October 25, 2018 / 7:33 AM / a month ago

UPDATE 1-Schneider Electric raises outlook, could accelerate buyback

(Ads share buyback, CFO, share price reaction)

Oct 25 (Reuters) - French electrical equipment manufacturer Schneider Electric raised its full-year growth outlook on Thursday after better than expected third-quarter revenue growth and said it might complete its share buyback programme ahead of schedule.

Revenue for the three months to Sept. 30 rose 7.2 percent organically to 6.38 billion euros ($7.28 billion), helped by strength in the Asia-Pacific and North America regions.

Analysts polled by the company had expected 5.5 percent organic revenue growth to 6.3 billion euros.

“That we are exposed to such diverse markets, with Asia-Pacific and North America, is a great advantage (as) we have two very powerful engines. We are also exposed to diverse technologies and end-markets,” finance chief Emmanuel Babeau told Reuters.

The group now sees full-year adjusted earnings before interest, tax and amortisation (EBITA) growing between 8 percent and 9 percent, compared with 7-9 percent expected previously, on sales growing close to the upper end of the 5-6 percent range.

Schneider, however, kept its adjusted EBITA margin expectations unchanged from July, seen up by 30-50 basis points, owing to investments to drive long-term top-line growth and increases in costs from anticipated U.S. tariffs.

Babeau said the negative impact from tariffs could reach up to 20 million euros this year and up to 50 million euros in 2019.

Based on current financial markets Schneider might accelerate its roughly 1 billion euro share buyback programme, the group said. It acquired about 390 million euros of shares in the third quarter, lifting to 730 million euros the total bought back since mid-2017.

Babeau said the company has yet to decide if there would be a follow-up to the buybacks in 2019.

“When we feel the share price is very low, it’s normal and desirable to reflect upon the acceleration of the programme. As for 2019, we will see, but we do not exclude anything,” he said.

Shares in the company were up 2.8 percent at 0712 GMT.

Analysts at Credit Suisse described the quarterly results as “very solid” with “added small positives” from the guidance raise and buyback news. ($1 = 0.8766 euros) (Reporting by Piotr Lipinski in Gdynia and Gilles Guillaume in Paris Editing by Rashmi Aich and David Goodman)

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