solutions integrating energy management and automation. We also benefit from
our multiregional model, at a time when some tensions tend to regionalize
markets. We complete in due time the transaction with AVEVA as well as IGE+XAO
in Q1, strengthening our software portfolio in both of our businesses."

I. FIRST QUARTER REVENUES WERE UP +6.2% ORGANICALLY

2018 Q1 revenues were EUR5,800 million, up +6.2% organically, +7.7% working day
adjusted and down -0.7% on a reported basis.

The Group's complete end-to-end offering continued to drive strong
cross-selling across segments, with pull through technologies orders growing
faster than the lead technology.

The breakdown of revenue by technology was as follows:

(1). Commercial and Industrial Buildings

                                              Q1 2018
                                              Organic     Reported
EUR million                       Revenues    Growth       Growth
Energy
Management
Medium Voltage                      883        -2.7%       -14.7%
Low Voltage                        2,667       +9.1%        +4.4%
Secure Power                        775        +2.7%        -6.9%

Total Energy Management            4,325       +5.2%        -2.2%

Industrial Automation
Industrial Automation              1,475       +9.2%        +4.1%
Group                              5,800       +6.2%        -0.7%

The breakdown of revenue by geography was as follows:

                                              Q1 2018
                                              Organic     Reported
EUR million                       Revenues    Growth       Growth

Western Europe                     1,633         0%          0%
Asia-Pacific                       1,630       +14%         +6%
North America                      1,576        +5%         -5%
Rest of the World                   961         +5%         -5%
Group                              5,800       +6.2%      -0.7%

GOOD DYNAMIC IN ENERGY MANAGEMENT UP +5.2% ORG., UP C.+6% INCLUDING DELIXI

Geographical trends for Energy Management:

North America. Energy Management grew mid-single digit in North America. The
Group continued to benefit from the rollout of recent launches in positive
residential markets. The market for Commercial and Industrial buildings saw
growth and the Group benefited from investments in Datacenters leveraging its
complete portfolio to win several large projects. In Industry & Infrastructure
markets, the Group saw increasing demand in several segments such as Metals &
Mining and Transportation and had a strong performance in services. Both the
U.S. and Canada posted growth while Mexico was down.

Western Europe: Energy Management was impacted by working days, with a mixed
picture across countries. Spain posted strong growth, with channel initiatives
delivering results in favorable markets across residential and commercial
buildings, infrastructure and data centers. Italy continued to deliver solid
growth. France and Germany were down mainly due to a low backlog in Medium
Voltage and working days, partially offset by growth in the residential and
non-residential markets. The U.K. was down on low backlog with utilities and
general slowdown of the economy. Overall in Europe, residential markets
developed well, with good results for the Group's offers in Final Distribution
& Wiring Devices. Commercial and Industrial Buildings demand continued to be
positive, as did the Data center end-market which generated strong growth for
the Group's entire portfolio.

Asia-Pacific: Energy Management was up double-digits in Q1. Residential and
Commercial & Industrial Buildings segments saw continued growth across the
region. China was up strongly across all Energy Management technologies, with
good growth in targeted segments and supported by distributor restocking. China
residential markets continued to perform well, though are expected to grow more
slowly through 2018. Elsewhere in Asia, Australia was up with good demand from
Cloud & Service Providers and growth in non- residential construction while
India was up due to Data Centers and residential construction markets.
Indonesia benefited from growth in residential markets while Singapore was up
due to project execution.

Rest of the World. Energy Management grew in the region. Construction markets
(both residential and commercial/ industrial buildings) continued to be
positive in the region. Datacenter activity was good and the Group delivered
several projects for Cloud & Services Providers across Energy Management.
Utilities investments continued to be weak in the Middle-East. CIS declined due
to lower O&G related activities in Russia. The Middle-East was up thanks to
good growth in Turkey while Saudi Arabia remained difficult. Africa grew and
South America was about flat.

Performance of Energy Management technologies:

The Group delivered strong performance in Energy Management leveraging its
complete end-to-end offering (Medium Voltage, Low Voltage, Secure Power). The
Group's go-to-market is oriented to address customer needs across end-markets
and therefore incorporates the full Energy Management technology portfolio. The
performance by technology was as follows:

Medium Voltage (15% of Q1 revenues) was down -2.7% organically, with strong
order growth over the last six months. Q1 Sales performance was impacted by low
backlog built from the beginning of 2017, especially in Western Europe. The
performance of the division was particularly challenged in India and Russia.
The division is expected to be back to growth in Q2 2018. The division saw good
results from its strategic initiatives: more products through partners, more
services and more digital, with additional wins in ADMS (Advanced Distribution
Management System). Investment in the traditional utility segment and Oil & Gas
sector remained difficult, but the division seized opportunities in growing in
segments such as data centers, infrastructure and commercial & industrial
buildings.

