Full Year 2023 Results Press Release

Rueil-Malmaison (France), February 15, 2024   

 Financial Highlights

•       FY23 revenues of €36 billion, up +13% organic o Energy Management up +14% organic o Industrial Automation up +7% organic 

•       Q4’23 revenues up +9% organic  o Software & Services up +17% organic; ARR at AVEVA up +19%

•       FY23 Adj. EBITA €6.4 billion, up +25% organic o Adj. EBITA Margin 17.9%, up +180bps organic

•       Net Income €4.0 billion, up +15%

•       Free Cash Flow €4.6 billion; up +38% with strong working capital contribution in H2

•       Progressive dividend¹ at €3.50/share, up +11%

•       Schneider Sustainability Impact - score of 6.13 vs. target of 6.00

•      
FY24 Target: Adj. EBITA org. growth between +8% and +12%, driven by +6% to +8% org. revenue growth and +40bps to +60bps org. Adj. EBITA margin improvement

Peter Herweck, Chief Executive Officer, commented:  

“I am pleased to share that 2023 was another year of record performance for Schneider Electric, with +13% organic growth in revenues coupled with excellent organic margin progression, highest free cash flow and a strong step-up in net income for the full year. Based on these results we are proposing a dividend of €3.50 per share, representing our 14^th consecutive year of dividend progression. 

1. Subject to Shareholder approval on May 23, 2024 

2. See appendix Adjusted Net Income & Adjusted EPS

We enter 2024 with a record level of backlog, particularly in relation to our systems business, giving us enhanced visibility for the coming quarters. Backlog and continuing strong demand dynamics across most of our portfolio solidifies setting strong financial targets for 2024. This is the first step of the “Next Frontier” our four-year journey as a leader in Industrial Tech, as set out in our CMD.”

       I.     FOURTH QUARTER REVENUES WERE UP +9% ORGANIC

2023 Q4 revenues were €9,480 million, up +9.1% organic and up +1.7% on a reported basis.

Products (53% of FY 2023 revenues) grew +2% organic in Q4. Product revenues grew mid-single digit in Energy Management with sales into consumer-linked segments having stabilized, coupled with continued strong demand across a range of other segments and end-markets. Growth in Industrial Automation products was down, impacted by weak discrete automation sales primarily in Western Europe, China and East Asia. Across the Group, product volumes were slightly positive, while the carryover impact of price actions taken in 2022 continued to fade, as expected. Product growth was supported by backlog execution throughout the quarter. 

Systems (28% of FY 2023 revenues) grew +17% organic in Q4, with strong double-digit organic sales growth in Energy Management supported by continued strong demand, including in Data Center and Infrastructure projects globally. In Industrial Automation, systems sales into Process & Hybrid markets saw solid growth, however weak demand from OEMs impacted systems sales into Discrete automation markets. 

Software & Services (19% of FY 2023 revenues) grew +17% organic in Q4. 

Software and Digital Services (9% of FY 2023 revenues) grew +28% organic in Q4.  

•       AVEVA delivered strong growth in Annualized Recurring Revenue (ARR), up +19%³ as of 31 December 2023, driven by strong performance in subscription contract wins, in particular for cloud-based Software as a Service (SaaS). SaaS growth was supported by the growth of the CONNECT platform and the related AVEVA Flex business model. In addition to new customer wins, ARR growth was boosted by successful upsell to the existing customer base on contract renewals while churn remained low. Q4 saw the successful roll-out of AVEVA PI Data Infrastructure, which saw strong traction with customers, supporting the evolution towards a greater proportion of subscription revenues. 

•       Energy Management agnostic software offers delivered double-digit organic revenue growth in Q4, led by the Group’s eCAD offer (ETAP), which saw contract renewals with key accounts and new customer wins. The Group’s software offer for the construction market (RIB Software) grew, seeing continued strong growth in recurring revenues. 

•       The remainder of the Group’s digital offers delivered strong double-digit growth, including strong contribution from EcoStruxure offers for Grid digitization and modernization. 

