Schneider Electric, provider of power solutions to the food and beverage industry, has fought off a slump in its sales figures to record first half increases in both its operating margins and its net profits. The company said that tough economic conditions and currency exchange rates were counteracted by strong development in Asia and productivity initiatives in Europe and the US.
Although net sales were down 7 per cent to €4,236 million, the company reported its gross margins up by 1 per cent to 41.9 per cent and that its net income after amortization had increased 8 per cent to €190 million.
Commenting on the results, Henri Lachmann, chairman and chief executive officer of Schneider Electric, said: "Schneider Electric recorded a remarkable growth in Asia which, excluding currency effect, enabled the Group to maintain stable sales overall in an unfavourable environment. At constant currencies, operating margin increased 1.2 per cent. These good performances demonstrate our reactivity and the relevance of our 'Growth & Efficiency strategy'".
On a regional basis, sales outside of Europe and the US, although still relatively small, grew at a rate of 11 per cent in the first half of the year, to €889 million. Figures in the US reflect the continuing struggle of the economy there, with sales dipping 4.6 per cent to €1,086 million for the first half. Similarly in Europe sales figures dropped for the first half by 2.1 per cent to €2,261 million, but were heavily impacted by the strength of the US dollar against the euro.
The company said that seasonally adjusted, the trend in sales was stable over the last three quarters in Europe and North America, but increased in the International sector.
The company reported strong growth in Eastern Europe in the second quarter whereas in the rest of Europe, sales change was on a par with the previous quarter. Spain, it said, continued to turn in a good performance and the United Kingdom also recorded an increase in the second quarter.
In the International sector, sales continued to grow at a sustained pace. Asia, and notably China, continue to be buoyant. In this part of the world, which represents the main driver for world growth, Schneider said it posted excellent performances thanks to the the strength of its local manufacturing and sales operations.
To respond to the change in its markets, Schneider said it had launched specific action plans to support growth and optimise costs. In Europe it said it aims to strengthen the Company's presence in the Industry market, re-size manufacturing bases and adapts costs in several of its largest countries and optimise R&D, IT and marketing functions.
In the US it said it would implement enhanced productivity plans and reinforce its marketing access.
In the International sector it said it would deploy the company's operations in Asia to support growth and increase productivity as well as continuing to shift manufacturing resources to China with the construction of two new plants.
The company said that for the second half of 2003 it would pursue an active growth strategy designed to target promising segments more effectively, invest in high potential geographical areas - China, Eastern Europe, India and Brazil - and develop new growth paths through selective acquisitions.
Schneider Electric, the world's Power & Control specialist with leading worldwide brands such as Merlin Gerin, Square D and Telemecanique, offers a comprehensive range of products and services for the residential, buildings, industry and energy and infrastructure markets. Schneider Electric's 74,814 employees generated sales of €9.1 billion in 2002 through 13,000 sales outlets in 130 countries.