Full Year 2016 Results. February 16, 2017

Transcription

1 Full Year 2016 Results February 16, 2017

2 Disclaimer All forward-looking statements are Schneider Electric management s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed description of these factors and uncertainties, please refer to the section Risk Factors in our Annual Registration Document (which is available on Schneider Electric undertakes no obligation to publicly update or revise any of these forward-looking statements. This presentation includes information pertaining to our markets and our competitive positions therein. Such information is based on market data and our actual revenues in those markets for the relevant periods. We obtained this market information from various third party sources (industry publications, surveys and forecasts) and our own internal estimates. We have not independently verified these third party sources and cannot guarantee their accuracy or completeness and our internal surveys and estimates have not been verified by independent experts or other independent sources. Page 2

3 4 Full year 2016 performance highlights 22 Full year 2016 finance presentation 30 Full year 2017 targets 32 Appendices Page 3

4 Full year 2016 performance highlights Page 4

5 Solid execution of Schneider is On: Strong improvement in Adjusted EBITA margin, all time high Free Cash Flow and Net Income up +24% We successfully delivered on our roadmap in 2016 Adj. EBITA c.+90 bps before FX, exceeding initial target and top-end of revised target All time high FCF of 2.2bn We focus on creating shareholder value: TSR c.48% in last 12 months dividend proposed, up +2% Company well positioned for profitable growth: Major geographies set to improve though geo-political uncertainty remains Strategy to focus on products, services and better systems fully delivering Ramping up EcoStruxure, our Digital architecture, across major markets Consistent & solid execution of Schneider is On. Margin improvement underway with focus on organizational simplification, consistent execution and potential portfolio pruning Page 5

6 Schneider Electric 2016 highlights Balanced geographies FY 2016 revenues 28% North America 18% Rest of the World 27% Western Europe 27% Asia- Pacific Four integrated and synergetic businesses FY 2016 revenues Building IT Industry Infrastructure 43% 15% 22% 20% 24.7 billion FY 2016 revenues 41% of FY revenues in new economies 5% of FY revenues devoted to R&D 44% of FY revenues as Solutions Page 6

7 This quarter, our Planet & Society barometer reaches 8.48/10 Indicators & objectives selection Q Q In 2016, Schneider Electric was awarded by: Fortune Magazine: #24 / 50 Companies that are changing the world 10% energy savings 7.1% 5.9% DJSI Industry Leader for the 4th consecutive year 100% of products in R&D designed with Schneider ecodesign Way TM 81.6% 46% CDP Climate Leader part of the Climate A list for the 6th consecutive year Ethisphere, world's most ethical companies listed for the 6th consecutive year 100% of new large customer projects with CO 2 impact quantification 16% All our entities pass our internal Ethics & Responsibility assessment 93.4% - 79% FTSE4Good: listed for the 1 st time since inception in th company globally for clean-energy in Carbon Clean 200 List 12 th most sustainable company in the world in Global 100 most sustainable corporations One day training for every employee every year 85% of employees work in countries with Schneider gender pay equity plan Page 7 Page 7 92% 83% 75% 57% See detailed results in appendix 10 th greenest company in the world in Newsweek Global Green Ranking Vigeo Eiris Industry Leader Oekom Industry Leader

8 Focus on strategic priorities yielded strong results in 2016; Well positioned for further organic sales growth and margin improvement SCHNEIDER IS ON INITIATIVES PROGRESS UPDATE IN 2016 DO MORE Growth in Products, Software & Services Better project and equipment selection and execution c.+1% organic growth ex-systems 1 & transformers Services up +5% organic Systems 1 gross margin up ~+40bps (~+70bps before FX) Global strategic accounts orders up mid-teens SIMPLIFY Target cost reduction of c bn by 2017 c. 620m cost reduction 2 in 2016, c. 1.3bn in past 2 years DIGITIZE Develop connected offer Digitize customer experience Number of connected assets +15% Connected Customers +40% INNOVATE Growth by innovation EcoStruxure: building, power, grid, industry, machines, datacenters Software & Analytics: StruxureOn, Wonderware online Connected products: Masterpact MTZ, Altivar Process & Others Page 8 1: Systems is comprised of Projects & Equipment 2: Gross support function cost reduction plus industrial productivity

