Schneider Electric reports 3.7% drop in 1Q sales; will open new R&D Center in Massachusetts

By Jack Keough

Schneider Electric is reporting first quarter revenues of $5.21 billion euros ($6.80 billion) a decline of 3.7 percent compared to the same quarter in 2012. The decrease in sales was partially due to economic difficulties in Europe.

Schneider also announced that it will build a large R&D Center in Massachusetts.

“Europe remained difficult,” and “our performance was negatively impacted by one-offs and high comparables” in North America, Chief Executive Officer Jean-Pascal Tricoire said in a statement about Scneider’s first quarter. “Improvement in China supported return to growth in Asia-Pacific and other new economies continued to grow.”

The CEO reiterated his 2013 target for “low-single digit organic growth” in sales and a stable to slightly up adjusted earnings before interest, taxes and amortization margin as the company is slashing costs by cutting jobs, regrouping sites, being more selective on services contracts, and redesigning products to adapt to a construction slump and government austerity measures in Europe, the Reuters News agency reported.

The recovery in residential construction was confirmed and the region continued to benefit from investments in oil and gas, and mining. The revenues were weighed down by lower IT spending and reduced government investments in buildings, according to company executives.

Revenues in new economies were up 2% organically and represented 39% of total first quarter 2013 revenues, up 1 point compared to same period previous year.

Schneider said the first quarter numbers were consistent with its expectations, with the confirmation of an improvement in China, overall strength in the new economies, significant challenges in Western Europe and slightly positive underlying trends in North America.

Based on these trends, Schneider confirmed its outlook of a low-single digit organic growth in revenues and of a stable to slightly up adjusted EBITA margin for 2013.

Schneider Electric is also reportedly investing “tens of millions of dollars” to build a global research and development center in Andover, Mass. by the end of this year.

The Boston Globe reported that about 730 people, relocated from other Schneider facilities in Massachusetts will work in the 235,000 square-foot building R&D center when it opens in December. Employment is expected to increase in future years.

Many staffers will move to the new Andover center, where the research and development team will focus on creating and improving software and devices to help customers manage energy and become more efficient, seeking ways, for example, to keep the equipment at large computing centers from overheating, the Globe reported.

“The vibrant ecosystem of innovation in the Greater Boston area is the ideal backdrop,” Chris Curtis, Schneider’s chief executive in North America, said in a statement.

The project, which company officials say is costing tens of millions of dollars, will renovate a vacant 160,000-square-foot building on Federal Street and construct a 75,000- square- foot addition. The center will include a laboratory for testing technologies, plus training and conference spaces, the Globe reported.

Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com.

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