Morgan Stanley Fifth Annual China Industrials … Stanley Fifth Annual China Industrials Summit 1...
Transcript of Morgan Stanley Fifth Annual China Industrials … Stanley Fifth Annual China Industrials Summit 1...
Morgan Stanley Fifth Annual China Industrials Summit
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China Industrials Summit
Hai ZhuExecutive Vice President, China President
18 June, 2014
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
Reference Document (which is available on www.schneider-electric.com ). Schneider Electric undertakes no obligation to publicly
update or revise any of these forward-looking statements.
This presentation includes information pertaining to the 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
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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.
We are global specialist in energy management and efficiency technologies
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and efficiency technologies
Balanced geographies – FY 2013 revenue1
Schneider Electric: the global specialist in energy management and efficiency technologies
25%North America
28%Western Europe
€25 billionrevenueFY 2013 revenue1
4 – 5%of sales devoted to R&D
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Diversified end markets – FY 2013 revenue1
Utilities &Infrastructure
Industrial and Machines
Data Centers& Networks
Non-residential and Residential Buildings
27% 25% 14% 34%
20%Rest of World
27%Asia Pacific
1: Pro forma basis including LTM Sep 2013 revenue from Invensys2: As of February 2014 (including Invensys)
FY 2013 revenue
160,000+people2 in 100+ countries
to R&D
43%of revenue in new economiesFY 2013 revenue1
Integrating power with automation to support our customers’ need for efficiency
Software and connectivity
The integration of power and automation is enabling improved reliability, reduced losses, and optimized efficiency.
I manage
IT2
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Power 1 Automation
1: Supported by low-voltage, medium-voltage, and critical-power technologies2: Information technology (IT) and operational technology (OT)
I control
I operate
IT2
OT2
Convergence
Key technology Low Voltage & Building Automation
Medium VoltageGrid Automation
Discrete & Process Automation
Critical Power & Cooling
Worldwide leadership in four sizeable and integrated businesses
Buildings & Partner Infrastructure Industry IT
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FY 2013 revenue1 €10.2 billion (40%) €5.7 billion (22%) €6.0 billion (24%) €3.4 billion (14%)
Worldwide position
#1 #1 #2 (Discrete)#4 (Process) #1
Worldwide competitors
ABB EatonLegrandSiemens
ABBSiemens
ABBEmersonRockwellSiemens
EatonEmerson
1: Pro forma basis including LTM Sep 2013 revenue from Invensys
Maximizing growth with two strong and complementary business models
€25 billion1
40%2
ProductScale and
pricing power
SolutionLow capital
intensity and service
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€8.8billion
2003 2013
pricing power
A decade of solid growth> Segment leadership> Differentiated software> Comprehensive service
Solution
Products
1: Pro forma basis including LTM Sep 2013 revenue from Invensys 2: Schneider Electric solution revenue only, pending Invensys solution split
intensity and service opportunity
Leverage our fundamentals.
Further enhance our expertise.
> Recognized brand> Full global coverage> Worldwide partner network
Nor
th A
mer
ica
33,700 Employees3
38 Factories
A balanced global footprint in 100+ countries
Wes
tern
Eur
ope
47,600 Employees3
92 Factories
Asi
a P
acifi
c
47,500 Employees36.4
4.1
7.1
2003 2013
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1: Published figures in billion € restated to reflect country-market view; 2: Billion € pro forma basis including LTM Sep 2013 revenue for Invensys3: Including Invensys, excluding Delixi and Fuji
Nor
th A
mer
ica
Wes
tern
Eur
ope
Res
t of W
orld
34,100 Employees3
53 Factories
Asi
a P
acifi
c
47,500 Employees3
69 Factories2.3
2003 2013
1.2
5
2003 2013
1.2
6.8
2003 201320031
20132
Continually investing in innovation
Product innovation
774 764 818
9791058
1,1454 – 5%of sales devoted to R&D
> More connectivity> Mid-market offers> Energy efficiency
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Solution innovation
2008 2009 2010 2011 2012 2013
R&D spend growth
> Embedding interoperability> Leveraging connectivity and software
to build our service offer> Developing our platform strategy > Instituting operational intelligence
A history of successfully growing our business in China
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A strong commitment to growing our business in new economies
€1.7 billion
€5.5
Our goal is to leverage opportunities by:> Expanding our geographical coverage in
these markets, increasing our presence in new cities
> Further penetrating these markets using local R&D and mid-market offerings
2013 Revenue breakdown in new economies 1
€10.9 billion
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Latin America
Middle East/Africa
Eastern Europe
Asia
€1.6 billion
€2.1 billion
€5.5 billion
1:Pro-forma basis including LTM Sept 2013 revenue for Invensys
billionrevenue 20131
€2.2 billionrevenue 2003
We have a long history in China and continue to invest
ExplorationGrowth(Global for China)
1991-2000
Development(China for China)
2001-2010
A solidified global role(China for Global)
2011-> Contribute to China's
energy efficiency
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Exploration1979-1990 1991-2000
> HV technology transfer to Ping Ding Shan
> Tianjin Merlin GerinCo.,Ltd.
