RUEIL-MALMAISON, France — Schneider Electric posted a strong performance in H1 2022 and upgraded its full-year 2022 target.
In the first six months of 2022 we faced a very disturbed environment: the war in Ukraine entailing sanctions on Russia, the resurgence of COVID-19, particularly in China in the second quarter, tensions on supply chain as a collateral of a continued strong demand, and inflation on costs.
Against these headwinds, we deliver a strong financial performance in H1. We confirm the good momentum of Q1 and deliver another quarter of strong growth and record high revenues in Q2, bringing our organic growth in H1 to 10% despite the negative impacts from China and Russia. Demand for our synergetic portfolio integrating digitization for efficiency and electrification for decarbonization is boosted by the acceleration of the energy transition in a context of tensions and inflated prices in energy, as well as by the priority set by most companies and societies on digitization, sustainability and reshoring. As expected, our H1 margin reflects a return to a more normal seasonality as many countries exit the pandemic. We maintain our margin in the backdrop of unprecedented inflation. While our operating cash flow reaches another all-time high, our free cash flow is impacted by our choice to carry more stock and secure our supply, and by the disturbances brought by the lockdown in China. Our growth is still constrained considerably by the upstream supply of our suppliers, but we see some gradual easing coming up in H2.
During the first half of the year, we continue to progress on our disposal program, and adapt to the new context by transferring our Russia operations to our local management. Outside of Russia, we have cumulatively addressed €1.1 billion [USD $1.12 billion] of our overall program of €1.5 – €2.0 billion [USD $1.53 – $2.04 billion] of revenues, which remains on target for completion by the end of the year and we stay committed to our share buyback program of €1.5 – €2.0 billion [USD $1.53 – $2.04 billion].
Considering the strong momentum of H1, our robust order intake and agile pricing strategy, we are upgrading our full-year target and confirm our expectation to drive our free cash flow to around €3 billion [USD $3.06 billion].
Highlights:
- Quarterly revenues of €8.5 billion [USD $8.68 billion] in Q2, up +10% org. despite lockdowns in China and impact from Russia
- Energy Management revenue up +12% org.
- Industrial Automation revenue up +6% org.
- H1 Group revenues of €16.1 billion [USD $16.44 billion], up +10% org.
- Adjusted EBITA at €2.8 billion [USD $2.86 billion], up +10% org.; Strong Adj. EBITA margin of 17.3% down -10bps org. in highly inflationary environment
- Positive net price versus RMI, electronics and freight
- Supply chain pressures continue with some easing in Q2 (excluding impacts of Russia and China)
- Adjusted Net Income of €1.8 billion [USD $1.84 billion], up +11%
- Record Operating Cash Flow of €2.6 billion [USD $2.65 billion] in H1; FCF continues to be impacted by prioritizing strategic supply
- Cumulative revenues of €1.1 billion [USD $1.12 billion] addressed of €1.5 – €2.0 billion [USD $1.53 – $2.04 billion] disposal program; remain committed to share buyback program of €1.5 – €2.0 billion [USD $1.53 – $2.04 billion]
- Schneider Sustainability Impact program progressing in H1
- FY22 Target upgraded: Continued strong demand and agile response to inflation drives upgraded expectation for growth