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PARIS—Schneider Electric SA, one of the world's biggest suppliers of power equipment and services, reported a steeper-than-expected 28% decline in net profit last year, attributing the slide to slack demand in China and the oil and gas sector, as well as write-downs.

The French company, based near Paris and in Hong Kong, said that trading conditions in China remain difficult, though not as tough as they were in 2015, forecasting improving profitability on flat or slightly overall lower revenue growth this year through better cost control.

"Despite a weak world economic growth, we will manage to raise our operating margin by focusing on businesses with better margins and on working on our costs," said Chief Financial Officer Emmanuel Babeau.

Schneider—whose main competitors include ABB Ltd., Eaton Corp., Rockwell Automation Inc. and Siemens AG—warned that volatile currency markets could yet weigh on its performance, threatening to wipe out around €1 billion ($1.13 billion) in revenue this year if emerging-market currencies continue to weaken. The company derives around 40% of its sales from emerging economies.

Net profit fell to €1.41 billion in the 12 months to Dec. 31 from €1.94 billion a year earlier on a 6.8% increase in revenue to €26.64 billion, below the company's and analysts' forecasts. Revenue on a comparable basis fell 1.0%, below Schneider's target of averaging 3% to 6% growth a year.

A €300 million euro write-down of Schneider's security-camera business, another €300 million in accounting losses on the sale of some assets more than offset a €295 million currency gain related to the euro's weakness against emerging-market currencies early in the year, Mr. Babeau said.

Schneider's performance illustrate the limitations of the industrial group's tilt toward Asia, and China in particular, while the slump in the oil and gas sector has set back growth at Invensys, the U.K. software and automation business Schneider bought for $5.2 billion in 2013.

The group had sought to reduce its reliance on Europe's sluggish economy and drastic cutbacks in spending by the region's power utilities.

Mr. Babeau said he expects business in parts of Western Europe—where economic growth has recovered modestly—to buoy the company in 2016, helping offset still weak demand in China and patchy demand in the U.S. "We expect a decline of our activity in China this year, though not as severe as in 2015, while business in the U.S. will be contrasted," he said.

Schneider said growth in revenue at its business supplying low-voltage and automated equipment for buildings and its infrastructure unit, selling medium-voltage gear to utilities and grid operators, was offset in the three months to end-December by declines at its industrial automation unit and at its business providing power and cooling systems for data centers.

Schneider said that overall cash flow improved in 2015, helping to reduce net debt at year-end to €4.6 billion from €5.0 billion a year earlier.

Schneider plans to return more cash to shareholders, raising its dividend by 4% to €2 a share and expanding a share-buyback program to up to €900 million this year from €600 million in 2014.

Write to Inti Landauro at inti.landauro@wsj.com

(END) Dow Jones Newswires

February 17, 2016 04:15 ET (09:15 GMT)

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