The ratings on Schneider Electric S.A. reflect Standard&Poor's Ratings Services' view of the company's "strong" business risk profile and "intermediate" financial risk profile. The ratings are supported by what we consider to be Schneider's sound competitive positions, extensive geographic diversity, efficient cost management, and ability to generate robust free operating cash flow (FOCF). These strengths are tempered, however, by the company's financial policy--which we believe continues to be characterized by an acquisitive strategy and a generous dividend policy--and, to a lesser extent, by our opinion of the cyclical nature of most of Schneider's end markets. In 2010, Schneider reversed its negative sales performance of 2009, reporting an organic 9.3% increase, leading to higher sales than we initially estimated.