With regard to the Power Systems business, the Group continues to implement the
new organization which would be fully operational at the end of H1 2018, and to
strategically evaluate the performance across geographies.

Low Voltage (47% of Q1 revenues) was up +9.1% organically in Q1. (+c.10.3%
including Delixi), with good results across all regions, with double-digit
growth in Asia Pacific and Rest of World. Western Europe grew mid-single digit,
working days adjusted, with good results in both residential and
non-residential markets. The Group continued to build on the strengths of its
portfolio with new offer launches and its strong focus on digital initiatives
through its EcoStruxure value proposition. The division saw broad-based growth
across its low voltage offers and benefitted from the Group's large
geographical presence. The strategic initiatives also contributed to delivering
growth in favorable end-markets. Final Distribution & Wiring Devices saw an
acceleration in growth, up high-single digit, supported by new product launches
and channel initiatives. The Group's offers for Commercial & Industrial
Buildings grew across all regions, and across multiple segments.

Secure Power (13% of Q1 revenues) was up +2.7% organically in Q1 with growth in
all regions. Secure Power offers sold through the IT channel and non-IT channel
posted growth, despite the impact of negative working days. Secure Power offers
for data centers grew and continued to be the catalyst for strong growth of the
entire Energy Management portfolio. Data centers were one of the fastest
growing end-markets for the Group with double-digit growth over the quarter.

INDUSTRIAL AUTOMATION GREW STRONGLY IN Q1

Geographical trends for Industrial Automation:

North America was up mid-single digit. Industrial Automation in the U.S.
continued to grow in discrete and machine manufacturers markets and targeted
end-users segments. O&G saw some improvement from low levels, mainly in capital
expenditures for efficiency. Canada and Mexico were up.

Western Europe was up as OEM demand remained favorable. France benefited from
continued growth in industrial investment, while Germany and Italy grew thanks
to Machine Solutions initiatives. The Group saw good momentum in EcoStruxure in
the region.

Asia-Pacific was up with double-digit growth in the region. Industrial demand
was strong in China, with continued success in the Group's OEM offers including
automation solutions and machine advisor. In the rest of Asia, Australia was up
due to successful implementation of growth initiatives in targeted segments and
South East Asia grew due to OEM demand and good successes in some hybrid &
process industries. India grew in OEM while process automation was down, but
with orders growing in Q1.

Rest of the World was up with all regions outside CIS posting growth. Russia
was down on lower execution of projects, notably in O&G. Middle-East was up
benefiting from good growth in discrete industries, notably in Turkey and from
the execution of some projects in process industries in the region. South
America was up.

Performance of Industrial Automation:

Industrial Automation (25% of Q1 revenues) was up +9.2% organically in Q1, with
growth in all four regions driven by strong OEM demand and continued success in
the execution of the Group's strategy. Process Automation was slightly down
with mixed results: North America and Asia Pacific saw growth, while Europe
continued to be impacted by a sluggish O&G market. Industrial software revenues
were up mid-single digit in the quarter(2). In addition, sales for the legacy
AVEVA group were strong, up double-digit in Q1 on a currency neutral basis.
Further details will be provided when AVEVA announces its results for the
financial year on 14 June 2018.

Products were up +8% organically in Q1. Solutions were up +4% organically in
Q1. Within Solutions, Services were up +6%. The Solutions business represented
39% of revenues in Q1.

CONSOLIDATION(3) AND FOREIGN EXCHANGE IMPACTS IN Q1

Net acquisitions had an impact of EUR88 million or +1.5%. This includes mainly
the consolidation for 1 month of AVEVA (Industrial Automation), 2 months of
IGE-XAO (Low Voltage), 3 months of ASCO Power (Low Voltage), the disposal of
DTN (Medium Voltage) and some minor acquisitions/ disposals.

The impact of foreign exchange fluctuations was negative at -EUR453 million or
-8.4%, primarily due to the weakening of the U.S Dollar, Chinese yuan and
several new economies' currencies against the Euro.

Based on current rates, the FX impact on FY 2018 revenues is estimated to be
between -EUR1.0bn and -EUR1.1bn. The FX impact at current rates on adjusted
EBITA margin is expected to be c.-20bps. Based on current rates, the Group
expects c.80% of the full year impact to both topline and margin to occur in
the first half of the year.