9 All financial targets achieved in 2016 FINANCIAL OBJECTIVES About flat organic growth ex-impact of selectivity in 2016 Expand Adj. EBITA margin +60bps to +90bps before FX (initial target bps) c.100% FCF conversion of Net income through an economic cycle Portfolio pruning c. 1.5bn share buyback by RESULTS Slightly positive organic growth excl. selectivity 1 Adj. EBITA margin of 14.1%, up c.+90bps before FX All time high FCF of 2.2bn, 118% FCF conversion Completed disposal of Telvent Transportation, launched strategic review of DTN 1.5bn share buyback executed in 2015/2016 at ~ 57 per share 1: Excluding the impact of selectivity for c m Page 9

10 Slightly positive underlying 1 organic growth in 2016 with c.+1.6% underlying 2 growth in Q4 FY 2016 ORGANIC GROWTH, % ORGANIC GROWTH, % Group: -0.9% org, Slightly positive underlying 1 Excl. selectivity ~+0.9 ~ ~ ~ Building Industry Infrastructure IT H H Group Organic Growth (%) Q Group underlying Organic Growth (%) 1: Estimated FY underlying organic growth excluding the impact of selectivity for c m (neutral working day impact) 2: Estimated Q4 underlying organic growth excluding impact of c m from selectivity and -1.1pt working day Page 10

11 Our strategic priorities achieved good results in a mixed market MORE PRODUCTS THROUGH PARTNERS Low-single digit organic growth in products sold through partners Mid-single digit organic growth in Wiring Devices & Final Distribution MORE SERVICES & SOFTWARE Services Growth across all the businesses 5.0 Services Organic growth (%) -0.9 Group Software down low-single digit driven by process industries & transition of some offers to SaaS BETTER SYSTEMS Grow specialized business OEM Solution Datacenters Building Automation Grid Automation Improve margins Revenues outperforming Group by c.+1.5pts organic Systems gross margin improved (~+0.7pt before FX) Page 11

12 Building delivers growth and a c.+1.5pt organic margin improvement 10.7bn 43% of Group 2016 revenues Low Voltage & Building Automation #1 worldwide Performance highlights 2 largest countries (U.S., China) both delivered growth, Western Europe about flat New economies grew with India and CIS up strongly, Middle- East declined Final Distribution & Wiring Devices grew mid-single digit Project business still impacted by soft activity in some markets Margin expansion of c.+1.5pts organic, mainly driven by industrial productivity & cost control Performance in % 19.6%/ +1.6pt Organic growth Adj. EBITA margin Page 12 Execution priorities Maximize all businesses sales through partners Continue to drive Wiring Devices/ Final Distribution Grow new connected offers EcoStruxure for Building & Power Keep growing analytics and digital services Attention to cost and pricing

13 IT grew in large markets but suffered from weakness in EMEA. Margin decreased but remains resilient at high level 3.6bn 15% of Group 2016 revenues Critical Power, Cooling & Services Performance highlights 2 largest markets (U.S. and India) grew Weakness in Western Europe, Middle-East & Africa Services performed strongly Margin declined by c. -0.5pt organic impacted by mix and investments in digital and services capabilities #1 worldwide Performance in % 16.8%/ -0.8pt Organic growth Adj. EBITA margin Execution priorities Leverage the Group s complete portfolio for datacenters Grow EcoStruxure for Datacenter offer with 2016 launch of cloud based Software Drive product business through channel expansion and new offers Keep services growth momentum Continued focus on cost discipline Page 13

14 Infrastructure improves margin by c.+1.3pt organic in difficult markets 4.9bn 20% of Group 2016 revenues Medium voltage & grid automation #1 worldwide Performance in %/ c.+0.3% 1 9.7%/ +0.6pt Organic growth Adj. EBITA margin Performance highlights Margin improved c.+1.3pt organic thanks to higher system margin and strong cost control but was below 2016 target of 10% due to strong negative FX (c. -0.9pt) Org. growth up slightly (+0.3%) excl. the impact of project selectivity Services grew mid-single digit EcoStruxure Grid grew double-digit organically Execution priorities Grow products, services and EcoStruxure Grid Continue project selectivity and better execution Further adjust cost-base and optimize industrial footprint Reach 10% to mid-teen adj. EBITA margin level 1: excluding c. 190m of selectivity in 2016 Page 14