Field Services (10% of FY 2023 revenues) grew +9% organic in Q4, with strong contribution from both businesses. Energy Management services grew high-single digit, while Industrial Automation services grew double-digit across both Discrete and Process & Hybrid automation, with the latter linked to strong project execution with attached service contracts. 

3. At constant currency, adjusted for Russia impacts

Sustainability Business: Sustainability consulting and services offers (split between Digital and Field Services) delivered high-single digit sales growth in Q4 against a base of comparison in excess of +20%. The Group’s sustainability consulting and managed services led growth, with strong performance in PPA advisory services in Europe, while the Group’s consulting services were a catalyst for strong pull-through for other offers. The Group’s public sector efficiency business saw good demand towards the end of the quarter, though sales growth remained impacted by higher interest rates. Q4 saw the completion of the acquisition of EcoAct, which is a pivotal addition to the portfolio of the Sustainability Business.

Digital update: 

In 2023, the Digital Flywheel represented 56% of Group revenue, showing good progress towards a target range of 60% - 65% by 2027. The growth of the Digital Flywheel outperformed the Group average, led by strong performance in connectable products (which now represent 28% of Group revenues) and Software & Services (which now represent 19% of Group revenues). Within its agnostic software businesses, around 70% of revenues were classified as recurring, showing strong progress towards a target of around 80% by 2027.

The breakdown of revenue by business and geography was as follows:

                                                                                          Q4 2023                                                                       FY 2023

Q4 2023 PERFORMANCE BY END-MARKET 

Schneider Electric sells its integrated portfolio into four end-markets: Buildings, Data Center, Infrastructure and Industry, leveraging the complementary technologies of its Energy Management and Industrial Automation businesses and supported by the focus on electrification, automation and digitization to enable a sustainable future. 

4. OSIsoft revenues are reported by region from January 1, 2023. 2022 baseline has been adjusted in the organic growth calculation.

•       Buildings – The majority of the Group’s exposure in the Buildings end-market is towards Non-Residential technical buildings where demand remains strong both year-on-year and sequentially. There was strength across many geographies supported by the completeness of the Group’s offer from design to execution, including services. In the quarter there was double-digit demand growth in Hotels and Retail, while there was continued good demand in Healthcare. In Residential buildings, both demand and sales growth showed stabilization with some variation by geography. 

•       Data Center & Networks – Demand remained very strong in Q4 driven both by larger data centers (internet giants and co-location providers), which saw strong sales growth helped by Artificial Intelligence developments, and by Enterprise data centers. Demand and sales growth in the more consumer-orientated distributed IT segment was stable. 

•       Infrastructure – The Group sells its unique combination of Energy Management and Industrial Automation offers into the Infrastructure end-market. The Electric Utilities segment represents the largest exposure within this end-market and Q4 saw very strong demand. The Group has comprehensive solutions for operators which enhance grid stability and sustainability with growth in digital offers in the quarter up strong double-digit including pull-through to AVEVA. Demand was strong in Water & Wastewater (WWW), particularly for Energy Management offers helped by EU Green Deal related investments and desalination needs in countries with fresh-water shortages. Demand was also very strong in the Transportation segment.

•       Industry – The Group sells its unique combination of Energy Management and Industrial Automation offers into the Industry end-market. Similar to Q3, sales growth in Q4 was contrasted between good growth in Process & Hybrid automation markets while sales into Discrete automation markets declined. Discrete automation demand continues to be down after high demand in the prior year associated with supply chain constraints, in particular impacting sales growth in Western Europe, China and East Asia. In Process & Hybrid automation there was good demand for both Energy Management and Industrial Automation offers in the Energies & Chemicals (E&C) and Metals, Mining & Minerals (MMM) segments. 

Group trends by geography:

North America (34% of FY 2023 revenues) was up +8.8% organic in Q4. 

