Schneider Electric Results Squeezed By China, Currencies
17 Febbraio 2016 - 10:30AM
Dow Jones News
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)
Copyright (c) 2016 Dow Jones & Company, Inc.
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