Schneider Electric sales up in third quarter

  • October 23, 2007
  • Schneider Electric
  • News
Rueil Malmaison, October 23, 2007 – Schneider Electric sales for the third quarter of 2007 totaled €4,468 million, up a strong 28.4% on a current structure and exchange rate basis from the year-earlier period.Acquisitions contributed a significant €592 million (or 17.0%): primarily APC for €519 million, consolidated since February 15, 2007. The currency effect remained negative, reducing sales by €73 million (or 2.4%).On a constant structure and exchange rate basis, sales growth was again high at 13.8% in the third quarter 2007 thanks, in particular, to strong demand for energy efficiency, critical power and investment in infrastructure for water treatment, raw materials extraction and transformation, transportation, data centers, etc.“The very robust double-digit organic growth delivered once again by Schneider Electric in all regions and businesses demonstrates the strength of the Group’s growth model and the effectiveness of our strategy to reposition the business over the past few years,” noted Jean-Pascal Tricoire, Chairman of the Management Board and CEO. “The unique positions we have acquired in businesses experiencing structural growth and our targeted deployment in promising markets give us confidence in Schneider Electric’s ability to generate healthy and lasting sales growth.”Growth by geographyOperations in Europe posted double-digit growth for the fourth quarter in a row, with sales up a strong 12.2% from the year-earlier period. Services and energy efficiency solutions continued to enjoy high demand. Activities in Eastern Europe also made a significant contribution, with growth of around 30%, thanks in particular to very buoyant markets in Russia.In Western Europe, growth was strongest in Spain and the United Kingdom, where sales were lifted by the vibrant energy and infrastructure markets, as well as by tertiary buildings. High industrial investment drove significant increases in Italy and Germany.In North America, sales rose by 13.1%, slightly above the first half 2007. This reflects good trends in all end-markets, with the exception of residential (only 12% of North America’s business). Schneider Electric is reaping the rewards of its strategy to target attractive markets, notably in energy and infrastructure (such as water treatment, data centers, etc.) and address customers’ structural needs: energy efficiency, critical power, building control and security, services.Growth in Asia-Pacific reached 14.7%, reflecting the region’s vigorous end-markets, notably in China, where sales continued to rise by around 20%, India and Southeast Asia, thanks to a rebound in Thailand.Operations in the Rest of the World confirmed their powerhouse status, with sales growth of 22.6%. Sales in the Middle East were lifted by direct and indirect spending stemming from high oil prices. Business in South America and Africa was driven by raw material extraction and transformation, and more generally, by the favorable environment in industry.Growth by businessOrganic growth in Electrical Distribution (57% of sales) was higher than in Automation & Control (27% of sales) due to stronger dynamics in the construction and energy markets.The fast-growing Critical Power and Cooling Services business accounted for 16% of Group sales in the third quarter.APC-MGEThe new Critical Power and Cooling Services Business Unit, combining APC and MGE operations, delivered sales of $923 million over the period, for organic growth of 14% ** in relation to the year-earlier period.Sales continued to be driven by large systems and related services for enterprise, due to rising demand for protection and energy efficiency solutions in sensitive installations, particularly in the IT industry. Growth was however slightly lower than in the first half due to the deployment of a more stringent project selection policy to improve profitability.During the period, APC-MGE announced an important partnership agreement with Stulz to provide customers with comprehensive and integrated data center cooling solutions and services.Recent highlightsBond issueOn September 25, 2007, Schneider Electric launched a €600 million bond issue with fixed coupon and maturing in January 2015, in order to refinance APC acquisition while extending its average debt duration. This bond issue, rated “BBB+” by Standard & Poor’s and oversubscribed more than 9 times, received a very positive response from the market.Finalization of Pelco acquisitionOn October 16, 2007, the Group finalized the acquisition of Pelco, worldwide leader in the design, development and manufacture of video security systems. This acquisition significantly enhances the offering of its Building Automation business – encompassing power, HVAC and electronic security control – and increases its ability to offer integrated solutions.Approval of Delixi Electric joint ventureOn October 16, 2007, the Group received the approval from the Ministry of Commerce of the People’s Republic of China for the formation of a Joint-Venture with Delixi Group. The new Joint-Venture named Delixi Electric, where Schneider Electric will own a 50% interest while Delixi Group will hold the other 50%, will focus on the manufacturing, marketing and distribution of Low Voltage products.OutlookThe acceleration of Schneider Electric’s growth potential reflects the deep transformation and diversity of its end-markets exposure following the repositioning of its business portfolio and the integration of APC.Assuming current economic and business conditions, Schneider Electric revised upward to around 13% its organic sales growth target for full-year 2007.The 2007 full-year results should be impacted by the same factors as the half-year results:
  • Selling prices will offset higher raw material costs.
  • Gross margin will be negatively impacted by changes in the business mix.
  • Industrial productivity gains will continue.
  • Support function resources will be carefully increased in emerging markets and new businesses to fuel growth.Schneider Electric: Giving the best of the New Electric World to everyone, everywhere, at any time - Schneider Electric, the world's power and control specialist, anticipates and satisfies its customers' requirements in the residential, building, industry and energy and infrastructure markets. With 112,000 employees and operations in 190 countries, Schneider Electric generated revenue of €13.7 billion in 2006 through 15,000 distributor outlets. Learn More

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