Energy Management grew +10.5% organic against a strong double-digit base of comparison. There was double-digit growth in the U.S., high-single digit growth in Mexico while Canada was down low single-digit. In the U.S., there was strong growth in Systems revenues, as a function of continued strong demand across Data Center and Infrastructure end-markets. Products sales growth in the U.S. was less strong, including in the Residential building market where sales declined due to continued supply constraints and against a very high base of comparison. Mexico saw strong growth across many end-markets. Canada was down against an overall high base of comparison though seeing some recovery in Residential buildings. Across the region, there was double-digit growth in Field Services, with good traction for those associated with the digitization of Nonresidential buildings.

In Industrial Automation, which was slightly down -0.3% organic, the U.S. was down low single-digit, while Mexico delivered double-digit growth and Canada also grew. Process & Hybrid automation markets saw solid growth, led by Mexico where there was strong execution on ongoing projects. Sales into discrete automation markets were flat, with Canada and Mexico growing while the U.S. saw a small decline driven by a demand normalization in response to elevated levels of stock held by customers, partly mitigated by backlog execution. 

Western Europe (25% of FY 2023 revenues) grew +7.4% organic in Q4 against a double-digit base of comparison for each of the five major economies, in both Energy Management and Industrial Automation.

Energy Management was up +10.6% organic, with growth led by Italy, up strong double-digit, supported by investment in many end-markets and segments including Non-residential buildings, Transportation, Grid and Data Center. The U.K. grew double-digit with strength in Infrastructure, e-mobility, Data Center and Building markets. Germany and France also grew double-digit while Spain was up high-single digit amid strong growth in several other countries. Across the region, Systems revenues grew double-digit on continued strong demand in the Infrastructure and Data Center end-markets. Product sales growth was positive, supported by price carryover and backlog execution. Distributed-IT showed a recovery while there was stabilization in the Residential buildings market in general, though remaining weak in Germany. Field Services grew double-digit across the region notably in France. Sustainability services grew strong double-digit supported by good activity in Power Purchase Agreements (PPA) advisory services. Software grew high-single digit, led by ETAP.

In Industrial Automation, which was down -2.5% organic, the U.K. delivered very strong growth in Process & Hybrid automation markets in part due to a large contract renewal at AVEVA. The U.K. also delivered strong growth in systems for Process industries, while sales into Discrete Automation markets were slightly positive with strength in the Food & Beverage segment. The other major economies of the region, France, Germany, Italy and Spain all declined with the anticipated weakness in Discrete Automation markets confirmed as demand continues to normalize in response to high customer stock levels and reduced lead-times. Each of these countries fared better in Process & Hybrid automation markets, with France and Germany also seeing strong growth in Software at AVEVA, as did the Netherlands. 

Asia Pacific (28% of FY 2023 revenues) grew +7.2% organic, with China up mid-single digit and India up strong double-digit.

In Energy Management, which grew +9.9% organic, China was up high-single digit with strength in areas such as transportation and renewable power while Residential buildings growth was stable. India delivered another quarter of strong double-digit growth with strength across end-markets, notably in Infrastructure and Buildings. Australia also grew double-digit benefitting from execution on a large Data Center project. Performance across the rest of the region was mixed, with strong growth in Thailand and good growth in South Korea, while some countries in East Asia saw declines with weakness in construction and semiconductor markets.

In Industrial Automation, which contracted -1.7%, China was down mid-single digit with contrasting performance between strong growth in Process & Hybrid markets and declines in Discrete Automation markets, where the Group has more exposure, with machine builders and industrial OEMs remaining weak. India delivered another quarter of double-digit growth, where sales growth into Discrete Automation markets remained strong, supported by backlog execution. Japan and South Korea each saw declines in Discrete Automation markets though South Korea benefitted from strong performance at AVEVA. Australia delivered double-digit growth, with strong performance at AVEVA and resilient performance in Discrete Automation. 

Rest of the World (13% of FY 2023 revenues) grew +17.8% organic, with strong growth supported by price actions in Turkey, Argentina and Egypt as the Group continues to take measures to control its exposure to significant currency devaluations. Each of these three countries consequently delivered strong double-digit growth in both Energy Management and Industrial Automation, and while price was a significant contributor each also saw volume expansion.

