Schneider Sales Beat Estimates on Improving U.S. MarketFrancois de Beaupuy
Schneider Electric SE, the world’s biggest maker of low- and medium-voltage equipment, reported third-quarter sales that beat analyst estimates as demand improved in the U.S. and “fragile” western European markets stabilized.
Revenue climbed 7 percent to 6.29 billion euros ($8 billion), the company, based in Rueil-Malmaison near Paris, said in a statement today. Analysts had forecast 6.23 billion euros, according to the average of three estimates compiled by Bloomberg. The company reiterated its 2014 forecast for sales and margins.
“Over the quarter, we see Western Europe stabilizing, U.S. improving and China slowing down as expected, while other new economies show a mixed picture,” Chief Executive Officer Jean-Pascal Tricoire said in the statement. “Looking ahead, we expect the environment to continue to be challenging.”
The company is cutting costs to adapt to a construction slump, government austerity measures and weaker demand from utilities in western Europe, where sales “marginally” grew for the first time in three years. It’s adding more manufacturing and support functions in faster-growing areas to be less exposed to the euro’s appreciation that has curbed sales growth and profitability in recent quarters.
Shares of the French company rose 2.8 percent to 60.49 euros as of 9:29 a.m. in Paris.
Schneider is also focusing on organic growth and integrating Invensys, a U.K. maker of software and control systems used in the chemical, oil and gas, and mining industries, which it bought in January. The software business “continues to perform well” and “targeted cost synergies” for 2014 are confirmed, Schneider said today.
Acquisitions net of disposals added 397 million euros to third-quarter sales, the company said. Currency fluctuations trimmed revenue by 81 million euros in the period as the Russian ruble, the Chinese yuan, the dollar, and the Indonesian rupiah fell against the euro.
Given the recent depreciation of the euro against the dollar, Schneider said it now expects a “neutral to marginally positive impact” on second-half revenue and adjusted earnings before interest, tax and amortization.
Schneider reiterated its prediction for low single-digit organic sales growth this year, and a 0.4 percentage point to 0.8 percentage point advance in its adjusted Ebita margin, excluding currency effects, from the 2013 pro forma level which includes Invensys. The negative currency effect is still estimated at 0.4 point for 2014, the company said.