Schneider Electric, the big power and automation vendor, today said sales in its third quarter rose 15.3%, reflecting strength in most geographic regions except North America.
The Rueil Malmaison, France-based company said third-quarter sales rose to €3.4 billion on what it called a current structure and exchange-rate basis. Schneider said that acquisitions -- primarily Juno Lighting, BEI Technologies, Merten, and Clipsal Asia -- contributed roughly 7.1%, or €216 million of the sales for the third quarter.
On a constant structure and exchange-rate basis, sales grew 9.9% organically, the company said. Schneider said that it expects organic sales to increase about 10% for the full year.
In terms of regions, the strongest sales growth on a constant basis, 19.6%, came in what Schneider calls its "rest of world" area, including the Middle East, South America, and Africa. This area, while the fastest growing, is the smallest in terms of size, registering only €285 million for the quarter.
Sales in the company's Asia-Pacific region grew 15% to €666 million. Schneider's largest region, the European market, grew 8.7% to €1.5 billion. Schneider said demand in Western Europe during the quarter was "higher than expected."
But it was the North American market, whose growth rates had been in the double-digits last year, which saw the most modest gain. Schneider said that North America grew only 5.6% to €959 million. (Rockwell, which like Schneider had enjoyed double-digit revenue increases in North America during the last few reporting periods, yesterday said it too had experienced more modest revenue growth in the region during its most recent quarter, due to continuing softness in the automotive sector.)
Schneider did not break out net income or earnings per share for the quarter.
Jean-Pascal Tricoire, who became Schneider's chairman and chief executive in May, said on a conference call with financial analysts today that comparing this year's North American third-quarter results to the like period in 2005 was difficult because last year's quarter was "extremely strong." Although citing a slowdown in the residential market as a key factor in the lower growth rate, he said that demand, particularly in non-residential construction, services, and energy management, remains strong.
"The pace of growth softened in North America, but the business trend remains very solid," Tricoire said. "We will be looking more to the U.S. market to see where it is going."
Asked during the conference call about his outlook for 2007 for all of Schneider, Tricoire sought to dampen expectations. "I don't expect 2007 to be as good as 2006, which was very, very high," he said. "Growth will be above 5%, but it's too early to say." He promised a 2007 forecast update by early next year.
Tricoire also said it was "too early to tell" whether the North American operation can get back to double-digit growth levels, but noted that management in that region "remains optimistic" about the company's business prospects.
In an interview with Managing Automation in late September at Schneider's Initiative 2006 customer conference in Orlando, North American CEO Dave Petratis warned that his region would not sustain double-digit growth increases. "North America was up 14%, but we're not going to continue to see that," he said. Petratis said he was looking for a 6%-8% growth rate for North America in 2007.
Schneider -- whose brands include Square D, Telemecanique, and Merlin Gerin -- has undergone a broad transformation over the past several years. The company has been emphasizing emerging markets and services as well as a long-term improvement plan dubbed new2 that focuses on growth, efficiency, and people.
Schneider had €11.7 billion in sales in 2005.