APC 2009 Annual Report Download - page 7

2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 5
INTERVIEW WITH EMMANUELBABEAU
EXECUTIVE VICE PRESIDENT FINANCE, MEMBER OF THE MANAGEMENT BOARD
2009 will go down in the history as the year of the Great
Recession. How did Schneider Electric’s revenue hold
up during the year?
Schneider Electric saw a steep decline in business in the fi rst half
of 2009, with sales falling 17.9%* on a like-for-like basis. During
the fi rst six months, the slump affected all markets and all regions.
Although the overall environment remained diffi cult in the second
half, we saw a strong upturn in a number of new economies,
including China. Spending in certain segments, such as industry
and data centres , also began to increase after dropping off
dramatically in previous months. This helped cushion the decrease
in revenue in the second half, which came to 13.6%* like-for-like.
Schneider Electric’s full-year revenue declined 15.7%* like-for-like to
15.8billion. China and Africa were the only regions that experienced
growth during the year.
How did Schneider Electric perform in
this unfavourable environment?
Schneider Electric responded to the situation swiftly and effectively.
We remained very fi rm on prices and managed to increase them
by 1% on average. In addition, the Group took measures to
achieve substantial savings in industrial productivity and support
function costs. These measures helped reduce our expenses
by  EUR650 million over the full year. As a result, we recorded
adjusted EBITA** of EUR2,044 million in 2009 and maintained high
profi tability with an adjusted EBITA** margin of 12.9% much better
then the12 %objective .
Cash generation remained a priority for our teams, and the
result was remarkable: free cash fl ow reached a record of nearly
EUR 2billion in 2009. These good results will allow us to recommend
a high dividend once again at the Annual Shareholders’ Meeting,
refl ecting our confi dence in Schneider Electric’s growth prospects.
I would emphasize that the efforts of our employees
to deal with
the recession did not compromise our future. Schneider Electric
maintained its R&D investments at around 5% of revenue, or
EUR 764million and pursued its expansion in the new economies
that now account for 34% of consolidated revenue.
What is the outlook for Schneider Electric in 2010?
Most of the new economies should return to growth, while the
Western markets will probably remain sluggish. Concerning
our businesses, we should see a return to growth in industrial
automation, building automation and critical power and cooling
services. Continued diffi culties in commercial real estate will slow
down the recovery in low and medium voltage. More generally,
increased spending worldwide to improve energy effi ciency
and increase the use of renewable energies will provide growth
opportunities for Schneider Electric. At the same time, we will
continue our efforts to reduce support costs and enhance industrial
productivity. This should allow us to signifi cantly improve our
operating margin and continue to generate substantial free cash
fl ow so we have the resources we need to pursue our investments
and ensure vigorous, sustainable growth for Schneider Electric.
* Using comparable scope and exchange rates.
** EBITA (operating profi t before amortisation and impairment of purchase accounting intangibles) adjusted for restructuring costs and non-recurring items.
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Interview with
Emmanuel Babeau
EXECUTIVE VICE PRESIDENT FINANCE,
MEMBER OF THE MANAGEMENT BOARD