In Energy Management, which grew +18.8% organic, Africa grew strong double-digit while the Middle East and South America were both up double-digit, excluding contributions from the above-named countries. Africa saw strong growth across many countries, largely due to execution on infrastructure projects across the region. There were strong growth contributions in the Middle East from Saudi Arabia and countries in the Gulf region where there was continued execution on Data Center projects. In South America, there was strong growth in Brazil supported by execution on several projects, and a recovery in sales to the Buildings end-market. Central & Eastern Europe grew high-single digit.

In Industrial Automation, which grew +14.7% organic, the Middle East and Africa both delivered double-digit growth, while South America delivered high-single digit growth excluding contributions from the above-named countries. The performance was primarily driven by strong growth at AVEVA particularly in the Middle East, and was supported by solid growth in Discrete automation markets particularly in the Gulf region, while Process & Hybrid automation markets were around flat. Central & Eastern Europe was down slightly with Discrete Automation demand following similar trends to Western Europe.

SCOPE⁵ AND FOREIGN EXCHANGE⁶ IMPACTS IN Q4

In Q4, net acquisitions/disposals had an impact of -€184 million or -1.9% of Group revenues, including the divestments of the Group’s industrial sensors business, its transformer plants in Poland and Turkey and Gutor, along with the net impact of some smaller acquisitions and disposals.

Based on transactions completed to-date, the Scope impact on FY 2024 revenues is estimated to be around -€300 million. The Scope impact on adjusted EBITA margin for FY 2024 is estimated to be around flat.

In Q4, the impact of foreign exchange fluctuations was negative at -€443 million or -4.9% of Group revenues, mostly driven by the weakening of the U.S. Dollar, Chinese Yuan and Argentinian Peso against the Euro. 

Based on current rates, the FX impact on FY 2024 revenues is estimated to be between -€400 million to -€500 million. The FX impact at current rates⁷ on adjusted EBITA margin for FY 2024 could be around -30bps. 

5. Changes in scope of consolidation also include some minor reclassifications of offers among different businesses.

6. For those currencies meeting the criteria to be considered hyperinflationary under IAS 29, such as Argentina and Turkey, an IFRS technical adjustment for hyperinflation impact is reflected as FX and therefore excluded from the organic growth calculation. The effect of operational actions taken in these countries such as increased pricing to mitigate the inflationary impact is reflected as part of the organic growth.

7. Forward exchange rates are volatile and difficult to predict. Consequently, the impact of such movement and possible impacts from hyperinflation technical accounting (IAS29) are not factored at this stage.

    II.       FULL YEAR 2023 KEY RESULTS

ADJUSTED EBITA MARGIN AT 17.9%, UP +180 BPS ORGANIC DUE TO STRONG PRICE CARRYOVER, GOOD VOLUME GROWTH AND IMPROVEMENT IN SYSTEMS MARGIN

Gross profit was up +18.1% organic with Gross margin up +200bps organic, reaching 41.8% in 2023. The organic increase in margin percentage was driven by a strong net price impact mainly related to carryover from price actions taken in 2022, an improvement of gross margin in systems business and improved industrial productivity, particularly in H2.

2023 Adjusted EBITA reached €6,412 million, increasing organically by +24.5% and the Adjusted EBITA margin expanded by +180bps organic to 17.9% as a consequence of good volumes and the strong gross margin improvement, combined with control over support function cost growth while investing for the future.

8. See appendix Adjusted Net Income & Adjusted EPS. 

The key drivers contributing to the earnings change were the following: 

       Cost of Goods Sold inflation                                                     -152     Cost of Goods Sold inflation was -€152m in 2023, of

which the production labor cost and other cost inflation

                                                                                                                              was -€127m, and an increase in R&D in Cost of Goods

           Production labor cost and other cost inflation                                  -127

Sold was -€25m. The overall investment in R&D,

                                                                                                                              including in support function costs continued to increase

           R&D in Cost of Goods Sold                                                               -25

as expected and represented 5.4% of 2023 revenue.

