Research Update: Schneider Electric Upgraded To 'A/A-1' On Resilient Business Model; Outlook Stable

France-based Schneider Electric S.E. has repositioned its portfolio to benefit from secular trends in decarbonization, digitalization, and automation. This has set the scene for significant future revenue growth, leveraging its leading market positions, resulting in S&P Global Ratings-adjusted EBITDA margins exceeding 20% and free operating cash flow (FOCF) beyond €4.5 billion in the next two years. We forecast the group will demonstrate resilient profitability and cash flow generation while maintaining strong credit metrics in 2024 and 2025, with funds from operations (FFO) to debt of above 50% and debt to EBITDA of less than 2.0x, which we expect to continue. We therefore raised our long- and short-term issuer credit ratings on Schneider to 'A/A-1' from 'A-/A-2'. The stable outlook reflects

...- France-based Schneider Electric S.E. has repositioned its portfolio to benefit from secular trends in decarbonization, digitalization, and automation. - This has set the scene for significant future revenue growth, leveraging its leading market positions, resulting in S&P Global Ratings-adjusted EBITDA margins exceeding 20% and free operating cash flow (FOCF) beyond 4.5 billion in the next two years. - We forecast the group will demonstrate resilient profitability and cash flow generation while maintaining strong credit metrics in 2024 and 2025, with funds from operations (FFO) to debt of above 50% and debt to EBITDA of less than 2.0x, which we expect to continue. - We therefore raised our long- and short-term issuer credit ratings on Schneider to 'A/A-1' from 'A-/A-2'. - The stable outlook reflects our view that Schneider will continue to show sound revenue growth, further strengthen its EBITDA margin above 20%, and maintain FFO to debt above 40%....

Research Update