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Earnings

France's Schneider Electric sees 2019 growth slowing less than expected

Key Points
  • French electrical equipment producer Schneider Electric expects its earnings growth to ease this year, but at a pace slower than the market expects.
  • The company said on Thursday it sees the 2019 revenue to grow between 3 and 5 percent organically.
  • The analysts polled by Schneider had expected current year's organic growth to be 2 percent.
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French electrical equipment producer Schneider Electric expects its earnings growth to ease this year, but at a pace slower than the market expects.

The company said on Thursday it sees the 2019 revenue to grow between 3 and 5 percent organically with an expansion in adjusted earnings before interest, tax and amortization (EBITA) margin of 20-50 basis points, leading to an adjusted EBITA organic increase of 4 to 7 percent.

Emmanuel Babeau, Deputy CEO and CFO at Schneider Electric, told CNBC Thursday that the company has "seen very solid progress coming out of 2017 and 2018."

"There's generally a lot of confidence in the market that we'll make that target," he told CNBC's Juliana Tatelbaum. He said the company was continuing to do "a very disciplined review of our structural costs and doing that in ways that it doesn't affect our organic growth performance," he said.

The analysts polled by Schneider had expected current year's organic growth to be 2 percent with a flat adjusted EBITA margin year-on-year.

The OEM demand in China is expected to soften this year, the group said, adding that the country remains, nevertheless, a growth market in aggregate with "dynamic" end-markets including construction, infrastructure and parts of industry. It also expects Western Europe to grow at a "moderate" pace, while the growth in the rest of the world, which also excludes North America and Asia-Pacific regions, will be contrasted based on country.

"While the increased level of inflation and tariffs will weigh on productivity in 2019, the group continues to expect a strong level of gross industrial productivity," the company added.

The revenue for 2018 grew 6.6 percent organically, ahead of the company-compiled consensus of 6.3 percent, to 25.72 billion euros ($29.01 billion). Its adjusted EBITA came in at 3.87 billion euros, as expected, while the net income was a slight miss at 2.33 billion euros, mainly due to M&A and integration costs.

The group, however, upped its dividend for the year by 7 percent to 2.35 euros per share.