15 Industry delivers a resilient performance in a mixed environment, with positive momentum in Q4 5.5bn 22% of Group 2016 revenues #2 Worldwide Discrete -1.2% Organic growth Performance in 2016 #4 Worldwide Process 16.7%/ -0.4pt Adj. EBITA margin Performance highlights FY org. growth impacted by weak O&G, China and U.S. Growth in Western Europe and New economies ex-china Positive performance in Q4 with improvement in OEM notably China (up mid-single digit) and for Process Automation orders Margin c.-0.2pt organic mainly driven by lower volumes OEM business up thanks to innovation & channel initiatives Execution priorities Grow business through partners & integrators Continue to develop OEM solutions Develop EcoStruxure for Plant & Machines Continue developing Software packages by segments Continuous control of SFC Page 15

16 Good progress in improving project management and margin INCREASE SELECTIVITY GROUP: ACTIONS LAUNCHED GROUP ACHIEVEMENTS IN 2016 IMPROVE EXECUTION Deeper screening of projects through experienced solution committees and tighter processes and hurdles Focus on repetitive segments. Impact: ~20% projects above 5m refused at tendering phase in 2016 Hit rate improved significantly (>10pts) Systems gross margin improved (+0.4pt, ~0.7pt before FX) Rationalization of project and equipment footprint and upskilling of teams Systematic proactive risk assessment, mitigation plan definition Increased cash generation Page 16

17 We continue to simplify our operations for greater efficiency TOTAL SAVINGS ( bn) KEY ACTIONS IN 2016 Industrial productivity (c. 380m) Ranked #18 Top Global Supply Chain Purchasing efficiency Quality value engineering Transport: improved container loading factor SFC Savings (c. 240m Gross savings) Non-manufacturing headcount down -4% organically in 2016 Marketing & Finance simplification Regional setup simplification Achieved SFC Gross savings Industrial productivity Target (Investor Day) Reinvestments (c. 60m) R&D for EcoStruxure development Digital and mobile tools Services & marketing capabilities Page 17

18 End to End Cybersecurity Cloud and/or On Premise Deployment of EcoStruxure.io EcoStruxure Platform Building Data Center Industry Grid Apps, Analytics & Services Edge Control Connected Products BUILDING POWER DATA CENTER MACHINE PLANT GRID Page 18

19 Numerous key launches in 2016 supporting EcoStruxure deployment Buildings Industrial & machines Utilities & infrastructure Data Centers & Networks Building Industry Grid Data Center Apps & Analytics, Services Smart Building Service Plans State of the art service plans Wonderware Online, leading cloud based offering Asset Performance Management as a Service turning data into action StruxureOn increases data center resiliency Edge Control StruxureWare Building Operations allows data collection, analysis, and management Modicon M580 is the first PAC* with built-in Cybersecure Ethernet capabilities PACis 5.4 Digital Control System Data Center Operation 8.0 Allow monitoring & Operation of DC s incl. Multi-tenant Connected Products Masterpact MTZ performance and reliability with new digital capabilities Altivar 340 Variable speed drive with superior performance and productivity Easergy T300 Remote Terminal Unit Galaxy VX 3-phase power protection Page 19 *Programmable Automation Controller

20 with continued focus on home and small buildings Wiser Air Solution Complete home energy management solution Resi 9 distribution board Transforms homes into vibrant, stylish living spaces Bond switch range Designed to be stylish, practical and set the mark in terms of functionality and modularity PowerTag meter Smallest power and energy meter in the world Smartlink ELEC solution Simple intuitive monitoring of the status of devices and alerts AvatarOn wiring devices range Allows switch customization FUGA One of the most successful launches of wiring device ranges Mureva Styl Complete waterproof system Clipsal / PDL Iconic The new standard in residential electrical accessories Page 20

