APC 2004 Annual Report Download - page 4

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2
Interview with the Chairman
Schneider Electric achieved
an operating margin of 12.6% in 2004.
This was the best performance in
the industry, but your target was 14%.
What is your analysis?
Our margin would have exceeded 14% if the
dollar hadn't depreciated by more than 30%.
2004 was our best year in a decade.
We returned to growth in all our markets while
undergoing an in-depth transformation.
Driven by our teams' ability to innovate and
our geographic repositioning, organic growth
was nearly twice as high as that of our markets.
Schneider Electric has a new growth profile.
We've moved closer to our customers in
the fastest-growing regions, including Eastern
Europe, South America, Asia and even North
America, where the economy is very strong.
In this way, we are narrowing the gap between
our costs, which are 60% euro-denominated,
and revenues, which are 50% in euros.
The Company has staked out positions in new,
less economically sensitive businesses with
high growth potential in building automation and
security, secured power, energy management,
ultra terminal distribution and services.
These specialized activities dovetail with our
core businesses and open the door to markets
that are twice as large. We now estimate our
accessible markets at 200 billion.
Our good performance also stems from the
efficiency plans we've been pursuing over the
last three years to reduce our purchasing and
base costs, enhance productivity, innovate
better and faster and, most important, serve our
customers more effectively.
What synergies do you see between
the new activities and your core businesses?
To start, the broader lineup of strategically
related products and services will lift sales.
This is amplified by synergy in market access.
Schneider Electric enjoys exceptional worldwide
coverage and highly diversified market access
channels. This is one of our distinguishing
strengths, and it directly benefits our
acquisitions. We'll also see synergy in costs,
notably thanks to our combined purchasing
clout. And most important, there is promising
synergy in innovation, research and
development. When you give talented,
imaginative teams the opportunity to work
together, it's always a winning proposition.
I'm counting heavily on this mutual enrichment
to boost our performance over the long term.
In the years ahead, we will put the priority on
innovation and technology in all our specialist
competencies.
Henri Lachmann
Chairman and Chief Executive
Officer of Schneider Electric