APC 2014 Annual Report Download - page 25

OVERVIEW OF THE GROUP’S STRATEGY, MARKETS AND BUSINESSES
AMBITIOUS LONG TERM FINANCIAL TARGETS FOR ATTRACTIVE SHAREHOLDER RETURNS
Competitive landscape 2.5
1
The main global competitors of Schneider Electric, by technology, discrete and process automation: Siemens, Rockwell
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are: Automation; ABB; Emerson;
critical power&cooling for IT and non-IT applications:
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low-voltage and building automation: ABB, Siemens, Eaton,
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Emerson, Eaton.
Legrand;
Other regional and emerging market competitors include: Chint,
medium voltage distribution&grid automation: ABB,
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Weg, Larsen&Toubro and Delta.
Siemens;
Ambitious long term financial 3.
targets forattractive shareholder
returns
Schneider Electric’s opportunities, strategy and business positioning have led its management to define ambitious long-term targets for the
company. Over the long term, the key priorities remain focused on profitable growth, cash conversion and capital efficiency.
2 sets of targets have been defined: business performance targets and capital efficiency targets.
Across the economic cycle(1) performance targets:
Average organic revenue growth: 3 to 6% across the cycle;
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Adjusted EBITA: margin between 13% and 17% of revenues;
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Cash conversion: c.100% of net profit converted into free cash flow.
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Across the business cycle capital efficiency targets:
ROCE(2): between 11% and 15%;
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Dividend: c.50% payout of net income;
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Capital structure: retain a strong investment grade credit rating.
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At its Investor Day in February 2015, the company also highlighted Margin improvement targeted: The Group confirms its
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its growth initiatives and near term business focus. The focus will 13-17% long-term adjusted EBITA margin range and targets a
be on organic growth, improving the returns on the recent margin improvement over the next 3 years driven by operating
investments and optimizing the portfolio and capital structure. leverage and EUR1.4-EUR1.5 billion efficiency initiatives(3)
highlighted in the new company program.
Hence the following objectives were defined:
Schneider Electric defines a business cycle as a period including a slowdown and an expansion, or a period in between. This concept allows (1)
investors to estimate the Group’s long-term growth potential across a business cycle. The length of a business cycle can vary and can not be
forecasted.
ROCE is defined as: adjusted EBITA after tax/Average Capital Employed. Capital Employed is defined as: shareholders’ equity + Net financial debt (2)
+ Adjustment for associates and financial assets. In the context of the Invensys acquisition, the tax rate will be adjusted for any benefits of the
Invensys-related tax shield that would not be captured in the P&L.
Includes Industrial productivity and gross SFC savings.(3)
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2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC