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SCHNEIDER ELECTRIC SE
SCHNEIDER ELECTRIC SE
Weak infrastructure, rise in raw material prices leads to cautious 2017 guidance
16 Feb 17
FY 16 revenues reached €24.7bn with an organic growth of -0.9%. The gross profit improved organically (+1%) through strong productivity and system improvements. Q4 16 revenues was €6,783m, down -1.7% organically and down -5.8% on a reported basis. The 2016 adjusted EBITA reached €3,480m, increasing organically by +4% and the adjusted EBITA margin improved 40bp to 14.1% thanks to positive net prices and strong productivity. Record cash generation with FY16 FCF of €2.2bn up 8% from FY15 thanks to improving CFO (up 8.4%) and good working capital management. Proposed dividend at €2.04/share, up +2%. During Q4 16, the group has repurchased 6,621,503 shares for a total amount of €400m. FY 16 net debt amounts €4,631m vs €5,022m in FY 15.
Flat Q3 16 revenue, limited growth ahead
27 Oct 16
Schneider reported its Q3 16 revenue figures and laid out its strategic plan at its investors day. Main facts: Q3 16 revenues reached €6.1bn corresponding to an organic growth of -1.7% and about flat excluding selectivity & working day impacts. China continues to improve, turning positive in Q3 while the Middle East’s decline impacted the group’s growth by -1.3pts. North America’s revenues were slightly positive and Western Europe’s was flat. Services continue to grow mid single-digit driven by Building & IT. FY2016 targets reaffirmed. Schneider now targets average organic growth of around 3% over the next three years excluding infrastructure. A targeted +20-50bp average organic improvement in the adjusted EBITA margin over the next three years, while increasing the support function’s cost saving targets for 2015-17 to €700-800m.
Strong execution amid still difficult markets
28 Jul 16
Schneider reported its H1 16 results. Main facts: Revenue reached €11.85bn in H1 16, a 7.8% reported decrease but corresponding to a 0.1% organic decrease. For Q2 16 alone, revenue was €6.21bn, a 9.4% reported decrease and 0.5% organic decrease. The EBITA margin reached 13.3% (€1,570m), a 70bp improvement over last year (12.5%) mainly due to cost reduction. Net profit was €809m, a +13% increase yoy leading to a strong free cash flow generation of €446m (versus €216m last year). The company revised upward its full-year margin target by +60bp and a +90bp improvement on the adjusted EBITA margin before FX (versus previously 20-60bp).
Situation looks under control
21 Apr 16
Main facts: Q1 16 revenue at €5.77bn (-3.7% yoy) came in above market expectations of €5.65bn. Organic growth was +0.1% yoy as the negative FX impact was €-144m, or -2.4%, primarily due to the depreciation of several new economies’ currencies versus the euro. The perimeter impact was €-85m corresponding to -1.4% on Q1 16 revenue. The company confirmed its FY16 guidance of organic revenue growth to be flat to down low single-digit, impacted by the group’s higher selectivity on project activities and +20-60bp on the adjusted EBITA margin before FX. The negative FX impact on margins is expected to be between -40bp to -50bp at current rates.
Rather reassuring on many fronts
17 Feb 16
The company reported FY15 results which are overall slightly above market expectations and rather reassuring. Revenue reached €26.6bn, corresponding to a -1% yoy organic change, but was stable excluding the negative impact from the change in the fiscal year closing in Invensys and the ramping down of the Chinese nuclear project. The adjusted EBITA margin was 13.7% slightly below last year (but stable ex. FX), in line with company guidance while the adj.EPS reached €3.73, bang in line with our forecast. The Q4 15 revenue was down 0.6% organically including +2% in building & partners helped by strong growth in the US construction market while the weak spot was Industry -4.3% yoy, negatively impacted by Oil&Gas in the US. China's operations continued to be under pressure as the Asia Pacific region decreased 6% but this included growth in India and South-East Asia. For 2016, Schneider sees continued growth in Western Europe and the construction market in the US, offset by difficult markets in China but to a lesser degree than in 2015, and mixed new economies. The company expects a flat to down low single-digit organic growth in 2016 coupled with a 20-60bp improvement in EBITA margins excluding FX impacts estimated between -40 to -50bp at current rates. In other words, a flat year for EPS.
