JP Morgan European Capital Goods CEO Conference 2015 CEO Conference - - PowerPoint PPT Presentation

JP Morgan European Capital Goods CEO Conference 2015

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CEO Conference 2015

Jean-Pascal Tricoire, Chairman and CEO

June 11, 2015

A technology company with strong foundations

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We are the global specialist in energy management and automation

€25 billion

FY 2014 revenues

~170,000

people in 100+ countries

~5%

• f revenues devoted

to R&D

43%

• f revenues

in Solutions 3

Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

BALANCED GEOGRAPHIES – FY 2014 revenues DIVERSIFIED END MARKETS – FY 2014 revenues

25%

North America

19%

Rest of World

28%

Western Europe

28%

Asia Pacific

44%

• f revenues in

new economies

Utilities & Infrastructure Industrial & Machines Data Centers & Networks Non-residential & Residential Buildings

26% 26% 14% 34%

Four globally leading and focused businesses

Low Voltage & Building Automation KEY TECHNOLOGY Medium Voltage Grid Automation KEY TECHNOLOGY BUILDINGS & PARTNER INFRASTRUCTURE INDUSTRY Discrete & Process Automation KEY TECHNOLOGY IT Critical Power & Cooling KEY TECHNOLOGY

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

FY 2014 REVENUES €10.8 billion (43%) WORLDWIDE POSITION #1 GLOBAL COMPETITORS ABB, Eaton, Legrand, Siemens FY 2014 REVENUES €5.3 billion (21%) WORLDWIDE POSITION #1 GLOBAL COMPETITORS ABB, Siemens FY 2014 REVENUES €5.6 billion (22%) WORLDWIDE POSITION #2 (Discrete) #4 (Process) GLOBAL COMPETITORS ABB, Emerson, Rockwell, Siemens FY 2014 REVENUES €3.4 billion (14%) WORLDWIDE POSITION #1 GLOBAL COMPETITORS Eaton, Emerson

Buildings1

(34% of group revenues)

Industrial and Machines

(Discrete and Process)

AUTOMATION SOFTWARE2

(Enabling integration)

POWER

(Low and Medium Voltage, Secure power)

END MARKETS

An integrated portfolio, to deliver complete bundles and solutions

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

(Discrete and Process) (26% of group revenues)

Utilities and Infrastructure

(26% of group revenues)

Data Centers and Networks

(14% of group revenues)

1 Including residential and non-residential buildings 2 Including standalone software

~65%

• f Group revenues

~35%

• f Group revenues

An integrated business model

Products

Scale = Cost + Differentiation + Strong partners network

Solutions

Strong segments expertise + Solid execution capabilities

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

network

>

Segment expertise

>

Growing share of services

> Org. Growth 7pts higher than

rest of Group in past 3 years

>

Differentiated software

A strong and balanced partner model A strong solutions offer

>

Balanced distribution channels

>

Global distribution network

>

Strong brand

>

Differentiation through innovation and system design

An integrated commercial setup, to supply more to each customer in each country

Low Voltage & Building Automation Discrete & Process Automation Critical Power & Cooling Medium Voltage & Grid Automation

Buildings & Partner Infrastructure IT Industry

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

Deliver value to the customer Non-residential & Residential Utilities & Infrastructure Industrial & Machines Data Centers & Networks Structured commercial setup in each country to drive cross selling and maximize coverage

An integrated and globalized supply chain to enable delivery of full offer and all synergies from scale

> €3bn productivity delivered over past 10 years > Low CAPEX > Outsourced COGS

STRONG RESULTS OVER THE PAST 10 YEARS Tailored Supply Chain > Increase customer satisfaction KEY FOCUS

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

Simplification

Footprint & Lean Globalization Simplification Footprint & Lean

Footprint & Lean > Continue to improve cash efficiency > Deliver industrial productivity

A high technology investment, for innovation and differentiation

1,058 1,119

1,212

R&D INVESTMENT

> ~5% of sales devoted to R&D

AN ECOSYSTEM FOR OPEN INNOVATION A TECHNOLOGY COMPANY

> c. 11,000 R&D engineers, c. 10,000

application and software engineers

> 20,000 patents active or in application

worldwide, >500 filed in 2014

> With recognized innovations

Partnering with 50+

best-in-class public and private organisations

Leading global projects

Homes, Minalogic, 9

Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

774 764 818 979 2008 2009 2010 2011 2012 2013 2014

> With recognized innovations

projects for Intelligent

buildings, renewables,

Boosting Standardisation

Zigbee, IEC, NEMA

Minalogic, Smart Electricity

Funding start-ups

Aster Capital fund

Demand response, software breakthrough

Recognized highest ranking DCIM solution in Gartner Magic Quadrant (Oct 2014) M580: World’s first ePAC with built-in ethernet & Machine Solution – NEXT Controller Generation

Focusing on execution and value creation

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REVENUES

(Billion € )

ADJUSTED EBITA

(Billion € )

FREE CASH FLOW

(Average, Billion € )

RETURN ON ASSETS1

(%)

A solid track record to deliver profitable growth through focused execution

CAGR +9%

24.9 3.5

CAGR +10%

2.0

36 27 +9pt

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

Benefit from balanced geography & complementary business model Resilient adj. EBITA margin from 13% –16% Predictable cash generation:

• ver 100% cash conversion from

Net income in past 10 years Continuing to improve asset efficiency 2014

24.9

2004

10.3 3.5 1.3

2014 2004

0.8

2002-2004 x2+ 2012-2014 27 2004 2012-2014

1 Calculated on operational assets = property, plant, and equipment + inventories+ trade receivables – trade payables.

“Schneider is on” is focused on further creating value for customers and shareholders

