epg conference - schneider electric · schneider electric - investor relations – epg presentation...

EPG conference

May 2011

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.

Disclaimer

We have built a leader in a promising industry

Schneider Electric 4- Investor Relations – EPG presentation – 16 May 2011

Schneider Electric – the global specialist in energy management

billion € sales in 2010

% of sales in new economies

people in 100+ countries

of sales devoted to R&D Residential 9%

Utilities & Infrastructure 20%Industrial & machines 24%Data centres 17%

Non-residential buildings 30%

Balanced geographies – FY 2010 salesYear-end 2010 employees

Diversified end markets – FY 2010 sales1

North America

24% Asia Pacific

24%Rest of World18%

WesternEurope

34%

1 Proforma with Areva D integrated on 12-month basis

26,000

41,700

31,900

19,200


We have built worldwide leadership in most of our businesses

#1 #1 #1#2 #4

ABBSiemens

EatonLegrand

ABBSiemens

SiemensRockwell

SiemensJCI

Honeywell

Emerson Eaton

Schneider Electric worldwide rank

Global competitors

90% of group sales as world #1 or 2 player vs. 50% in 2000

Low Voltage &

Renewable

Medium Voltage

Critical Power & Cooling

Industrial Automation

BuildingAutomation& Security

Key technology

Adjacent & synergetic businesses

% of 2010 sales pro-forma1

1 Proforma withAreva D integrated on 12-month basis

Power Energy Industry IT Buildings

38% 21% 20% 14% 7%


Commitment to innovation and R&D in products and solutions to support future growth

723

542

2005 2006 2007 2008 2009 2010

€m and % of sales

R&D budget

4%-5%

Roombox

power protection, metering, KNX,

Zigbee, IP-ready

EcoBreeze

data center cooling efficiency, offers PUE

approaching unity

Acti 9

the new referencein the field of LV final

distribution

Odace

a new innovative range

for LifeSpace

Motion control

adapted for new economies

818


Measureour commitmentPlanet & SocietyBarometer

Engage all our people

GainrecognitionIn 2 ethical stock indexes:- Dow Jones Sustainability Stoxx(Europe) Index- Aspi Eurozone

People & communities development

Sustainable and responsible business

A responsible commitmentsupporting Schneider Electric’s sustainable growth

Access to energy

Environmental protection

BipBop programme

Green Premium products

Health & Safety and engagement

UN Global Compact

Schneider Electric Foundation

.


We have transformed our company

€60bn

€200bn

50%

90%of sales with

#1 or 2 ww position

80% of salesWestern Europe + North America

~20%

37%of sales

78% of salesNon-residential buildings + Industrial & machines

5diversified

end-markets

Accessible markets Leadership positions Geographies

New economies exposure End markets Products & Solutions

Product business model

dominant

33%of sales*

2000

2010

2000

2010

4balanced

geographies

* Before consolidation impact of Areva Distribution


We see favorable trends in our environment…

Energy efficiency is mainstream

Smart grid is emerging

New economies are driving

world growth

…that create a world of opportunities for us

Our transformation continues with One

Deliver solutions for energy efficiency


Energy efficiency is a powerful engine to fuel our business

Incremental market opportunity on annual basis by 2020 ($bn)

Source: Schneider Electric estimates based on McKinsey Climate Change Special Initiative research

Mature countries

+18

BRICs

+27

Opportunity in buildings and datacenter marketsOpportunity in industrial markets

~$45bn incremental opportunity for the sector

40% in mature countries60% in new economies

Mature countries: largebuildings opportunity

New economies: largeindustry opportunity

Energy efficiency opportunity in the non-residential, industrial, residential and data-center markets driven by 1/ regulations introduced in connection with carbon abatement pledges by governments and 2/ NPV-positive energy saving measures


