The ratings on France-based Schneider Electric S.A. reflect the company's above-average business profile, supported by sound competitive positions, extensive geographic diversity, and efficient cost management. They also take into account Schneider's strong financial structure and ability to generate solid free cash flow. These strengths are tempered, however, by the cyclicality of most of Schneider's end-markets, as well as by the potential impact of future share buybacks and the group's acquisitive strategy. Schneider is a major worldwide player in electrical distribution, industrial controls, and automation. These industries enjoy above-average characteristics: The limited number of global players enjoys well-entrenched positions, strong barriers to entry, and weak capital intensity. Schneider delivered robust sales growth and enhanced profitability in first-half 2005, with sales up