21 Investing in Digital Customer Experience and impactful launches Refreshed Web Experience Globally Impactful Launches ~70 Million Visitors annually Mobility for Customer Engagement Anytime, Anywhere Launched with 25 hero offers Leader in Analysts Quadrants for Software, Grid, BMS, Datacenter Analytics for Intelligence My SchneiderElectric app launched in 70 countries MyElectrician app & PRM: c.320,000 registrations end-2016 Sales Efficiency and enhanced customer care Page 21

22 Full year 2016 finance presentation Confidential Property of Schneider Electric Page 22

23 Slightly positive underlying organic growth. Scope and FX main driver for revenue decline 26,640 Western Europe +0% ANALYSIS OF CHANGE IN GROUP REVENUES (in m) Group: -0.9% org, slightly positive underlying growth 1 Asia-Pacific -1% North America -1% Rest of World -3% Mainly Delixi deconsolidation, Juno & Telvent transport. disposals Primarily due to weaker CNY, GBP and other new economies currencies vs Scope -3.9% Fx -2.5% 24, % Based on current rates, the FX impact on FY 2017 revenues is estimated to be around + 400m. The FX impact at current rates is expected to be about neutral on margin 1: Excluding the impact of selectivity for c m Page 23

24 Strong productivity, net price and improving mix trend drove a strong gross margin improvement GROSS MARGIN: ANALYSIS OF CHANGE (%) Price positive outside China. In China, despite price investments, strong industrial productivity and cost efficiency protected the margin Given the resurgence of raw material inflation, the Group expects a negative raw material impact in 2017 of c million at current prices Improving trends vs thanks to selectivity initiatives on systems R&D increase impacted c. -0.1pt Divestments & Delixi deconsolidation c.+0.4pt 2015 GM Volume Net price Productivity Mix R&D & Prod. Labor infl. FX Scope & Others 2016 GM Page 24

25 Adj. EBITA margin improves c.+90 bps before FX, +70 bps organic thanks to strong gross margin improvement In m FY 2015 FY 2016 Revenues 26,640 24,693 Organic change Gross Profit 9,845 9,390 +1% Gross margin (%) 37.0% 38.0% +1pt Support function costs (6,204) (5,910) SFC 1 ratio (% Revenues) 23.3% 23.9% Adjusted EBITA 3,641 3,480 +4% Margin % 13.7% 14.1% +70 bps Gross profit improved organically through strong productivity & system margin improvement SFC organic reduction of -0.5% thanks to c. 240m gross SFC savings Main driver for higher SFC ratio is linked to divestments & Delixi deconsolidation (c.+40 bps impact) 1: Support function cost Page 25

26 EBIT and Net income increased by +32% and +24% on reported basis and adjusted EPS 1 up c.+2% 2 In m FY2015 FY2016 % change Adjusted EBITA 3,641 3,480-4% Other income and expenses (522) (63) Restructuring (318) (313) Amortization & depr. of purchase accounting intangibles (572) (153) EBIT 2,229 2, % Financial costs (446) (462) Income tax (389) (712) Equity investment & Minorities 13 (27) Net income (Group share) 1,407 1, % Adjusted Net income 1 2,119 2,117 Adjusted Earning per share % Restructuring costs expected to be c. 900m in to drive efficiency initiatives. 23m decrease in Net cost of financing but increased exchange losses due to currency volatility Includes exceptional 3-119m. Without exceptional, ETR of 23.8%. Effective tax rate expected in 2017: 26%-28%, not factoring potential US tax changes at this stage Growth of c.+2% at 31 December spot share count 1. Adjusted Net Income and EPS calculation in appendix 2. Growth of c.+2% at 31 December spot share count Page Linked to the negative adjustment of net deferred tax assets

27 Record Free cash flow, up +8% thanks to improving operating cash flow and good working capital management Analysis of debt change in m FY2015 FY2016 Net debt at opening Dec 31 (5,022) (4,631) Operating cash flow 2,715 2,942 Capital expenditure net (787) (764) Change in trade working capital Change in non-trade working capital 26 (54) Free cash flow 2,045 2,206 Dividends (1,219) (1,227) Acquisitions net Net capital increase (448) (689) FX & other (309) (531) (Increase) / Decrease in net debt 391 (194) Net debt Dec 31 (4,631) (4,824) Strong control over inventories Includes 853m share buyback Mainly due to FX impact > 90% FCF RETURNED TO SHAREHOLDERS OVER PAST 2 YEARS 1: including dividend from CST holding in 2015 Page 27