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

Create more

• pportunities for
• ur customers…

and for ourselves Digitize for

• ur customers,

for efficiency and simplicity Innovation to make

• ur customers’ lives

simpler and better Our customers get great service because great people work at Schneider Simplifying our work makes the difference to customers

Strengthen product leadership, establish excellence in targeted segments

MORE COMPLETE SOLUTIONS FOR TARGETED END-MARKETS MORE INTEGRATED OFFERS

Water-loss management

Example: Water

Infrastructure

Example: E-House integrating Low and

Targeted segments focus

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

Secure power Electric distribution Automation & control Water-loss management software Safety Example: E-House integrating Low and Medium-voltage electric distribution

Water & Waste Water Utilities Healthcare Oil & Gas Food & Beverage Metals, Mining & Minerals Internet Giants & Cloud

Datacenters

Example: Prefabricated datacenter modules with power, cooling & IT modules , integrated with Schneider modular MV & LV switchgear

Finance

Accelerate software and service business

MORE SOFTWARE MORE SERVICES

10,000+ Highly skilled experts 10,000+ application and software engineers Outgrew +7pts rest of group on average during past 3 years Leading Software suites in our end-markets Technology area Leading software suites

Process Engineering & 14

Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

INCREASE BREADTH INCREASE DEPTH DEVELOP CAPABILITIES

Our execution focus:

Process Engineering & Optimization Planning & Scheduling Operations Execution Mgt Asset Management Operations Control Information Management

Ampla Aquis Termis ClearSCADA

Consistent Project Execution for our customers

Consistency

CONSISTENT PROJECT EXECUTION SCHNEIDER ELECTRIC/ ENERGOBIT CONSORTIUM EPC PROJECT IN ROMANIA

• Strong cooperation within Schneider

Electric to secure customer satisfaction

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

Global best practices Agility Technical leadership

• Technical leadership in providing complete solution from

the grid connection to the windmills satisfaction

• Best practices from project on grid

connection to wind farms shared throughout Schneider Electric

Simplify our operations for enhanced efficiency

~€1.4-1.5bn of costs savings targeted by 2017 through KEEP HIGH INDUSTRIAL PRODUCTIVITY

320 340

SIMPLIFYING OUR OPERATIONS

> Simplify management set-up > Make company leaner

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

targeted by 2017 through industrial productivity and SFC savings Free up resources for reinvestment

240 260 280 300

Connect ’12-’14 One ’09-’11 New2 ’05-’08 Average annual productivity (€m)

> Optimize R&D efficiency and

solution execution

> Increase focus and prioritization > Increase sales force efficiency

DIGITAL CUSTOMER EXPERIENCE

Digitize for our customers, for efficiency and simplicity

CONNECTED OFFERS

For customers Mix & match App

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

For distributors App Quick ref. App Improved customer experience > Simple installation and registration to the cloud > Instant power disturbance notification > Ability to respond remotely to critical events > Easier diagnostic and technical support

Innovate to support our growth and improve our customer lives

FASTER AND MORE TARGETED PROGRAMS EASIER INSTALLATION AND USAGE MORE SERVICES

Wireless and connected A complete offer based on the cloud Most advanced process simulation solution: > Market ready – co-designed with key

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

Wireless and connected devices Real-time alerts and analysis Optimization algorithms in the cloud to enhance performance Customers data Plateforme Cloud > Market ready – co-designed with key customers, > Efficiency ready – from design to operations > Cloud ready – low TCO1 and built-in collaboration.

1 Total cost of ownership

With this program, we continue to focus on profitable growth and ROCE improvement

TARGETING 3 TO 6% ORGANIC GROWTH THROUGH THE CYCLE LONG-TERM ADJUSTED EBITA RANGE CONFIRMED AT 13-17% WE FOCUS ON ROCE IMPROVEMENT

MATURE MARKETS NEW ECONOMIES

15.4%

> We aim to come back to ROCE pre- Invensys level (c. 12%) by 2015/2016 > 1.5-2pt1 improvement in ROCE by 2016/2017

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

> More Energy Management > More Digitization > More Automation

> Renovation > Digitization > Efficiency > Urbanization > Industrialization > Digitization 2014 13.9% 2013 14.5% 2012 14.7% 2011 14.3% 2010 2009 13.0% 2015/ 2016 Target c.12% 2014 11.7% Adjusted for FX 11.0% 2013 proforma 10.9% Medium- term range 15.0% 11.0% 2016/ 2017 target 12.9% 12.4% 1 from the level of the 2013 proforma

We are targeting strong returns for our shareholders

STRONG EPS GROWTH IN THE NEXT COMPANY PROGRAM SHARE BUYBACKS

+

We are targeting

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Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015

SHARE BUYBACKS (€1.0 to 1.5bn in next 2 years)

+

PROGRESSIVE DIVIDEND WITH c. 50% PAYOUT FROM NET INCOME

We are targeting strong returns for our shareholders

Full year 2015 Targets

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2015 targets

Q1 performance is broadly in line with our expectations, with the stabilization in Western Europe, favorable construction market in North America and weakness in China. Despite the impact in Q1 of the change in date of fiscal year closing, Invensys is expected to contribute to the Group performance on a full year basis. Therefore the Group confirms its 2015 targets: > Low single-digit organic growth in revenues

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> Adjusted EBITA margin at 14-14.5% assuming no negative FX impact on margin

HELP PEOPLE MAKE THE MOST OF THEIR ENERGY

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HELP PEOPLE MAKE THE MOST OF THEIR ENERGY