                                                                                                                               Support Function Costs increased organically by -

€1,033m, or +13.7% org. in 2023, deteriorating as a percentage of sales by -20bps org. The Group was impacted by inflation for -€376m and continued to focus on its strategic priorities with investments of -€568m

mainly linked to innovation through R&D, commercial

       Support function costs                                                           -1,033     footprint expansion and digital transformation including AI

projects. Despite completing its operational efficiency plan in 2022, the Group delivered a further +€226m of cost savings. Other increases of -€315m include impacts from bonus accruals and some one-time items linked to technical accounting changes on employee share plans and marketing costs.

                                                                                                                               2023 performance resulted in a positive mix effect of

9. Price on products and raw material impact

10.    For those currencies meeting the criteria to be considered hyperinflationary under IAS 29, such as Argentina and Turkey, an IFRS technical adjustment for hyperinflation impact is reflected as FX and therefore excluded from the organic growth calculation. The effect of operational actions taken in these countries such as increased pricing to mitigate the inflationary impact is reflected as part of the organic growth

By business, the FY 2023 adjusted EBITA for: 

-       Energy Management generated an adjusted EBITA of €5,967 million, or 21.1% of revenues, up c.+220bps organic (up +70bps reported), due mainly to a combination of strong net price impact, good contribution from volumes and an improvement of gross margin in the systems business, more than offsetting investment in SFC and inflationary impacts.

-       Industrial Automation generated an adjusted EBITA of €1,304 million, or 17.0% of revenues, down c.-110bps organic (down -190bps reported), where strong net price contribution, improved productivity and improvement of gross margin in the systems business were more than offset by impacts from inflation and increased strategic investment within support function costs.

-       Central Functions & Digital Costs in 2023 amounted to €859 million (€833 million in 2022), remaining stable at 2.4% of Group revenues. Investment in the Group’s strategic priorities continued, while the Corporate cost element continued to be an area of focus and remained under tight control, remaining at around 0.7% of Group revenues in 2023.

▪ NET INCOME UP +15%

11. See appendix Adjusted Net Income & Adjusted EPS.

             ▪     FREE CASH FLOW REACHED €4.6 BILLION

The Group delivered Free Cash Flow of €4,594 million, primarily due to the P&L performance driving record operating cash flow of +€5,529 million. This included R&D cash costs of €2,016 million, which increased to 5.6% of 2023 revenue.

Net capital expenditure of -€1,313 million increased slightly to 3.7% of revenue, in line with the Group’s plans to make capacity investment to fuel future growth.

Trade working capital unwind boosted the free cash flow in 2023 by +€173 million, with a strong rebound in H2 of +€1,065 million. Inventory days were stable compared to December 2022, having seen an increase in the middle of the year as the Group sought to secure supply and prioritize deliveries to customers. For receivables, DSO also remained broadly stable while in relation to payables DPO increased slightly, helping working capital. Non-trade working capital requirements were primarily impacted by the level of bonus accruals.

             ▪     BALANCE SHEET REMAINS STRONG

Schneider Electric’s net debt at December 31, 2023 amounted to €9,367 million (down from €11,225 million at December 2022) after payment of -€1.9 billion to fulfill the 2022 dividend and payment of -€0.7 billion in relation to share buyback, offset by net acquisitions of +€0.6 billion and the strong Free Cash Flow performance of +€4.6 billion.

The Group remains committed to retaining its strong investment grade credit rating.

             ▪     CASH CONVERSION & PROPOSED DIVIDEND

Cash conversion was 115% in 2023, benefitting from the strong working capital tailwinds experienced in H2 2023 as product backlog was drawn down with a resulting decrease in inventories from highs at the end of H1 2023. This follows a period of lower cash conversion in 2021 and 2022 related to global supply chain challenges which necessitated the holding of higher levels of inventory. The three-year average cash conversion (2021-2023) is 97% (excluding impacts from Russia exit in 2022) in line with the Group’s expectation to deliver ~100% cash conversion on average across the cycle.

The proposed dividend¹² is €3.50 per share, up +11% vs. 2022 as the Group maintains its progressive dividend policy for the 14^th year. 

