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Schneider Electric posts record H1 core profit, ups guidance

by Joel Richer (2020-11-05)

July 25 (Reuters) - Schneider Electric posted a record first-half core profit on Thursday, helped by improved sales volumes and pricing at the French electrical equipment manufacturer's energy management division, and raised its guidance.

Schneider's first-half adjusted earnings before interest, tax and amortisation (EBITA) rose 10.9% organically to 1.96 billion euros ($2.18 billion), topping analyst consensus for 1.92 billion.

The group, which markets products ranging from electrical car chargers and lighting control to transformers and production software, reported 5.4% organic revenue growth for January-June to 13.20 billion euros, also exceeding analysts' estimates.

The company's energy management division reported solid growth, underpinned by high demand for products and services, particularly in the data centres market across all the regions in which it operates.

The residential, commercial and industrial buildings end-market remained strong, while the energy management unit also benefited from higher investments in construction and infrastructure end-markets in China.

"This illustrates our ability to look for growth where it is (...). Even with uncertainties linked to the trade war between China and the U.S., to Brexit, there are lots of parts of the economy that are still growing, lots of areas where things are going very well," Chief Financial Officer Emmanuel Babeau said.

Demand for its energy management products also offset weakness at its industrial automation business, which saw discrete and original equipment-manufacturing markets slow during the second quarter, affected by the U.S.-China and U.S.-Mexico trade tensions.

This softness is expected to continue into the second half of the year, the company said.

However, it saw growth in the United Kingdom, Babeau said, despite uncertainties over the UK's looming exit from the European Union.

"In the United Kingdom, where we expected difficulties linked to Brexit, we're growing almost 5% in the first semester. It doesn't mean it will be less complicated in the second," he said.

The company, which has a history of raising its guidance several times a year, hiked its full-year outlook for adjusted EBITA organic growth to 6%-8%, and organic sales growth to 4%-5%.

These targets are roughly in line with what analysts polled by the company expect for the year.

Schneider has also been actively reviewing its operations portfolio to focus on its core businesses and speed up growth at its two divisions.

The French company has said it will review over 2019-2021 assets accounting for around 1.5-2 billion euros of revenues, and said it has exited about 0.3 billion euros of that target range, having disposed of its video surveillance manufacturer Pelco and the U.S.

HVAC control panel offer. (Reporting by Piotr Lipinski in Gdynia and Gilles Guillaume or maintenance in Columbus Paris, Editing by Sherry Jacob-Phillips and Maria Sheahan)