20140612 jpm conference

JP Morgan European Capital Goods CEO Conference

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European Capital Goods CEO Conference

Emmanuel BabeauDeputy CEO in charge of Finance & Legal Affairs

June 2014

Disclaimer

All forward-looking statements are Schneider Electric management’s present expectations of future events and are subject to a

number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking

statements. For a detailed description of these factors and uncertainties, please refer to the section “Risk Factors” in our Annual

Reference Document (which is available on www.schneider-electric.com). Schneider Electric undertakes no obligation to publicly

update or revise any of these forward-looking statements.

This presentation includes information pertaining to the our markets and our competitive positions therein. Such information is

based on market data and our actual revenues in those markets for the relevant periods. We obtained this market information from

2Schneider Electric - Investor Relations – JPM Conference– 12 June 2014

based on market data and our actual revenues in those markets for the relevant periods. We obtained this market information from

various third party sources (industry publications, surveys and forecasts) and our own internal estimates. We have not

independently verified these third party sources and cannot guarantee their accuracy or completeness and our internal surveys and

estimates have not been verified by independent experts or other independent sources.

A company with strong foundations, an integrated portfolio and a global footprint

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integrated portfolio and a global footprint

Balanced geographies – FY 2013 revenue1

Schneider Electric: the global specialist in energy management and efficiency technologies

€25 billionrevenueFY 2013 revenue1

4-5%of sales devoted to R&D

25%North America

28%Western Europe


FY 2013 revenue

160,000+people2 in 100+ countries

to R&D

43%of revenue in new economiesFY 2013 revenue1

Diversified end markets – FY 2013 revenue1

Utilities &Infrastructure

Industrial and Machines

Data Centers& Networks

Non-residential and Residential Buildings

27% 25% 14% 34%

20%Rest of World

27%Asia Pacific

1:Pro-forma basis including LTM Sep 2013 revenue from Invensys2:As of February 2014 (including Invensys)

Key technology Low Voltage & Building Automation

Medium VoltageGrid Automation

Discrete & Process Automation

Critical Power & Cooling

Worldwide leadership in four sizable and integrated businesses

Buildings & Partner

Infrastructure Industry IT


FY 2013 revenue1 €10.2 billion (40%) €5.7 billion (22%) €6.0 billion (24%) €3.4 billion (14%)

Worldwide position

#1 #1 #2 (Discrete)#4 (Process) #1

Worldwide competitors

ABB Eaton

LegrandSiemens

ABBSiemens

ABBEmersonRockwellSiemens

EatonEmerson

1:Pro-forma basis including LTM Sep 2013 revenue from Invensys

We integrate power with automation to support our customers’ need for efficiency

Software and connectivity

The integration of power and automation is enabling improved reliability, reduced losses, and optimized efficiency

I manage

IT2


Power 1 Automation

1:Supported by low voltage, medium voltage, and critical power technologies2: Information technology (IT) and operational technology (OT)

I control

I operate

IT2

OT2

Convergence

Nor

th A

mer

ica

33,700 Employees3

38 Factories

A balanced global footprint in 100+ countries

Wes

tern

Eur

ope

47,600 Employees3

92 Factories

Asi

a P

acifi

c

47,500 Employees36,4

4,1

7,1

2003 2013


1:Published figures in billion € restated to reflect country-market view; 2:Billion € pro-forma basis including LTM Sep 2013 revenue for Invensys3:Including Invensys, excluding Delixi and Fuji

Nor

th A

mer

ica

Wes

tern

Eur

ope

Res

t of W

orld

34,100 Employees3

53 Factories

Asi

a P

acifi

c

47,500 Employees3

69 Factories2,3

2003 2013

1,2

5

2003 2013

1,2

6,8

2003 201320031

20132

A technology company with a long -term commitment to innovation

Product innovation

774 764 818

9791058

1,1454-5%of sales devoted to R&D

> More connectivity> Mid-market offers> Energy efficiency


Solution innovation

764

2008 2009 2010 2011 2012 2013

R&D spend growth

> Embedding interoperability> Leveraging connectivity and software

to build our service offer> Developing our platform strategy > Instituting operational intelligence

Our near-term priority is capturing growth and improving returns

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and improving returns

We focus on stepping up solution execution capabilities…

Comprehensive approach on selected segments

Differentiated software

> Water & Wastewater

> Telemetry Solutions & Intelligent Water Network Management

Comprehensive services

12,000


> Water & Wastewater

> Utility> Healthcare> Oil & Gas

> Food & Beverage > Cloud and Telecom> Mining, Minerals, and Metals> OEM (machine builders)

Water Network Management > StruxureWare for Building Operations

> Data Center Infrastructure Management (DCIM) software

12,000Service delivery professionals

250Service centers

15Service bureaus

… while continuing to improve efficiency in key areas…

Supply chain Support functions> Customer satisfaction

> Supplier network rationalization> Inventory efficiency> Rebalance footprint

> Mutualization and globalization of back office

> Simplified infrastructure

> Non-production purchases> Commercial efficiency> Cross-selling

R&D> Prioritize programs

> Build common technology platforms

> Standardize process and tools> Specialize R&D tasks by

leveraging global R&D footprint


22

23

24

25

26

27

Support function costs to revenue ratio

> Optimize resource allocation

> Reduce time to market> Rationalize R&D footprint

Inventory to revenue ratio201320122011

-1.5%

2013

358

2012

289

2011

376

Industrial productivity(million euros)