III.         SCHNEIDER SUSTAINABILITY IMPACT

Schneider Electric, recognized as a sustainability leader by independent environmental, social and governance (ESG) ratings, announced its strong sustainability impact performance as part of the full-year financial results. The 2023 Schneider Sustainability Impact score exceeded expectations, reaching 6.13 out of 10, surpassing the year-end target of 6 out of 10.

Schneider’s Sustainability Impact program drives and measures company-wide progress toward 11 global sustainability targets over the period 2021-2025. It is complemented by locally led initiatives, all of which support Schneider Electric’s six long-term ESG commitments.

12. Subject to Shareholder approval on May 23, 2024

Key highlights of Schneider’s Sustainability Impact 2023 results:

•       Schneider Electric solutions for electrification, digitalization, and automation continue to lower the emissions of customers, 112 million of tonnes of CO2 were saved and avoided in 2023 alone.

•       Carbon emissions from Schneider Electric’s top 1,000 suppliers fell by 27% — significant progress compared to the 10% reduction achieved in 2022 — and 21% of the company’s most strategic supply chain partners have met Schneider Electric’s decent work standards. 

•       63% of Schneider Electric’s product packaging is now free of single-use plastic and uses recycled cardboard.

•       46.5 million people now access clean and reliable electricity thanks to Schneider Electric initiatives around the world.

•       Schneider Electric has now trained more than 578,000 people with new skills to help them address the future energy needs of their communities.

Additionally in 2023, Schneider Electric maintained a strong performance in the Dow Jones Sustainability Index

(DJSI), in Corporate Knights’ list of Global 100 Most Sustainable Corporations in the world for the 13th year running, and obtained high scores from Moody’s Analytics, CDP, and EcoVadis with a Platinum medal.

To access Schneider Electric Sustainability reports with detailed results and highlights, click here.

IV.         PORTFOLIO UPDATES

Since reporting on Q3 2023, Schneider Electric engaged in the following transactions:

Acquisitions

•       EcoAct

As announced on November 2, 2023, the Group completed the acquisition of EcoAct from Atos Group. EcoAct is an international leader in climate consulting and net zero solutions headquartered in Paris, France. The acquisition will expand and accelerate Schneider Electric’s global Sustainability Business and will be reported within Energy Management.

•       ETAP

On January 23, 2024, the Group purchased the remaining 20% minority interests of ETAP in accordance with the forward agreement concluded in 2021 when it acquired 80% of the company.

Disposals 

•       Industrial Sensors Business

As announced on October 31, 2023, the Group completed the disposal of its industrial sensors business, Telemecanique Sensors, to YAGEO. Until the date of disposal, Telemecanique Sensors was reported as part of the Industrial Automation business.

•       AutoGrid

On December 14, 2023, the Group entered into an agreement with Uplight Inc. (in which Schneider Electric holds a strategic minority investment) to sell AutoGrid to Uplight. AutoGrid is the U.S. based leader in artificial intelligence (AI)-driven optimization for distributed energy resources (DERs), which Schneider Electric had acquired in 2022. This transaction represents a reorganization among Schneider Electric-owned or affiliated businesses aimed at Prosumers, to better align their capabilities. The transaction closed on February 8, 2024.

Schneider Electric believes that a continuous and ongoing review of the portfolio is a healthy business practice to ensure and retain the strategic focus of the Group. In 2023 this has been embedded as part of a ‘business as usual’ approach to portfolio optimization and will be reported externally where relevant.

V.          FINANCING UPDATE

Since reporting on Q3 2023, Schneider Electric has successfully issued bonds enabling the Group to increase its debt maturity profile and to strengthen its liquidity position:

•       On November 20, 2023 the Group announced the success of its offering of bonds convertible into new shares and/or exchangeable for existing shares (OCEANEs) due 2030 for a nominal amount of €650 million.

•       On January 4, 2024 the Group launched the successful issue of a €1.3 billion bond in two tranches respectively maturing in 7 years (€600 million) and long 11 years (€700 million).

