Schneider Electric SA, the biggest maker of low- and medium-voltage equipment, said a slowdown in Europe continues to weigh on sales even as it reported first-quarter revenue that beat analysts’ estimates.
Revenue climbed 9.4 percent from a year earlier to 5.41 billion euros ($7.11 billion), bolstered by acquisitions and rising demand in the Americas and Russia, the French company said in a statement today. Analysts polled by Bloomberg predicted 5.29 billion euros. Excluding acquisitions and exchange rate changes, sales rose 0.4 percent, hurt by declines in France, Spain, Italy, China and Japan.
“In Western Europe, there have been a lot of uncertainties at the end of 2011 that are weighing on markets and sales at the start of 2012,” Chief Financial Officer Emmanuel Babeau said in a telephone interview. “We should see an improvement later this year.”
Chief Executive Officer Jean-Pascal Tricoire reiterated a forecast for “flat to slightly positive” organic revenue growth this year, held back by the economic slump in Southern Europe. “For the remainder of 2012, visibility remains limited by the uncertainty surrounding the global economy,” he said in the statement.
Schneider declined as much as 1.8 percent and was down 0.6 percent at 47.16 euros at 9:44 a.m. in Paris, paring the stock’s gain this year to about 16 percent.
The CEO repeated a goal for adjusted margin on earnings before interest, taxes, and amortization of 14 percent to 15 percent in 2012 as the company cuts costs to mitigate the impact of rising raw material prices and more sales of systems and services that have lower margins than products.
The CEO spent $3.8 billion last year on takeovers such as Spanish software company Telvent GIT SA, Chinese energy-savings drives maker Leader Harvest Power Technologies, and Indian maker of inverters and power-storage systems Luminous Power Technologies to expand in emerging markets and broaden power-management systems.
In the first half of 2012, Schneider is in “integration mode” for its recent acquisitions, though it doesn’t rule out making “small” purchases, Babeau said. He didn’t exclude asset sales, declining to discuss specific units.
Schneider, based in Rueil-Malmaison near Paris, will continue to benefit from price increases made last year and have a “slightly negative” impact from rising raw material prices, CFO Babeau said.
The “mid-single digit” decline in first-quarter sales in China, which accounts for about 12 percent of Schneider’s revenue, is due to government policy aimed at arresting the “overheating” of some industries and by slowdowns at some of China’s customers in Western Europe, Babeau said. “We’re expecting a gradual improvement” during the year, he said.
France, which accounts for about 8 percent of the group’s revenue, is marked by a “wait-and-see attitude” that may be partly due to this month’s presidential elections, and Italy posted a “double-digit” drop in first-quarter sales.