APC 2002 Annual Report Download - page 39

Business review
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- Improving manufacturing and logistics quality and productivity
worldwide;
- Optimizing product development;
- Accelerating the Company’s e-transformation;
- Developing first-class partnerships in all areas to maximize
growth at less cost.
The six challenges of the NEW2004 program
Schneider Electric intends to create wealth for its four
stakeholders: customers, shareholders, employees and the
community. The NEW2004 has been developed around six
challenges:
- Be more Customer-centric.
- Be committed to Quality.
- Be more Global.
- Increase our People’s commitment.
- Think Innovation.
- Develop Corporate community responsibility.
Indicators have been defined for each of the program’s
challenges and are tracked each quarter, resulting in additional
actions to ensure alignment with targets set for 2004.
Financial targets
The Company has set ambitious financial targets for itself in its
new program.
- Achieve organic growth two points above the market every
year and add 2 billion euros in sales from acquisitions.
- Achieve a 43.5% gross margin on sales in 2004.
- Achieve a 14% operating margin in 2004.
Schneider Electric implements a disciplined financial policy,
aimed mainly to:
- Ensure growth in net earnings per share, by avoiding,
in particular, any diluting effect relating to acquisitions
over more than two years.
- Increase operating earnings faster than capital employed
and maintain low capital intensity to preserve its flexibility
and its ability to generate strong free cash flow (net cash
provided by operating activities, after change in working
capital and capital expenditure).
- Maintain a balanced debt policy to minimize interest
expenses and maintain its high rating.
Creating a stimulating work environment
for employees
Finally, Schneider Electric’s NEW2004 is intended to favor the
development and sharing of employees’ skills, by encouraging
their mobility and adaptability in a worldwide network, inciting
good performance, respect of the environment and community
responsibility.
c) Alliances, acquisitions and partnerships
In Japan
Following a friendly takeover bid, the Company acquired
a98.7% stake in Digital Electronics, the worldwide leader
in man-machine dialogue products: industrial PCs, graphics
terminals and touch terminals. Digital Electronics, with sales
of 196 million euros and 1,200 employees, holds leading
positions in Japan, Korea, the United States and Europe.
Man-machine interfaces integrate a growing number
of automated features and are key components in networked,
web-enabled architectures, such as the Transparent Ready™
range that the Company offers in all of its markets.
Schneider Electric thus obtained a position in a new,
fast-growing market segment, while gaining greater access
to OEMs, particularly in Japan.
Greater presence in China and Malaysia
The Company raised its holding in Schneider Swire Ltd., which
manufactures and markets low-voltage electrical distribution
equipment in Hong Kong and in mainland China, to 100%.
Its 2001 sales were  15.7 million.
Schneider Electric also raised its interest to 100% (from 49%
previously) in Schneider Scott & English, founded in 1996 with
a local partner to distribute low-voltage electrical equipment
and automated devices in Malaysia. The goal is to reinforce
the subsidiary’s organization and sales resources to accelerate
development.
In Denmark and Russia
The Company took over Hano Elektroteknik A/S and Digimatic
Aps, two companies specializing in automation controls. They
now make up the technical support center for the Company’s
industrial automation applications in Denmark, and are
especially directed at services for OEMs.
The Company acquired a 90% stake in Uralelektro Contactor,
specializing in the manufacture and marketing of 100-250A