28 Strong cash conversion and solid balance sheet CASH CONVERSION, % NET DEBT/ ADJ. EBITDA : Based on Net income adjusted for discontinued ops 2: Based on Net income adjusted for business disposals impact and Pelco impairment (see p25) 3: Based on Net income adjusted for non-cash c. 120m income tax increase due to deferred tax assets adjustment Page 28

29 Proposed dividend of 2.04 per share, increased by +2% DIVIDEND HISTORY 2.5 Dividend Yield (%) 1 Dividend ( per share) : Based on share price prior to dividend payment, or Feb.15th 2017 for 2016 dividend 2: Subject to shareholder approval in AGM Page 29

30 Full Year 2017 Targets Page 30

31 2017 Targets DRAFT In 2017 the Group expects more positive momentum in its major end-markets. In North America, modest growth is anticipated with improvement in industrial activity and continued growth in residential markets. Western Europe is expected to grow moderately, benefiting from an environment with a lower Euro and still relatively low oil price, while some Brexit-related risks remain. China is expected to improve in Industry and Infrastructure markets while the construction market should grow at a slower pace due to policy tightening. The Group will still face headwinds from O&G and continued weakness in some resource driven economies, although these may ease towards the end of the year. Additionally, in 2017 the Group will face a strong increase in raw material costs estimated at c.- 200m at current prices. In this environment, the Group s priorities are to grow its partner network through the launch of many new integrated offers, accelerate services and software, working on margin improvement through continued selectivity on projects and keep a strong attention on cost control. In addition, the Group should benefit from the recent deployment of its EcoStruxure architectures in several domains to create further opportunities for growth. Therefore, in line with the objectives announced at the 2016 Investor day, the Group targets for 2017: > Organic revenue growth between +1% and +3% for the Group outside Infrastructure. For Infrastructure the priority remains margin improvement and the organic growth target for the division is to be about flat underlying, before an expected -4% to -5% impact from project selectivity for the division in > +20bps to +50bps organic improvement on adjusted EBITA margin. The FX impact at current rates is expected to be about neutral on margin Page 31

32 Appendixes Page 32

33 Definitions EBITA: EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill Adjusted EBITA: EBITA before restructuring and other operating income and expenses EBITDA: EBIT before depreciation, amortization, provisions and before sharebased compensation cost Adjusted EBITDA: Adjusted EBITA before depreciation, provisions and before share-based compensation cost Cash conversion: Free cash flow / Net income (Group share) Free cash flow: Operating cash flow less change in working capital less net capital expenditures ROCE: Return On Capital Employed Page 33

34 Sustainability key messages 2016 and trends key messages: The Planet & Society barometer reaches 8.48/10, outpacing year-end target 2016 (7.5/10). More than 20 million people benefited from our Access to Energy offers. Launch of Homaya, a solar home system for off-grid households: complete solution comprises solar panels, in-built battery and 3-4 lamps; Commitment highly recognized by worldwide sustainability raters: DJSI (Industry Leader), CDP (in Climate A list), Global 100 (27 th ), Ethisphere, Vigeo Eiris (Industry Leader), Oekom (Industry Leader) and more Schneider Electric at COP22 Marrakech, mobilization for access to energy in Africa with Homaya, Schneider Electric Foundation s partnership with Art of Change 21, conferences & side events at Riad Yima. Company signed the Science-based targets initiative to support carbon neutrality commitment in own value chain & ecosystem. Program launched to quantify CO 2 impact and savings of large customer projects. Successful first integrated report released in Main trends 2017: Company engaged to accomplish the 17 SDGs (UN Sustainable Development Goals) Towards first carbon neutral marathon (Marathon de Paris 70% carbon neutral in % in 2018) Human rights policy and program in accordance with the UN Guiding Principles on Business & Human Rights Page 34

