April 19, 2018 / 6:38 AM / a month ago

UPDATE 2-Schneider Electric makes strong start to 2018 as China demand offsets currency impact

* Strong demand in Asia-Pacific helps beat expectations

* Revenue up 6.2 percent organically at EUR 5.80 bln

* Western Europe stagnates, Brexit worries

* Confirms FY outlook

* Shares rise 2 pct (Adds exchange rate and acquisitions impact, share price)

April 19 (Reuters) - French electrical equipment maker Schneider Electric beat market expectations with 6.2 percent organic growth in first-quarter revenue, buoyed by an upbeat performance by both of its businesses and strong demand in China.

The company reported revenue of 5.80 billion euros ($7.18 billion) for the January-March period on Thursday, ahead of an average forecast of 5.67 billion euros among analysts polled for Reuters.

“We begin the year 2018 with strong performance in (the first quarter), confirming accelerated momentum across 2017,” Schneider’s Chairman and Chief Executive Officer, Jean-Pascal Tricoire, said in a statement.

The company’s Energy Management business, which accounts for 75 percent of first-quarter revenue, posted organic growth of 5.2 percent, while the Industrial Automation business saw a 9.2 percent organic increase. China and the broader Asia-Pacific region recorded double-digit increases in sales.

Shares in the company were up 2.1 percent at 0823 GMT, the second biggest gainer on France’s blue-chip CAC40 index.

The company markets a wide range of products for homes and businesses, ranging from electrical car chargers and lighting control to transformers and software.

Restocking by distributors in China spurred the growth in the Asia-Pacific region, the company said.

However, results were hit by a strong euro and the company said Brexit uncertainty in Britain was causing concern.

Schneider last month completed a deal to take a 60 percent stake in an enlarged industrial software business worth about 3 billion pounds ($4.25 billion) after agreeing to combine with Britain’s Aveva Group.

“The only country that is a little worrying is Britain because Brexit creates a climate of uncertainty and wait-and-see that is starting to materialise in a number of projects,” Chief Financial Officer Emmanuel Babeau told Reuters.

The British market was tepid on low backlog with utilities and a general slowdown of the economy, the company said.

Sales in western Europe were flat. The region suffered a setback in the first quarter from a decline in orders in the Medium Voltage segment of its Energy Management business.

The firm, which generates roughly three-quarters of its revenue outside the euro zone, suffered a negative foreign exchange impact from the strong euro of 453 million euros (-8.4 percent) in January-March.

The group expects the negative currency impact on revenues to come in a range of 1.0-1.1 billion euros in 2018.

It expects about 80 percent of the foreign exchange impact on both top-line and margin to occur in the first half of the year, while in February the expectations were for over half.

The electrical equipment maker confirmed its annual forecast for adjusted EBITA organic growth towards the upper end of a 4-7 percent range on organic revenue growth of 3-5 percent.

It expects organic improvement in the adjusted EBITA margin at the upper end of a range of 20-50 basis points.

Schneider, which recently took control of software designer IGE+XAO, said the positive net impact of acquisitions in the first quarter was 88 million euros.

$1 = 0.8078 euros $1 = 0.7054 pounds Reporting by Cyril Altmeyer in Paris and Piotr Lipinski in Gdynia; Editing by Sherry Jacob-Phillips and Adrian Croft

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