Solid process

Integration typology aligned with strategic intent

Integration focus

> Invensys integration is on track to deliver expected synergies

… and driving value creation on acquisitions through integration


Clear guidelines on integration tasks and accountability

Regular performance tracking

Dedicated integration teams

expected synergies

> We continue to drive synergies from past acquisitions

Priority is to improve shareholder returns

Balance sheet Share count

> Maintain a solid balance sheet and

Dividend M&A

> Neutralization of dilution from employee

> Attractive and sustainable dividend

> Small acquisitions on an opportunistic basis


balance sheet and keep a strong credit rating, with a long term target of A-

dilution from employee incentive plan through share buy-back

sustainable dividend policy with 50% targeted payout ratio

an opportunistic basis

Growth profile Efficiency

Targets for improvement:

> ROCE back to pre-Invensys level in one to two years

Focusing on growth and returns to target significan t improvement of ROCE in the next two to three years


Growth and returns

Acquisition integration Capital allocation

level in one to two years

> 1.5 to 2pts improvement in two to three years

Invensys integration is on track to deliver expected synergy

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expected synergy

Acquisition of Invensys completes our portfolio with added value in automation and software

Buildings 1

Automation SoftwarePower

End-markets


Utilities and Infrastructure

Industrial and MachinesDiscrete Industries

Process Industries

Data Centers and Networks

1:Including residential and non-residential buildingsInvensys presenceStrong Invensys presence

Double-digit growth

9%

~flat

Invensys achieved strong performance 1 in fiscal year 2013-2014...


Order intake 2

1: Excluding Appliance division, 2: Constant exchange rate 3: Operating Profit Before Interests and Taxes before exceptional items

Revenues 2 OPBIT2,3

FY 2012/2013 FY 2013/2014 FY 2012/2013 FY 2013/2014 FY 2012/2013 FY 2013/2014

> Strong order growth in software (double-digit) and industrial automation (high single-digit) > Order growth in all regions driven by Asia-Pacific and North America> Profitability improved, OPBIT up double-digit despite flat revenues

… and proved its strong market access and superior software capabilities

34%

12%

> Strong presence in electro-intensive segments

> Project delivery capability across wide end markets

> Diversified industry footprint

> Mitigates industry-specific risks and business cycles

6%

12%


34%

13%

10%

7%

24% Oil & Gas

Energy

Chemicals

Water/Waste Water

General industries

Others

Industry automation revenueFiscal year 2013- 2014

40%

28%

8%

7%General industries

Oil & Gas

Discrete manufacturing

Food & Beverage

Chemicals

Others

Software revenueFiscal year 2013- 2014

Key integration figures:

> 90%+ synergy is in execution

> 120+ welcome events

Implementation plan to be finalized in next three months

<10%1

Expected 2014 cost synergy

Cost synergy implementation stage

Integration is well on track to deliver 2014 cost synergy…


> 300+ customers informed and visited

> One CRM kicked off

> 90%+ key talents retained

Implementation plan finalized, execution in progress

>90%1

Total 100%

1: As of end March 2014

… with most synergies coming from low risk and straightforward implementation initiatives

Organization optimization Real estate rationalizationPurchasing excellence


> De-layering organization> Optimize span of control> Better workforce planning

> 17 major collocations between two companies

> Sites involved across all the regions

> Globalize non-production and electronic purchase

> Convert third party purchase to intra-group

<5%~20%>75%

Percentage of total expected 2014 cost synergy (As of end March 2014)

Solid Q1 2014 performance and Full Year 2014 objectives confirmed

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2014 objectives confirmed

Western Europe 1,672 -2%

Asia-Pacific 1,512 +6%

Q1 2014 revenues of €5.7 billion, up 7.7%, (2.5 % organically), driven by early cycle businesses

Buildings & Partner 2,422 +5.8%

Industry 1,444 +6.0%

Organic growth by business

Organic growth by geographyQ1 2014

revenues(million €)

Organic growth

Q1 2014revenues(million €)

Organic growth


Asia-Pacific 1,512 +6%

North America 1,428 +2%

Rest of World 1,059 +8%

Group 5,671 +2.5%

Industry 1,444 +6.0%

Infrastructure 1,089 -3.7%

IT 716 -3.4%

Group 5,671 +2.5%

> Continuous improvement of early cycle businesses

> Although still declining, Western Europe improved sequentially in Q1

> Strong service growth across all businesses, up 14% organically

Q1 performance is in line with expectations. As anticipated, Q2 will be impacted by high comparison basis and slightly negative working day effect of ~0.6pt, while growth is expected to accelerate in H2. Therefore the Group confirms its 2014 objectives:

> Low single-digit organic growth in revenue

2014 objectives confirmed


> Low single-digit organic growth in revenue

> 0.4 pt to 0.8 pt improvement of the adjusted EBITA margin vs. the 2013 pro-forma1 level excluding the currency impact. The negative currency impact is currently estimated at ~0.4 pt, with most of the impact concentrated in H1.

1: The 2013 pro-forma adjusted EBITA margin including the last 12 months of Invensys (without Appliance) to September 2013 and the full consolidation of Electroshield – TM Samara is ~14.0%.

Help people make the most of their energy

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Help people make the most of their energy

20140612 jpm conference

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