Schneider Lifts 2010 Margin Goal to Around 15.5%; First-Half Profit Climbs

Schneider Electric SA, the world’s biggest maker of circuit breakers, raised its margin target for 2010 after first-half profit more than doubled, helped by a rebound in sales and cost cuts.

Net income rose to 735 million euros ($961 million) from 346 million euros a year earlier, the company, based near Paris, said today in a statement. That compares with an average estimate of a 566-million euro profit in a Bloomberg survey of nine analysts. Second-quarter sales rose 10 percent like-for- like to 4.66 billion euros.

“Our businesses gained traction in the past months,” Chief Executive Officer Jean-Pascal Tricoire said in the statement. Second-half “organic sales progression” should be “broadly in line” with that of the first half, when it was 6.4 percent.

The company, which was hurt last year by the construction slump in Europe and the U.S., said it’s on track for its 2009- 2011 cost-cut plan. Schneider now aims to lift 2010 earnings before interest, taxes and amortization before restructuring costs and the impact of the purchase of Areva Distribution to “around” 15.5 percent of sales, up from a previous target of 14 percent.

The company bought the power-grid distribution unit of Areva SA in June as part of a plan to expand in faster-growing regions and in business areas such as energy efficiency and services to boost its profitability. The “cash impact” of the purchase of Areva’s power-distribution business was 1 billion euros, Schneider said.

The purchase will be consolidated from June, and is expected to add about 1.1 billion euros in revenue this year, and to deliver an Ebita margin of about 5 percent before integration and separation costs of about 50 million euros this year, Schneider said.

The integration of Areva Distribution is “well on track,” Tricoire said.

Schneider shares added 3.1 percent to 89.11 euros as of 9:03 a.m. in Paris.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net.

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