Earnings

Schneider Electric expects lower annual revenue, margin on virus uncertainties

Key Points
  • The group, which sells products ranging from electrical car chargers to home automation systems, now expects a 7-10% organic revenue decline and adjusted earnings before interest, taxes, and amortization (EBITA) margin to shrink to 14.5-15.0% year-on-year.
  • Schneider had previously forecast organic revenue growth and a higher core profit margin for the year, but scrapped this in March due to the pandemic.
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Schneider Electric sees 'resilience' in second-quarter results, CEO says

French electrical equipment group Schneider Electric SE on Wednesday forecast a drop in its 2020 revenue and core profit margin, due to uncertainty around the coronavirus outbreak and a possible second wave of lockdowns.

The group, which sells products ranging from electrical car chargers to home automation systems, now expects a 7-10% organic revenue decline and adjusted earnings before interest, taxes, and amortization (EBITA) margin to shrink to 14.5-15.0% year-on-year.

Schneider had previously forecast organic revenue growth and a higher core profit margin for the year, but scrapped this in March due to the pandemic.

The Paris-based company also flagged further restructuring costs of between 400 million euros and 500 million euros ($469.08 million and $586.35 million) over three years.

However, the group confirmed its medium-term goals, which include raising its adjusted EBITA margin to 17% by 2022.

"Though some markets might be impacted, a large part of our business will be well oriented for future years and will potentially be accelerated by government stimulus," Chief Executive Officer Jean-Pascal Tricoire said.

Schneider's results declined less-than-expected in the first six months of 2020, beating analysts' forecasts.

The Paris-based firm's adjusted EBITA fell to 1.58 billion euros, a margin of 13.6%.

Analysts polled by the company had estimated an 11.6% margin from a 1.30 billion euro adjusted EBITA.

The group said it was helped by a strong second-quarter rebound in China as well as resilience in its software and services division.