APC 2006 Annual Report Download - page 8
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APC is by far the largest acquisition
of the past few years. What is its status?
APC is now part of Schneider Electric.
It is the global leader in integrated critical power
and cooling systems, with 2006 revenue of close to
$2.4 billion–a 20% increase from 2005.
This transaction gives Schneider Electric world
leadership in one of the fastest growing areas of
electrical distribution. The acquisition was finalized
on February 14, 2007. We’ve created a critical power
and cooling services business unit that combines
APC’s resources with those of Schneider Electric
subsidiary MGE UPS Systems. Their people have
been brought together under a single management
team.
We confirm our synergy target of $220 million.
If we meet this target–and we fully intend to do so–
the value created will total $3.3 billion or 11.4 per
Schneider Electric share.
You’re now half-way through new
2
,
the company program for 2005-2008.
How do things look for the second half?
Things look very good. Our business backlog
and very solid outlook have led us to revise our
2008 targets upwards.
We’re now aiming for organic growth of more than
6% instead of 5%, which is twice the global economic
growth estimate of 3%. And we’re raising our EBITA*
margin forecast to 13%-15% from 12.5%-14.5%.
This includes APC, which for the moment has a
much lower margin than Schneider Electric.
We also think we can repeat our performance of
the past two years and improve return on capital
employed (ROCE)** by another two points from
a base that includes the APC acquisition.
We have fantastic growth potential and a unique
business model that offers both great resilience and
high performance. Our strengths are clear, and we
are determined to develop them to generate wealth
for all of our stakeholders.
We’re also investing in the commitment of our
105,000 team members in 106 countries.
Their involvement is what makes the difference.
*EBITA: operating profit before amortization of purchase
accounting intangibles.
**ROCE: After-tax operating profit before amortization
of purchase accounting intangibles/Capital employed
= Shareholders’ equity + Net debt + Provisions.
We have fantastic growth
potential and a unique
business model that offers
both great resilience
and high performance.
Jean-Pascal Tricoire
6