JP Morgan European Capital Goods CEO Conference 2015 CEO Conference 2015 Jean-Pascal Tricoire, Chairman and CEO June 11, 2015 1
A technology company with strong foundations 2
We are the global specialist in energy management and automation €25 billion ~5% 43% ~170,000 FY 2014 revenues of revenues devoted of revenues people in 100+ to R&D in Solutions countries DIVERSIFIED END MARKETS – FY 2014 revenues BALANCED GEOGRAPHIES – FY 2014 revenues Non-residential & Data Centers Industrial Utilities & Residential Buildings & Networks & Machines Infrastructure 28% 25% 34% 14% 26% 26% Western Europe North America 28% 19% 44% Asia Pacific Rest of World of revenues in new economies 3 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
Four globally leading and focused businesses BUILDINGS & IT INFRASTRUCTURE INDUSTRY PARTNER KEY TECHNOLOGY KEY TECHNOLOGY KEY TECHNOLOGY KEY TECHNOLOGY Low Voltage & Medium Voltage Discrete & Process Critical Power & Building Automation Grid Automation Automation Cooling FY 2014 REVENUES FY 2014 REVENUES FY 2014 REVENUES FY 2014 REVENUES €10.8 billion (43%) €5.3 billion (21%) €5.6 billion (22%) €3.4 billion (14%) WORLDWIDE POSITION WORLDWIDE POSITION WORLDWIDE POSITION WORLDWIDE POSITION #1 #1 #2 (Discrete) #1 #4 (Process) GLOBAL COMPETITORS GLOBAL COMPETITORS GLOBAL COMPETITORS GLOBAL COMPETITORS ABB, Siemens ABB, Emerson, Eaton, Emerson ABB, Eaton, Rockwell, Siemens Legrand, Siemens 4 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
An integrated portfolio, to deliver complete bundles and solutions SOFTWARE 2 POWER AUTOMATION (Low and Medium Voltage, Secure power) (Enabling integration) END MARKETS Buildings 1 ( 34% of group revenues) Industrial and Machines (Discrete and Process) (Discrete and Process) ( 26% of group revenues) Utilities and Infrastructure ( 26% of group revenues) Data Centers and Networks ( 14% of group revenues) ~65% ~35% of Group revenues of Group revenues 1 Including residential and non-residential buildings 2 Including standalone software 5 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
An integrated business model Products Solutions Strong segments Scale = Cost expertise + + Differentiation + Solid execution Strong partners capabilities network network A strong and balanced A strong solutions offer partner model Segment expertise Balanced distribution channels > > Growing share of services Global distribution network > > > Org. Growth 7pts higher than Strong brand > rest of Group in past 3 years Differentiation through innovation > Differentiated software and system design > 6 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
An integrated commercial setup, to supply more to each customer in each country Buildings & Infrastructure Industry IT Partner Low Voltage Medium Voltage & Discrete & Process Critical Power & Building Automation Grid Automation Automation & Cooling Structured commercial setup in each country to drive cross selling and maximize coverage Deliver value to the customer Non-residential & Residential Utilities & Infrastructure Industrial & Machines Data Centers & Networks 7 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
An integrated and globalized supply chain to enable delivery of full offer and all synergies from scale STRONG RESULTS OVER THE PAST 10 YEARS KEY FOCUS > €3bn productivity delivered over past 10 years > Low CAPEX > Outsourced COGS Tailored > Increase customer satisfaction Supply Chain > Continue to improve cash efficiency Simplification Globalization Simplification > Deliver industrial productivity Footprint & Footprint & Lean Footprint & Lean Lean 8 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
A high technology investment, for innovation and differentiation A TECHNOLOGY COMPANY R&D INVESTMENT AN ECOSYSTEM FOR OPEN INNOVATION > ~5% of sales devoted to R&D > c. 11,000 R&D engineers, c. 10,000 Partnering with 50+ application and software engineers best-in-class public and private organisations > 20,000 patents active or in application 1,212 worldwide, >500 filed in 2014 1,119 Homes, Leading global 1,058 > With recognized innovations > With recognized innovations Minalogic, Minalogic, projects projects for Intelligent 979 Smart buildings, renewables, Recognized highest ranking Electricity 818 774 764 DCIM solution in Gartner Magic Quadrant (Oct 2014) Boosting Standardisation Zigbee, IEC, NEMA M580: World’s first ePAC with built-in ethernet Demand Funding start-ups response, & Aster Capital fund software Machine Solution – NEXT breakthrough 2008 2009 2010 2011 2012 2013 2014 Controller Generation 9 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
