APC 2011 Annual Report Download - page 22

20 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
DESCRIPTION OFTHEGROUP, ANDITSSTRATEGY, MARKETS ANDBUSINESSES
1GLOBAL SPECIALIST IN ENERGY MANAGEMENT
Connect: Key financial benefits for 2012-2014
With Connect, Schneider Electric expects Group performance to reach a new level of excellence by 2014.
By 2014
Services growth Outgrow the rest of Group by more than 5 points (on organic basis)
Solutions profi tability At least 2 points improvement on the adjusted EBITA margin
Industrial productivity €0.9bn to €1.1bn of cumulated gross productivity
Support functions effi ciency
At least 1 point decrease of support functions costs/sales ratio*
(excl.scopeandcurrency,net of investments)
Inventory effi ciency Inventory to sales ratio reduced by ~2 points
* Assuming no severe disruption of the global economy.
Ambitious long term financial targets for
attractive shareholder returns
Over the long term, the key company priorities remain
focused on profi table growth, cash conversion and capital
effi ciency. The management views the Connect program as
another opportunity to improve the Group’s through cycle
performance on those metrics.
Across the business cycle performance targets:
• sales: average organic growth of GDP +3 points.
By offer types, sales growth will be driven by Solutions with
a targeted profi le at GDP +3 to 5 points. The Group intends
to maintain solid Products growth, at a rate of GDP +1 to
3points.
By geographies, growth will continue to be driven by New
Economies with a targeted growth profi le at GDP + 6 to
8points.
For each of these indicators, the reference basis is world GDP
growth on a real basis and at market foreign exchange rates.
• adjusted EBITA: margin between 13% and 17% of sales;
• cash conversion: ~100% of net profi t converted into free cash
fl o w .
Across the business cycle capital effi ciency targets:
• ROCE**: between 11% and 15%;
• dividend: 50% payout of net income;
• capital structure: retain a strong investment grade credit rating.
** ROCE is defi ned as: ajusted EBITA after tax/Average Capital Employed.
Capital Employed is defined as: shareholders’ equity + Net financial debt+Adjustment for associates and financial arrets.
Closing of the One company programme (2009-2011)
One, the company programme that covered the period 2009-
2011 was a big step forward in the Group’s transformation. With
One, Schneider Electric was re-organis ed into 5 customer-focused
businesses and strengthened its integrated portfolio to establish itself
as the global reference in energy management. The Group became
a leading provider of high value-added solutions. During the course
of the programme , solutions have gone from 30% in 2008 to 37%
of Group sales in 2011. The company’s positions in new economies
were also signifi cantly reinforced. New economies represented 39%
of 2011 sales (32% in 2008) and about 46% of production costs (41%
in 2008). The Group emerged from One leaner, simpler and more
agile. Under One , it simplifi ed its supply chain, reduced the number of
its brands (10 active
(1)
brands versus 120 in 2008), generated about
€1 billion of productivity and drove operational effi ciency by reducing
support functions costs to sales ratio by 1.5 points.
“Our company programme “One” was a success and a big step
forward in the transformation of the Group’s profi le. It also laid a
very solid foundation for our future: One brand, One company for
our customers and employees, One organis ation everywhere, and
a far higher effi ciency than in 2008”, said Jean-Pascal Tricoire,
President and CEO.
Three
transformations
customer 1
1 team
solution provider
leader in new
economies
company
1
1
1
Two
fondamentals
The One programme leant on two fundamentals as cornerstones of
Schneider Electric’s strategic transformation:
• Customer 1: focus on customers, develop customer delight;
• 1 Team: focus on people development, determination to become an
employer of choice and to increase collaboration between the different
regions and business groups.
In addition, One targeted three transformation priorities:
•1 Solution Provider;
•1 Leader in New Economies;
•1 Company.
(1) Excluding brands from recent acquisitions and in the mid-market.