APC 2006 Annual Report Download - page 19

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Accelerate growth
Schneider Electric is investing heavily in innovation
and technology, with nearly 5% of revenue devoted to
R&D. At the same time, it is internationalizing its R&D
resources and moving them closer to customers to
innovate faster and more effectively.
The Group has accelerated its expansion in the
fastest-growing regions. Between 2001 and 2006, the
percentage of consolidated revenue generated in
emerging markets rose from 18% to 31%.
Schneider Electric is developing activities that com-
plement its core businesses through both organic
growth and acquisitions. These high-potential activities
target the most promising market segments, including
installation systems and control, critical power and
energy management systems, and automation every-
where. Less exposed to capital spending cycles, they
have significant value-added services content and
offer excellent prospects. New activities accounted for
42% of revenue in 2006 and have given Schneider
Electric the ability to offer an unparalleled range of
solutions and services for energy management.
Enhance operating
efficiency and competitiveness
The Group globalizes its purchases, produces near
customers to ensure top-quality service and develops
continuous improvement programs in all areas. It is
also deploying a single IT system with harmonized
processes worldwide.
Between 2004 and 2006, production in emerging mar-
kets rose from 18% to 28% of total output thanks to the
transfer of 529 million worth of production costs over
two years.
Promote employee
involvement
At Schneider Electric, people and their commitment is
what makes the difference. Human resources evalua-
tion and management resources are being harmo-
nized worldwide so that all team members can fully
express their potential and help execute Group strat-
egy. Schneider Electric is enhancing its forward-look-
ing management, deploying competency plans to
match new needs, increasing investment in training
and stepping up programs with schools and universi-
ties to attract talent.
At the same time, it is applying a global program to
improve workplace health and safety.
This aggressive strategy of profitable growth has sig-
nificantly modified Schneider Electric’s performance
profile, driving faster growth and a higher operating
margin. The Group has become less exposed to capi-
tal spending cycles and exchange rate fluctuations,
and enjoys even brighter prospects.
3.The new2
company program
Schneider Electric’s strategy is being deployed within
the framework of the new2company program for 2005-
2008. Through new2, the Group has reaffirmed its
ambition to be a great company to do business with, a
great place to work, a great world partner and a great
investment.
Schneider Electric has set ambitious targets for 2005-
2008.
Customers
Increase the rate of very satisfied customers by 30%.
Reduce the rate of dissatisfied customers by 50%.
At end-2006, the rate of very satisfied customers was
up 10%, while the percentage of dissatisfied cus-
tomers was down 34%.
Employees
Reduce the number of days lost due to work acci-
dents by 20% per employee per year.
Develop competencies through three-year plans.
Produce a quarterly report on progress plans imple-
mented in response to employee satisfaction surveys.
At end-2006, the lost-time injury rate was down 38%.
Three-year competency plans have been set up and
quarterly reports have been produced on progress
plans for employees.
Planet and society
Publish a quarterly barometer with 10 indicators
tracking the Group’s social, environmental, societal
and corporate governance performance.
The Planet & Society Barometer is available online at
www.barometer.schneider-electric.com.
Improve the Group’s performance to 8/10 by end-
2008. At December 31, 2006, the barometer showed a
rating of 7.01.
Shareholders
Achieve organic revenue growth of more than 5%.
Deliver an operating margin of between 12.5% and
14.5% throughout the business cycle. In 2006, the
operating margin stood at 14.6%.
Improve return on capital employed (ROCE) before
tax by 2% to 4% improvement between 2004 and
2008. ROCE improved by 2% in 2006 to 11.7%.
Pay out 50% of net profit before goodwill to share-
holders. The recommended dividend for 2006 corre-
sponds to this rate.
Optimize the balance sheet, with a debt-to-equity
ratio of 30%-40% at end-2006. Taking into account the
APC acquisition on a pro forma basis before the impact
of the 1 billion capital increase, the ratio came to 69%.
See Outlook for 2007, page 93.
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