Focusing on execution and value creation 10
A solid track record to deliver profitable growth through focused execution REVENUES ADJUSTED EBITA FREE CASH FLOW RETURN ON ASSETS 1 (Billion € ) (Billion € ) (Average, Billion € ) (%) +9pt CAGR +9% CAGR +10% 2.0 36 24.9 24.9 3.5 3.5 27 27 x2+ 0.8 10.3 1.3 2004 2014 2004 2014 2002-2004 2012-2014 2004 2012-2014 Benefit from balanced Predictable cash generation: Resilient adj. EBITA Continuing to improve geography & complementary over 100% cash conversion from margin from 13% –16% asset efficiency business model Net income in past 10 years 1 Calculated on operational assets = property, plant, and equipment + inventories+ trade receivables – trade payables. 11 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
“Schneider is on” is focused on further creating value for customers and shareholders Create more Simplifying our Digitize for Innovation to make Our customers opportunities for work makes our customers, our customers’ lives get great service our customers… the difference for efficiency simpler because great people and for ourselves to customers and simplicity and better work at Schneider 12 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
Strengthen product leadership, establish excellence in targeted segments MORE COMPLETE SOLUTIONS FOR MORE INTEGRATED OFFERS TARGETED END-MARKETS Targeted segments focus Infrastructure Example: Water Example: E-House integrating Low and Example: E-House integrating Low and Water-loss management Water-loss management Medium-voltage electric distribution software Water & Waste Water Utilities Healthcare Automation & control Datacenters Electric distribution Example: Prefabricated datacenter modules Food & Metals, Mining & Secure power Oil & Gas Beverage Minerals with power, cooling & IT modules , integrated with Schneider modular MV & LV switchgear Safety Internet Giants Finance & Cloud 13 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
Accelerate software and service business MORE SOFTWARE MORE SERVICES 10,000+ application and software engineers Outgrew +7pts rest of group on average during past 3 years Leading Software suites in our end-markets 10,000+ Highly skilled experts Technology area Leading software suites � Process Engineering & � Process Engineering & Our execution focus: Optimization � Planning & Scheduling � Operations Execution Mgt Ampla Aquis Termis � Asset Management INCREASE INCREASE DEVELOP � Operations Control BREADTH DEPTH CAPABILITIES ClearSCADA � Information Management 14 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
Consistent Project Execution for our customers SCHNEIDER ELECTRIC/ ENERGOBIT CONSISTENT PROJECT EXECUTION CONSORTIUM EPC PROJECT IN ROMANIA - Strong cooperation within Schneider Consistency Electric to secure customer satisfaction satisfaction Global best - Best practices from project on grid practices connection to wind farms shared throughout Schneider Electric Agility - Technical leadership in providing complete solution from the grid connection to the windmills Technical leadership 15 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
Simplify our operations for enhanced efficiency KEEP HIGH INDUSTRIAL SIMPLIFYING OUR PRODUCTIVITY OPERATIONS 340 > Simplify management set-up ~€1.4-1.5bn of costs savings 320 > Make company leaner targeted by 2017 through targeted by 2017 through industrial productivity and SFC 300 > Optimize R&D efficiency and savings solution execution 280 > Increase focus and prioritization Free up resources for 260 reinvestment > Increase sales force efficiency 240 New2 One Connect ’05-’08 ’09-’11 ’12-’14 Average annual productivity (€m) 16 Schneider Electric – JP Morgan European Capital Goods CEO Conference 2015
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