II. SHARE BUY BACK / CANCELLATION OF SHARES

The Group has repurchased 1.5 million shares for a total amount of c. EUR100
million in the first quarter, with an average price of c.EUR69.5 per share. At
the end of Q1, the Group has bought back c. EUR270m of the about EUR1bn buyback
announced in mid-2017 and to be completed by mid-2019.

Following the Board's decision to proceed with the cancellation of 22,000,000
treasury shares(4), the total number of shares outstanding was 574,955,979 as
of March 31, 2018. Further to this cancellation, Schneider Electric holds
18,807,108 of treasury shares, representing 3.3% of the share capital as of
March 31, 2018 after capital reduction.

(2). Following the combination of the Group's Industrial Software Business with
AVEVA on March 1st, Industrial Software performance is reported in organic
growth for January and February, and in Scope from March 1st.
(3). Changes in scope of consolidation also include some minor
reclassifications of offers among different businesses.
(4). See FY2017 press release, on February 15, 2018

III. 2018 TARGETS

The Group continues to successfully implement its strategy in a positive market
environment in Q1 with strong growth in Products, Services and Digital offers,
leveraging cross-selling of the full portfolio. The strong performance in Q1
bodes well for the organic top line growth for the year.

In this context, the Group re-affirms its target 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 maximize its organic top line
growth and will make the necessary investments to capture growth in developing
digital markets. Therefore, for 2018, the Group will target:

* An organic top line growth towards the higher half of the +3% to +5% range;
  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 available in appendix

The 2018 Q1 revenues presentation is available at www.schneider-electric.com

The Annual General Meeting will take place on April 24, 2018.

The 2018 Half-Year Results will be presented on July 26, 2018.

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.

About Schneider Electric: Schneider Electric is leading the Digital
Transformation of Energy Management and Automation in Homes, Buildings, Data
Centers, Infrastructure and Industries. With global presence in over 100
countries, Schneider is the undisputable leader in Power Management - Medium
Voltage, Low Voltage and Secure Power, and in Automation Systems. We provide
integrated efficiency solutions, combining energy, automation and software. In
our global Ecosystem, we collaborate with the largest Partner, Integrator and
Developer Community on our Open Platform to deliver real-time control and
operational efficiency. We believe that great people and partners make
Schneider a great company and that our commitment to Innovation, Diversity and
Sustainability ensures that Life Is On everywhere, for everyone and at every
moment.

Discover Life is On

www.schneider-electric.com

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Appendix - Further notes on 2018

- Foreign Exchange impact: Based on current rates, the FX impact on FY 2018
  revenues is estimated to be between -EUR1.0bn and -EUR1.1bn. The FX impact at
  current rates on adjusted EBITA margin is expected to be c.-20bps. Based on
  current rates, the Group expects c. 80% of the full year impact to both
  topline and margin to occur in the first half of the year.
- Scope: Based on the most recent fiscal years for acquisitions, scope impact
  is currently estimated around +EUR400 million in revenues and expected to be
  around +10bps at the level of the Group adj. EBITA margin. This includes
  AVEVA which would be fully consolidated for 10 months starting with March
  2018.
- 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 EUR150m to EUR200m corresponding
  in majority to the costs required to generate the manufacturing productivity
  and to continue to drive simplification.

                  Appendix - Q1 Revenues breakdown by business

                                               Q1 2018
                                              Changes in
                                    Organic    scope of     Currency
Reported
EUR million              Revenues   Growth   consolidation   effect    Growth
Energy Management
Medium Voltage             883       -2.7%       -5.6%       -6.4%     -14.7%
Low Voltage               2,667      +9.1%       +4.1%       -8.8%      +4.4%
Secure Power               775       +2.7%          0%       -9.6%      -6.9%

Industrial Automation
Industrial Automation     1,475      +9.2%       +2.9%       -8.0%      +4.1%
Group                     5,800      +6.2%       +1.5%       -8.4%      -0.7%

Appendix - Consolidation

In number of months                   2017                2018
                                       Q1   Q2   Q3   Q4   Q1   Q2   Q3  Q4

DTN
Medium Voltage Business
USD213 million revenues in 2016             1m   3m   3m   3m   2m

Asco
Low Voltage Business
USD468 million revenues in 2016                       2m   3m   3m   3m   1m

AVEVA
Industrial Automation Business
GBR216 million revenues in FY2017
(ending March 2017)                                        1m   3m   3m   3m

IGE-XAO
Low Voltage Business
EUR29 million revenues in FY2017
(ending July 2017)                                         2m   3m   3m   3m

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