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Schneider Electric cautious despite good start to year
April 20, 2017 / 8:52 AM / 8 months ago

Schneider Electric cautious despite good start to year

April 20 (Reuters) - French electrical component maker Schneider Electric kept its full-year targets on Thursday, despite reporting first quarter organic growth at the top-end of its 2017 target, citing political and macroeconomic uncertainty.

* First quarter revenue was 5.84 billion euros, beating the consensus forecast of 5.77 billion euros in a poll conducted for Reuters.

* “Schneider has started FY17 with a surprisingly good Q1 growth number ... The key question is whether this strong start is sustainable as the re-stocking effect fades and if IT growth proves unsustainable,” Jefferies said in a note.

* Despite the good start to the year, the company believes it is premature to modify its target of organic growth of between one and three percent excluding infrastructure for the full year.

* “This range aims to take account of a certain number of scenarios,” said Deputy Chief Executive Officer in charge of Finance and Legal Affairs Emmanuel Babeau during a telephone interview.

* “There are a lot of uncertainties, political in Europe, geopolitical or linked to the scale of the acceleration of construction in China because the authorities (fear) the creation of a bubble. A lot of parameters could move and play out more unfavourably,” he added.

* The main political uncertainty is the outcome of the French presidential election, the first round of which is on Sunday.

* Schneider also confirmed its target for 20 to 50 basis points organic improvement on the adjusted EBITA margin for 2017.

* The company expects a positive currency impact of around 400 million euros on 2017 revenue.

* Schneider said it would face an increase in raw material costs of around 200 million euros, which it intends to mitigate by raising prices, being more selective in choosing projects and focussing on cost control.

* Shares in the company were up 2.2 percent at 0837 GMT (Reporting by Gilles Guillaume and Marc Angrand Writing by Alan Charlish; Editing by Mark Potter)

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