35 The Planet & Society barometer Results as of Q Planet & Society barometer Start 01/2015 Results Q Results Q Target 12/2017 Our megatrends and our targets Overall score (out of 10) /10 10% energy savings - 5.9% 7.1% 10% 10% CO 2 savings from transportation - 8.5% 11.2% 10% Towards zero waste to landfill for 100 industrial sites % of products in R&D designed with Schneider ecodesign Way TM - 46% 81.6% 100% 75% of product revenue with Green Premium TM eco-label 60.5% 66.3% 74.8% 75% 100% of new large customer projects with CO 2 impact quantification % 100% 120,000 tons of CO 2 avoided through maintenance, retrofit and end-of-life services - 83, , ,000 x5 turnover of Access to Energy program to promote development - x3.3 x2.1 1 x5 100% of our recommended suppliers embrace ISO guidelines 48% 72% 82.3% 100% All our entities pass our internal Ethics & Responsibility assessment - 79% 93.4% 100% 30% reduction in the Medical Incident Rate (MIR) One day training for every employee every year 64% scored in our Employee Engagement Index 85% of employees work in countries with Schneider gender pay equity plan 150,000 underprivileged people trained in energy management 1,300 missions within Schneider Electric Teachers NGO The arrow shows if the indicator has risen, stayed the same or fallen compared to the previous quarter. The colour shows if the indicator is above or below the objective of 8/ Change in scope of consolidation in Q % 61% - 73, % 83% 63% 57% 119,140 1,203 33% 92% 64% 75% 123,839 1, % 85% 64% 85% 150,000 1,300

36 Adj. EBITA up +4% organic thanks to positive net price and strong productivity Analysis of change of adjusted EBITA (in m) 3, ,480 FY 2015 Volume Mix Net price 1 Productivity COGS (Inflation & R&D) SFC Other Net acquisition impact Currency effects FY : Of which RMI: c. 130m Page 36

37 ROCE calculation ROCE calculation P&L items 2016 Reported EBITA (1) 3,104 Restructuring costs (2) -313 Other operating income & expenses (3) -63 = Adjusted EBITA (4) = (1)-(2)-(3) 3,480 x Effective tax rate of the period 1 (5) 23.8% = After-tax Adjusted EBITA (A) = (4) x (1-(5)) 2, Balance sheet items reported reported Avg of 4 quarters Shareholders' equity 21,289 20,653 (B) 20,256 Net financial debt 4,631 4,825 (C) 5,253 Adjustment for Associates and Financial assets (fair value) (D) Sunten Electric Equipment (25% stake) Fuji Electric FA Components & Systems (36.8% stake) NVC Lighting (8.9% stake) Delixi (50% stake) CST Holding (30% stake) Other non-current financial investments = Capital Employed 25,428 24,716 (E) = (B)+(C)+(D) 24,753 = ROCE (A) / (E) 10.7% ROCE would be c.+90bps higher excluding FX impacts since Effective Tax rate corrected for the adjustment of the net deferred tax assets in France 1: Effective Tax rate corrected for the adjustment of the net deferred tax assets in France Page 37

38 Adjusted net income calculation In m FY2015 FY2016 Net income (group share) 1,407 1,750 Invensys integration cost post-tax 1 57 Impact of business disposals (in OOIE, share of profit on associates & discontinued ops) Impairment on Pelco net of tax 180 Restructuring charges post-tax Tax rate: deferred tax net assets depreciation Adjusted Net income 2,119 2,117 Adjusted EPS ( ) : Calculated post-tax at the year effective tax rate (ETR). 2: see Press release from 9 January 2017 Page 38

39 Q4 Performance Page 39

40 Q4 revenues underlying organic growth up c.+1.6% with Industry turning positive in Q4 Analysis of change in Group revenues ( m) Organic Growth: -1.7% c.+1.6% underlying growth 1 7,198 Building -1.2% Industry +1.4% Infrastructure -6.7% IT +0.3% Scope -3.1% Fx -1.0% 6, % Q Q : Estimated underlying growth excluding Q4 impact of c m from selectivity and -1.1pt working day Page 40