Second "limited" warning in a row as China weighs
29 Oct 15
Schneider reported its Q3 15 revenue of €6,594m, +4.9% reported growth, but corresponding to -1.6% organic growth (-1.1% working day adjusted). The Industry segment decreased 4.6% yoy on an organic basis, reflecting weak industrial investments, a further slowdown in China while North America declined due to weaker oil & gas and IT investments. Other segments (IT, Infrastructure, Buildings & Partner) were flat to slightly negative, also impacted by China. By region, Western Europe stabilised (-1% organic) while Asia Pacific (-5%) weakened due to China and North America (-4%) due to weak Oil & Gas and IT segments coupled with a strong dollar impact. ROW grew +9% due to continued infrastructure investments in the Middle East and project execution in Africa that drove strong growth in the region. Overall, Q3 15 revenue was up slightly outside China. The impact of FX fluctuations was +€420m, or +6.6% during the quarter, mainly due to the US dollar and Chinese yuan against the euro. However, given the euro’s appreciation against the US dollar, Chinese yuan, and several new economies’ currencies since the summer, Schneider now expects, at current rates, the positive FX impact on FY2015 revenues to be reduced by c. €0.2bn to c. €1.8bn with a c.-20bps impact on the 2015 adjusted EBITA margin rate compared to a neutral impact estimated previously. Schneider revised its FY15 targets down: slightly negative organic growth in revenue (vs "an around flat organic growth") and a moderate decline in the EBITA margin vs 2014 (vs a flat to moderate decline) is now expected.
N+1 Singer - T. Clarke - Strong conclusion to FY16, record order book
28 Mar 17
After significant upgrades at the time of the full year update (PBT forecast +43% FY16; +14% FY17), today’s results are c.4% ahead of our expectations at the PBT level and show strong growth on the prior year (PBT +48%). All regions achieved positive growth in revenue. The outlook statement refers to a still growing order book (£350m at the end of February vs. £330m at the year end) and the strength of recent trading, with London & the South East and Scotland said to be particularly positive. The Group has reiterated its ambitions to improve margins, but we have not incorporated this into our forecasts at this stage. We have nudged up our FY’17 forecasts (PBT +5%) and introduced FY’18 forecasts that imply 2% PBT growth. Despite the well justified bounce in the share price, the shares still trade at a significant discount to the peer group (7.6x FY17 PE, 4% yield).
Panmure Morning Note 29-03-2017
29 Mar 17
We are cutting our recommendation to HOLD as we see little upside from current levels given the lack of positive surprises in today’s trading update. Multiples of 4.4x 2017 sales and 17x 2017 EBITDA imply an expectation of at least slightly exceeding expectations. We had assumed that acquisitions will provide the momentum until organic investments deliver. However, acquisitions are proving elusive and excess cash is diluting returns. Moreover, our forecast relies on at least one order in vehicle simulator market, which has yet to be announced. The management has shown that it can use the financial markets to raise equity but it now needs to show that it can deploy excess equity productively.
N+1 Singer - Severfield - Strong H2 drives upgrades; CEO temporarily steps down due to ill health
28 Mar 17
Severfield’s trading update highlights that trading during H2 was strong and the Group now expects results to be ahead of expectations. Cash flow performance has been similarly strong with net funds at the year end also expected to be ahead of expectations. The strong performance was driven by both a better than expected revenue performance and better than expected growth in the operating margin. We expect to increase our FY16 PBT forecasts by c.9% to around £19.5m. In addition, we are disappointed to see that Ian Lawson (CEO) has taken a temporary leave of absence due to physical ill health. John Dodds (non-executive Chairman) will step up to Executive Chairman on an interim basis and Alan Dunsmore (FD) has agreed to assume the role of CEO on a similar basis. This should ensure the continuity of the business whilst Ian is recovering. The outlook for Sevefield remains positive and the Group has reiterated its medium term target to double PBT from £13.2m in FY16 by FY20. We remain positive on Severfield (one of our best ideas for 2017) and continue to see clear potential for it to outperform its medium term targets.
28 Mar 17
ClearStar* (CLSU): Building a background for growth (CORP) | Sound Energy (SOU): TE-8 results (HOLD) | LiDCO* (LID): 2017 should be a transformative year (CORP) | Proteome Sciences* (PRM): FY 2016 in line. Moving towards breakeven (CORP) | Fulcrum (FCRM): Significant market potential, rising margins and a strong balance sheet (BUY) | Mortgage Advice Bureau (MAB1): Strong and growing intellectual property (BUY) | 7digital* (7DIG): Open offer result (CORP)