Schneider Electric S.E.

Our stable outlook on Schneider reflects an expectation that it will continue to generate strong FOCF and sustain its credit metrics in 2022 and 2023. In our view, adjusted FFO to debt of 30% and debt to EBITDA of no higher than 2.5x is in line with the current ratings. The stable outlook also incorporates our assumption that the group's financial policy will remain supportive and that the company will balance future acquisitions, or additional share buybacks, against maintaining credit metrics in line with the rating level. We could lower the rating if we forecast that adjusted FFO to debt will fall below 30% and debt to EBITDA will climb above 2.5x for a protracted period. This could occur if

...Strong demand across segments and geographies supports profitable growth prospects into 2022 and 2023 despite turbulent markets. Schneider is confidently navigating through the turbulence in global markets, triggered by the aftershocks of COVID-19 in China and economic disruption caused by the Russia-Ukraine conflict. This was evident in the company's ability to absorb these events and deliver strong results in the first half of 2022, when it posted record sales of 16 billion, up 10.1% on the same period in 2021. The company also maintained profit margins at 2021 levels, despite operational headwinds from continuing supply chain constraints and strong inflation. Despite an increasingly difficult and volatile economic environment, S&P Global Ratings believes Schneider will continue to build on structural trends such as increasing demand for energy efficiency, decarbonization, decentralized power production, and connectivity. We anticipate that a strong focus on fulfilling a backlog of orders...

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