Schneider Electric Expected to Post Higher 1H Earnings After Sustained Demand – Earnings Preview

REVENUE FORECAST: Schneider Electric is expected to report 17.615 billion euros ($19.49 billion) in first-half revenue, according to a company-provided consensus of analysts’ views, compared with the EUR16.08 billion it reported in the same period a year prior. The same company-consensus shows analysts expect it to post EUR9.12 billion in second-quarter revenue. In the second quarter of last year the company reported EUR8.51 billion in revenue.

NET INCOME: Net profit for the six-month period is seen by analysts at EUR2.02 billion, according to the company-provided consensus. That would be an increase compared with EUR1.52 billion the company made a year ago.

WHAT TO WATCH:

– PRIOR TRENDS & CHINA: Jefferies analysts say they expect the second quarter of the year to have unfolded in line with prior trends. Schneider Electric said in April during its first-quarter results that it continued to expect strong demand supported by electrification, digitization and sustainability. “Long-term positives remain the structural themes of decarbonization, automation, and digitalization, but sector negatives heading into [2Q] earnings also include a slower China re-open, slow order intake in wind, de-stocking drags in lighting, and slowing appliance markets,” Citi analysts said in a research note on the larger European electrical equipment sector. China, which represents 16% of the company’s revenues, is likely to have stayed muted in 2Q with indicators pointing to continued near-term weakness, Deutsche Bank analyst Gael de-Bray said in a research note. Jefferies analysts say 2Q growth in China ought to be supported by easy comparisons.

– GROWTH & GUIDANCE: Schneider Electric in April upgraded its 2023 targets saying it was aiming for organic adjusted earnings before interest, taxes and amortization growth of between 16% and 21%, organic revenue growth of 10% to 13%, and an organic increase to its Ebitda margin between 100 to 130 basis points, implying an adjusted Ebita margin of around 17.6% to 17.9%. The company raised its guidance after a first quarter marked by broad-based demand for electrification, software and digitization. Electrification demand is expected to support 15% organic growth in the second-quarter, Deutsche Bank analyst Gael de-Bray said. He added that Deutsche Bank forecasts 1H adjusted Ebita to increase 14% on year, implying an expanded adjusted Ebita margin of 17.9% from 17.3% a year prior. “The combination of solid pricing dynamics, a record backlog and easing supply-chain constraints should support growth this year,” de-Bray said. Deutsche Bank says it expects the company to confirm its 2023 organic growth and Ebtia margin guidance and analysts at Citi likewise expect Schneider Electric to confirm its full-year guidance.

About Schneider Electric

Schneider’s purpose is to empower all to make the most of our energy and resources, bridging progress and sustainability for all. We call this Life Is On.

Our mission is to be your digital partner for Sustainability and Efficiency.

We drive digital transformation by integrating world-leading process and energy technologies, end-point to cloud connecting products, controls, software and services, across the entire lifecycle, enabling integrated company management, for homes, buildings, data centers, infrastructure and industries.

We are the most local of global companies. We are advocates of open standards and partnership ecosystems that are passionate about our shared Meaningful Purpose, Inclusive and Empowered values.

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