41 Building grew in Asia-Pacific but declined in North America and Rest of the World 3,112 Q Analysis of change in Q4 Revenues ( m) North America declined, as the U.S. suffered from lower project activity in commercial & industrial buildings mainly due to selectivity and a high base of comparison in solar markets. Residential activity continued to show good growth in a favorable market. Mexico grew while Canada Organic -1.2% Scope -6.1% 44% of Q4 revenues Fx -1.2% 2, % Q was about flat. Western Europe was stable. France posted solid growth thanks to good project execution and an improving residential market. Italy, Spain and the U.K. grew benefiting from commercial initiatives while Germany declined. Asia-Pacific was up slightly thanks to growth in India and residential activity in Australia. India continued to grow, avoiding substantial impacts from government demonetization policies through actions with partners. China was slightly negative due to some delays in projects in favorable construction markets in Tier 1 & Tier 2 cities. Rest of the World posted mixed results, with growth in CIS, Africa and South America and a strong decline in the Middle-East. Page 41

42 Industry turned positive in Q4 thanks to OEM and improvement in China 1,464 Q Analysis of change in Q4 Revenues ( m) Globally, the Group benefited from its focus on OEM in a favorable market. Process automation declined organically, though showing early signs of improvement in order intake. Organic +1.4% Scope +0.4% 22% of Q4 revenues Fx -0.9% 1, % Q China was up high-single digit in an improved OEM market, driving the growth of Asia-Pacific. Elsewhere in Asia, the Group continued to see growth in India and weakness in Australia. Western Europe declined slightly, with an impact from working days. Positive OEM demand in Italy and Spain could not fully offset a decline in France, and lower project execution in U.K. and Germany. The U.S. was down slightly as it continued to be impacted by low O&G investment but posted growth in the OEM market. The priority remains to enhance cross-selling through channel initiatives. Rest of the World was positive, led by strong growth in Russia and Africa while South America and the Middle- East declined. Page 42

43 Infrastructure was slightly up before the impact of the project selectivity which accelerated as expected in Q4 Analysis of change in Q4 Revenues ( m) Negative impact from selectivity initiatives accelerated to ~- 100m in Q4, in line with expectations. 1,639 Q ~flat organic growth before selectivity Organic -6.7% Scope -2.6% 22% of Q4 revenues Fx -1.3% 1, % Q North America was down due to selectivity and continued weakness in resource and industrial markets in the U.S. and Canada. Western Europe was down. Germany declined mainly due to project selectivity despite continued growth in transactional and services business. In France, the business remained stable with strong growth in services thanks to targeted initiatives which compensated for a planned decrease in projects due to selectivity. In Asia-Pacific, China was down slightly on selectivity and weakness in traditional segments. Indonesia benefited from project execution while Australia continued to suffer from lower investment in resources. Rest of the World was down with a mixed picture, notably with weakness in the Middle-East but growth in Russia. Page 43

44 IT grew slightly in Q4, thanks to North America and Asia Pacific 983 Analysis of change in Q4 Revenues ( m) North America was up led by the U.S. with strong growth in IT channel sales, continued success in Organic 0.3% Scope +0.0% 15% of Q4 revenues Fx +0.6% % services initiatives and project execution in data centers. Mexico declined. Western Europe was down mainly due to declines in Germany and the U.K. Italy, France, and Nordic countries grew. Asia-Pacific was up as India continued to grow strongly with little impact seen from government demonetization initiatives. Elsewhere in Asia, the Group saw growth in South East Asia and Japan and declines in China and Australia. Rest of the World declined, mainly driven by Russia and the Middle-East. Services continued to grow strongly. Q Q Page 44

45 Asia-Pacific grew slightly with China & India while rest of regions declined Analysis of change in Group revenues ( m) 7,198 Western Europe -1% Organic: -1.7 % Asia- Pacific 0% North America -4% Rest of World -2% Scope -3.1% Fx -1.0% 6, % Western Europe Asia Pacific Q4 revenues North America Rest of the World 27% 27% 27% 19% Q Q Page 45

46 Contacts & agenda Amit Bhalla Head of Investor Relations Tel: Alexis Denaud Senior Investor Relations Manager Tel: Apr 20, 2017 Apr 25, 2017 Q Revenues Annual General Meeting Conference call Meeting Page 46

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