April 23, 2020 / 10:02 AM / 3 months ago

Schneider Electric sees tough first half, but confident long-term

(Reuters) - French electrical equipment group Schneider Electric (SCHN.PA) warned on Thursday of a very difficult second quarter as lockdowns to curb the spread of the coronavirus take a toll, but said it was well placed for a post-crisis recovery.

FILE PHOTO: The logo of Scheider Electrics is pictured at the company's headquarters in Rueil-Malmaison near Paris, France, April 22, 2020. REUTERS/Charles Platiau/File Photo

The company, which markets products ranging from electrical car chargers to transformers and production software, reported a smaller-than-expected drop in first-quarter revenue thanks in part to higher software and services sales.

The business features prominently in the group’s long-term strategy to improve its digital offerings in energy and automation.

“As we come out of the crisis we feel very, very confident in our positioning,” Schneider’s incoming chief financial officer, Hilary Maxson said on a call with reporters.

The company also said it had agreed to buy ProLeiT, a German IT and automation company, and that it expected to close its 1.4 billion euro (1.22 billion pounds) takeover of RIB Software (RIB.DE) in the second quarter.

“Digital will be big, people will want more digital; resilience has become huge on the agenda,” Schneider’s Chairman and Chief Executive Jean-Pascal Tricoire said. “There will be industrial relocation in all geographies that will serve our automation and industrial business.”

The company suspended its detailed guidance in March because of the coronavirus pandemic, but Tricoire said it was “absolutely committed” to achieving its long-term core margin goals. Schneider said it should benefit from government initiatives to boost energy efficiency and renewables, as well as investment in smart buildings, software and infrastructure.

It reported first-quarter revenue of 5.83 billion euros, down 6.4% organically but less than analysts’ expectations of a 7.2% fall, with sales in the software and services business up 3.4%.

China reported the largest fall in revenue across divisions but began recovering towards the end of the quarter, while sales dropped across Asia-Pacific by 19.3% as other countries entered partial or complete lockdowns, the company said.

Schneider said it had total liquidity of around 9 billion euros and confirmed its dividend proposal, which will be voted on later on Thursday.

In February, the group proposed a payout of 2.55 euros per share.

Schneider shares were up slightly in morning trade. Credit Suisse described the results as “reassuring”, after it cut its target price on Wednesday but predicted the company would show resilience, citing its growing data centre segment and industrial software strategy.

Reporting by Sarah Morland in Gdansk; Editing by Tomasz Janowski and Emelia Sithole-Matarise

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