From products to products & solutionsDifferentiation through

technologies that can be combined and integrated

Solutions- Customized Systems

- Installed base services- Advanced energy management

services

Products- Best-in-class technology- Strong channel access

- Optimized quality & cost

Scale & pricing power

Low capital intensity& service opportunity

Customer intimacy feeding continuous

innovation and differentiation

Distributors and direct partners

End-usersand direct partners

Provide us the reach to small and medium size customers

Extend access to large end-users for our distributors

and partners


Industry IT BuildingsEnergyPower

● Residential● MarineEnd-market

responsibility for integrated

solutions

Low Voltage &

Renewable

Medium Voltage

Critical Power & Cooling

Industry Automation

BuildingAutomation & Security

Key technology

● Oil & gas● Utilities

● OEMs ● Water● Mining,

Minerals & Metals

● IT / Telco● Bank /

Insurance

● Retail● Hotels● Hospitals● Life

Sciences● Green

organization is put in place with increased end-market focus


: the architecture of efficiency

Global Supervision Remote monitoring

Building & Security

Global supervision> SCADA

BuildingsGreen University of North Texas, USA

Global SupervisionScalable, standardized architecture

Global supervision> TAC Vista BMS

PowerPhotovoltaic plant, Italy

Power & Energy Industry

IT

Power & Energy Power & Energy

Industry

Building & Security

Building & Security

ITData center for Financial Technologies, India

IndustryCement plant, Colombia

+ multi-year service contract


Deliver solutions for the smart grid


Interactive Smart Grid: 5 fields of opportunities for Schneider Electric

Industries

Buildings

Datacenters

Centralizedgeneration

Renewableenergyplants> 1MW

Decentralizeddistributedgeneration<1MW

Transmission Commercial and industrialDistribution

Flexible Distribution

Demand-Response

Efficient enterprise

+EV charging infrastructure

+EV charging infrastructure Residential

Efficient home

Renewables integration & connection


Huge investments planned in development & deployment of associated infrastructure

Electrical vehicles

8M

Grid automation 1

Average scenario

Demand Response

Solar PV solutions

7GW

Installed Capacity GW

No. of EV/PHEV cars(% of total car production)

25 GW

Annual capex $bn

31

65

2009 2015 2009 2015

2009 2020

5m(10%)

10k (0.01%)

€5bnof charging

infrastructure market in 2020

Source: Pike Research(1): Substation & Distribution Automation

Source: IMS

4

11

2009 2015

Grid Automation Market Size $bn

Power Consumption GW / DR Potential DR Market Size $bn

20202009

1000

800

GW

Base

Average

1.7%

Aggressive (with EE)

2009 2020

8

18

42

Example : USASource: Pike Research

including spending on real estate & PV panels not accessible to SE


Lead the development of the smart grid

Renewables

Electric Vehicle Infrastructure• 1st installations in

Brussels and Strasbourg

• Partner with Parkeon(joint payment system for parking and charging)

• +600 solar photovoltaic projects in 2010

• Capturing business also in wind and hydro markets

~2% of sales

1st large contracts in

2011

Flexible Distribution• Optimize network assets &

increase energy efficiency• Improve network reliability

• +150 PACiS substation automation systems delivered in 2010

PACiS

MiCOM

Leveraging Areva

Distribution

Demand-Response management• Leveraging our edge in

energy efficiency

• Partner with Energy Pool in Europe

• Pilot projects in the US

Power System Solution for Dayton,

Ohio solar farm

Kicked offin the US

and Europe

100,000 points of consumption

connected


Capturing growth in new economies


A two-speed world necessitating different answers to different markets

Source: Oxford Economics

Capex at Purchasing Power Parity

MatureNew Economies

+7%CAGR 2010-2020

+6%CAGR 2020-2030

2010 2015 2020 2025 2030

70% of GDP growth opportunity

80% of capex growth opportunity

New economies


A robust business model in new economies

Sales in new economies37% of Group (32% in 2008)

Strong and deep-rooted presence established to fully benefit from the strong market potential in these regions

0.9*

* Excluding Elektroshield TM Samara consolidated with the equity method (2010 sales: €0.4bn)

