(Reuters) - French electrical equipment group Schneider Electric SE (SCHN.PA) on Wednesday forecast a drop in its 2020 revenue and core profit margin, due to uncertainty around the coronavirus outbreak and a possible second wave of lockdowns.
The group, which sells products ranging from electrical car chargers to home automation systems, now expects a 7-10% organic revenue decline and adjusted earnings before interest, taxes, and amortization (EBITA) margin to shrink to 14.5-15.0% year-on-year.
Schneider had previously forecast organic revenue growth and a higher core profit margin for the year, but scrapped this in March due to the pandemic.
The Paris-based company also flagged further restructuring costs of between 400 million euros and 500 million euros (363.10-453.87 million pounds) over three years.
In a call with journalists, the group’s finance chief, Hilary Maxson, flagged headcount as one of the drivers for cutting costs. The company declined to give further details.
The group confirmed its medium-term goals, which include raising its adjusted EBITA margin to 17% by 2022.
“Though some markets might be impacted, a large part of our business will be well oriented for future years and will potentially be accelerated by government stimulus,” Chief Executive Officer Jean-Pascal Tricoire said.
“Probably the biggest one for us would be in China,” said Maxson, noting a digitalisation program there, as well as infrastructure and building renovation packages in the U.S. and European Union.
Maxson noted that while government stimulus would help Schneider reach its goals faster, it had not assumed this into its mid-term targets.
Schneider's results declined less-than-expected in the first six months of 2020, beating analysts' forecasts, helped by a rebound in China and a resilient software and services business. (bit.ly/30ZaFjQ)
The Paris-based firm’s adjusted EBITA fell to 1.58 billion euros, a margin of 13.6%.
Reporting by Sarah Morland and Linda Pasquini in Gdansk; Editing by Rashmi Aich/Keith Weir