VI.        EXPECTED TRENDS IN 2024

•       Strong and dynamic market demand to continue on the back of structural megatrends

•       Strong demand for System offers notably driven by trends in Data Centers, Grid Infrastructure investment, and increased investments across Process industries served by both businesses

•       Continued focus on subscription transition in Software and growth in Services 

•       A gradual demand recovery for Product offers, weighted towards H2, linked with a recovery in consumer-linked segments, and Discrete automation 

•       All four regions to contribute to growth, led by U.S., India and the Middle East 

VII.        2024 TARGET

The Group sets its 2024 financial target as follows:

2024 Adjusted EBITA growth of between +8% and +12% organic. 

The target would be achieved through a combination of organic revenue growth and margin improvement, currently expected to be:

                •     Revenue growth of +6% to +8% organic 

                •     Adjusted EBITA margin up +40bps to +60bps organic 

This implies Adjusted EBITA margin of around 18.0% to 18.2% (including scope based on transactions completed to-date and FX based on current estimation). 

Further notes on 2024 available in appendix

VIII.      2024-2027 FINANCIAL TARGETS AND LONGER-TERM AMBITIONS AS ANNOUNCED IN 2023 CAPITAL MARKETS DAY

Based on its current view and assuming no major changes to the macro-economic and geopolitical environment, Schneider Electric announced its medium-term financial targets as follows:

2024-27 Financial Targets:

•       Organic revenue growth of between +7% to +10%, CAGR 2023-2027¹³

•       Organic expansion of Adjusted EBITA margin of around +50 basis points, CAGR 2023-2027¹³

Longer-term ambitions:

•       Organic revenue growth of 5%+ on average across the economic cycle

•       To consistently be a Company of 25¹⁴ across the economic cycle

•       Cash conversion ratio¹⁵ expected to be around 100%, on average, across the economic cycle

***********

The financial statements of the period ending December 31, 2023 were established by the Board of Directors on February 14, 2024. At the date of this press release, the audit procedures were carried out and the report of the statutory auditors is being finalized.

The Q4 2023 & FY 2023 Annual Results presentation is available at www.se.com

Q1 2024 Revenues will be presented on April 25, 2024.

The Annual General Meeting will take place on May 23, 2024.

Contact Details:

13. 4-year CAGR

14. Sum of organic revenue growth % and adj. EBITA margin %

15. Free Cash Flow as a proportion of Net Income (Group Share)

Disclaimer^: All forward-looking statements are Schneider Electric management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed description of these factors and uncertainties, please refer to the section “Risk Factors” in our Universal Registration Document (which is available on www.se.com). Schneider Electric undertakes no obligation to publicly update or revise any of these forward-looking statements.

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. 

www.se.com

Appendix – Further notes on 2024

▪  Foreign Exchange impact: Based on current rates, the FX impact on FY 2024 revenues is estimated to be between -€400 million to -€500 million. The FX impact at current rates¹⁶ on adjusted EBITA margin for FY 2024 could be around -30bps

▪  Scope: around -€300 million on 2024 revenues and around flat on 2024 adjusted EBITA margin, based on transactions completed to-date

▪  Tax rate: The ETR is expected to be in a 22-24% range in 2024  

▪  Restructuring: The Group expects restructuring costs to decrease towards target of around €100 million per year

Appendix – Revenues breakdown by business

Q4 2023 revenues by business were as follows:

16. Forward exchange rates are volatile and difficult to predict. Consequently, the impact of such movement and possible impacts from hyperinflation technical accounting (IAS29) are not factored at this stage.

Throughout this document growth percentage calculations are compared to the same period of the prior year, unless stated otherwise.

Appendix – Scope of Consolidation 

Appendix – Adjusted EBITA, Analysis of Change 

17. H1 2023 Adjusted EBITA analysis of change restated to reflect clarification published on August 1, 2023 regarding a presentational correction between categories.

Appendix - Results breakdown by division  

Appendix – Adjusted Net Income & Adjusted EPS

18. The effective tax rate implied in the adjusted net income calculation for 2022 is adversely impacted by the write-offs in relation to

Russia exit

Appendix – Free Cash Flow and Net Debt

Appendix – ROCE 

ROCE calculation