1.7 3.6

2010

2010

2010

Eastern Europe

Middle East Africa

Asia

Billion €sales

2006 2007 2008 2009 2010

New economies

Mature countries

+17%+20%

+12%

-9%+8%

+11%+3%

-18%

+6%

Organic growth in new economies

+15%

1.1

2010Latin

America

Highlights of 2010and business update


Deployment of strategy roadmap drove the rapid rebound

Strong organic growth of +9% in 2010 Right positioning and exposure of our business portfolio

Power

IT

Industry

BuildingsQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010

-10%

-20%-16% -17%

+12%+10%

+2%

+12%

Businesses organic growthGroup organic growth

+6%

+24%

+10%

+3%

Strong momentum

Later cycle businesses


Strong margin recovery in 2010 led to record EBITA before restructuring at €3bn

In m€ 2009 2010 2010excl. Areva reportedDistribution

16.2%

2,967

40.5%

+9.3%

18,350

3,0522,018EBITA1 before restructuring and Areva D integration costs

15.6%12.8%Margin %

+9.3%Organic growth

39.5%39.4%Gross margin

15.0%11.4%EBITA1 margin

15,793 19,580Sales

1 EBIT before amortization and impairment of purchase accounting intangibles

+3.4 pts

+3.6 pts


Excellent free cash flow in 2010, net debt down, including Areva Distribution acquisition

1 Dividends distributed in 2010 amount to €525m, of which ~63% have been paid in shares (at shareholders’ option)2 Of which sale of shares held through Cofibel/Cofimines +€249m, dividend for minorities of -€46m, FX impact of

approx. -€100m (53% of net debt is USD-denominated, after swaps)

Analysis of debt change in €m 2009 2010

(206)839Change in working capital

(2,736)76

(19)2305

(1,749)(195)11,734(528)

2,468(2,812)

(2,812)1,741

32158

(103)(317)1,971(576)

1,708(4,553)

Net debt at December 31(Increase) Decrease in net debtOtherCapital increaseAcquisitionsDividendsFree cash flow

Operating cash flow

Capital expenditure – net

Net debt at January 1


Continued strong sales growth in first-quarter 2011

Sales organic growth by business

Sales organic growth by region

Q1 2011

4,944

359663

1,105908

1,909

+21.9%Industry

+11.8%Group

+11.2%+11.1%

+1.4%+10.1%

Buildings

Energy

IT

Power

Q1 2011

+15%1,163North America+18%1,235Asia-Pacific

4,944

838

1,708

+11.8%

+10%

+6%

Rest of World

Group

Western Europe

€ m € m


2011 outlook

Schneider Electric confirms its targets for 2011:

Strong organic growth of 6% to 9%

EBITA margin of 15.0% to 15.5%(vs 2010 proforma* of 14.5%)

Topline

Japan-related supply chain disruption: potential impact on some components. No material impact expected on sales short term. Intensive mitigation efforts are deployed to limit the impact in H2

Limited impact of political unrest in North Africa

Raw material inflation ~€350m

Accelerate price actions to largely offset raw material input costs and target price increasesabove the initial ~1%

Industrial productivity of at least ~€400m

Reduce support function costs to sales ratio

Profitability

* Proforma including Areva Distribution activities on a 12-month basis

Confirmed full-year outlook for each business: - ‘new’ Power to show more improvement- Energy to continue its slow recovery- Industry and IT on still strong underlying trends

but face tougher comparison- Buildings supported by energy efficiency,

services and improving mature markets


We deliver strong and profitable growthGroup sales (in €bn)

Group targeted organic growth

at world GDP +3 points

targetsacross a

normal cycle

10.3

19.6

13.7

15.8

18.317.3

11.7

Combination of strong organic growth and successful acquisitions

1.29

2.93

2.021.80

2.772.56

1.57

Strong business model delivering attractive returns

2004 2005 2006 2007 2008 2009 2010

Group targeted EBITA margin

between 13% and 16%

Group EBITA (in €bn)

2004 2005 2006 2007 2008 2009 2010

Help people make the most of their energy

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