Half Year 2025 Schneider Electric SE Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Martin Wilkie - Citibank SA - Analyst : It's Martin at Citi. The question I think was just on gross margins. You've outlined obviously, that lower in the half, but there is obviously pricing action expected in the second half. Could you just clarify how much of that is already pricing has been announced and therefore, you sort of automatically come through into the second half? And how much is still some uncertainty about the final tariff levels and so forth. And therefore, that we still need to see the pricing action alone to happen in the half year to see that pick up in gross margins in the second half?

Question: Martin Wilkie - Citibank SA - Analyst : I wanted to ask a question about the systems growth and just on a couple of dimensions. First of all, perhaps discuss how the backlog has been building across data centers and infrastructure quarter-on-quarter? And then perhaps more specifically, could you frame how you see the data center-related growth developing in 2025 based on backlog execution in pricing and project development?

Question: Jonathan Mounsey - Exane Bnp Paribas - Analyst : Maybe I'll ask one on capital allocation, given yesterday's news. So obviously, very helpful of you to give the pro forma net debt-to-EBITDA post that deal completing, I think 2.13. I suppose it sort of begun the question. What does this mean in terms of at least the next one to two years in terms of your future M&A ambitions or certainly at least for the next 12 months or so? I mean, would you potentially resort to equity for the right deal? How much financial leverage could you go to? Is this really kind of the top end of the range, and we'll have to wait to delever before we start thinking about further deals? Really, just some color on capital allocation and also are you willing to take the balance sheet.

Question: Daniela Costa - Goldman Sachs Group Inc - Analyst : I wanted to ask to dive a little bit deeper into Western Europe on the energy management side, where you had a turn back to growth this quarter. Was that just the data center part turning given you didn't have the same maybe comparables as last quarter? Or do you see like any other green light signs across other areas in Europe?

Question: Max Yates - Morgan Stanley - Analyst : Could I just ask on your gross pricing in products? Because I guess I understand why sort of the systems business may see some negative pricing and that normally goes into your mix line in your EBIT bridge. But most companies in industrials and electricals are seeing sort of 1% to 2% price rises. And I guess that would have been EUR180 million to EUR360 million in the bridge. It was slightly negative on gross pricing. So I guess my question is, is it difficult to push prices up from current levels? Are there any kind of products or regions where pricing is negative? And yes, just any detail around why gross pricing and products should be negative, just ignoring net pricing but the gross price?

Question: Ben Uglow - OxCap Analytics - Analyst : I wanted to come back and thank you very much for all the color on the Industrial Automation margin. I think I sort of understand what's happened in the last sort of 12, 18 months or so. I wanted to kind of look at it a little bit longer. If we look at the business, let's say, over the last 5 to 10 years, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 6:30AM, SCHN.PA - Half Year 2025 Schneider Electric SE Earnings Call you've averaged pretty consistently 17% margin, and you've achieved those types of level even in the down cycle. I think you got down to about 15% in the first half of 2020. My question, and maybe it's for Hilary, my question is, are you confident that the downturn that you're seeing in the margin at the moment and stripping out, let's say, AVEVA at 50 bps, a SaaS transition or whatever it might be. Are you absolutely confident that, that is purely cyclical? Or are there any other structural factors going on? So do we know for sure that there hasn't been a change in market share? That our customer base in Italy or machine builders or whomever it might be, is absolutely the same as it was? This is very much a cyclical phenomenon and that we're going to go back to where we were the 17%-plus range once these effects roll off. Is that the view?

Question: Andre Kukhnin - UBS AG - Analyst : I just have a brief kind of bigger picture margin question as well. When we think about your targets of target of 20% and kind of how we're going to get there. Is this now purely reliant on industrial automation recovery helped by the measures and the cycle in AVEVA? Or do you see scope for margin improvement in Energy Management as well if we look out a couple of years?

Question: James Moore - Redburn Partners LLP - Analyst : I wonder, Olivier, if I could ask you about portfolio. Your software business of AVEVA is more AEC, more process construction really, whereas your automation business is predominantly discrete or at least as bigger than process. Do you see any room to shift into PLM and CAD over time? Would you be interested in such assets?