French power and automation company Schneider Electric, maker of the Square D and Telemecanique brands of electrical and control products, today highlighted record organic sales growth combined with strong earnings increases in the first half of fiscal 2007.
For the period ended June 30, sales increased 25.3% (14% on a constant structure and exchange rate basis), while earnings before interest, tax, and amortization (EBITA) and net income rose 23% and 21%, respectively, from the year-earlier period.
Total sales in the first half of 2007 were €8.3 billion, fueled by €986 million contributed by recent acquisitions, including American Power Conversion (APC), which Schneider acquired earlier in the year.
Schneider's sales improved across all of its geographies. Revenue in Europe grew 12.4% in the half-year period, to €3.8 billion. North American sales were up 12.5%, to €2.3 billion, while business in Asia-Pacific rose 15.5%, to €1.5 billion, with China a standout at 20% growth. The "rest of world" (including the Middle East, South America, and Africa) saw the largest rate of growth, at 25%, with €672 million in sales. Average sales growth in emerging countries was 21%.
Chairman of the Management Board and Chief Executive Officer Jean-Pascal Tricoire noted on a conference call announcing the financial results that a stubborn decline in business from the residential sector in the United States was "more than compensated" for by commercial and industrial business results, driven particularly by customers' investments in IT and data centers.
"[Schneider] is in a unique position in a promising industry," Tricoire said on the call, pointing to several areas of focus for the company, including the development of automation products "for every segment," including building and home automation, as opposed to the company's traditional focus on industrial automation alone. Tricoire also mentioned Schneider's expanding use of open, Web-enabled standards in its automated systems.
Schneider's sales growth and operating cost containment, the company reported, contributed to a 23% increase in EBITA in the first half, bringing the total to €1.2 billion. EBITA included €88 million from APC, with a total contribution from acquisitions of €117 million.
In addition, net income grew by 21% in the period, to €729 million, with a 15% rise in earnings per share to €3.16.
Finally, Schneider raised its guidance for organic sales growth for the full 2007 year to "above 10%." The company previously forecast an 8% organic sales growth target.
In concert with its first-half earnings results, Schneider announced that its supervisory board has appointed SAP Deputy CEO Leo Apotheker to a non-voting position, pending the proposal of his full membership at Schneider's next annual shareholder's meeting.
In other recent news, the company announced a court ruling in its favor regarding the blockage of its proposed 2001 merger with French rival Legrand, a deal that Forbes magazine reported at the time would have resulted in one of the world's largest electrical component makers. The court ruled that the European Commission's prohibition of the merger was illegal. Schneider says the court ordered the commission to compensate the company for two-thirds of its resulting losses, the amount of which is to be determined by a court-appointed panel.