> Schneider Electric Co., Ltd.
> First wave of large-scale investments
> Establish R&D centre> Massive technology
transfer
energy efficiency> Engineering innovation> Pilot new products and
solutions> Provide global talents
Today we have a nationwide presence
Tianjin
Beijing
Urumqi
> 2013 sales: more than €3 billion
> 28,000 employees
> 1 headquarter in Beijing
53 regional offices
> 2 customer care centres
> 700+ distributors
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Shanghai
GuangzhouShenzhen
Chengdu Wuhan
Xi’an
Suzhou
Head office
Regional office Production facility
R&D centre
Distribution centreCustomer care centre
> 300 cities in which we have a presence
> 30 production facilities
> 8 distribution centres
> 3 R&D centres with
1,000+ R&D engineers
> 1 online Energy University
> 1,000+ local suppliers
Adapting our business strategy in China during its economic transformation
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China is undergoing a major transformation
48% 47% 46% 45%43% 42%
50% 51% 51% 53%55% 56%
48% 48% 48%
48% 49% 49%
Consumption as GDP
Investment as GDP
Rebalancing GDP mix Urbanization & infrastructure Industry upgrades
74+88%
2010
83+66%
Number of cities (>1.5M people)
2025 138
2005
Domestic consumption
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43% 42%
10 11 12 13 14 15 16 20 22
Investment as GDP
CAPEX ► CAPEX+OPEX and towards balanced regional development
Property investment to peak, new opportunities in infrastructure
Domestic consumption-led / low energy intensity industries to outperform
48.7%
47.5%
51.3% 52.5%
45.9% 45.6%
54.1% 54.4%
2011 2013 2017 2022
West/Central as GDP
East as GDP
Source: Development Research Center of the State Council, The World Bank, IDC, McKinsey & Company
+88%
Length of Expressways (1,000 km)
2020 139
175+37%
Number of Airport
2020 240
2010
510,530+60%
Number of DCs
2020 814,766
2010
High value-add manufacture
Eco-Friendly Infrastructure
IT and Service
Government agenda creates new opportunities and potential challenges
Eco-challenges Wealth distribution & Social welfare
603 987
1,455
3,250
5,209 Energy consumption (mil ton coal)
% of GDP12
10
8
6
4
PensionsHealthEducation
National agenda
Deregulation: i.e. Distributed Generation (DG)
40%
Social safety net investment
NDRC issued new policy encouraging Distributed Generation (“DG”) in July 20131) Exempt DG business from the government
approval2) Clarify the rule of “self-usage first, spare powe r
to grid”
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Aggressive energy efficiency ambition to meet increasing energy consumption pressure
Healthcare / education as key government investment priorities, meanwhile middle class expanding
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1980 1990 2000 2010 2020
4
2
0203020202010
3.02.4
2.0 1.8 1.7
China CO 2 emission targets(kg per 2000 US$ GDP)
2015 202020102005
-17% -8%-21%
2020
-16%
(Conservative) (Aggressive)
Government is poised for major deregulation and “go-overseas”
2001 20092005
Budgeted external assistance
Eximbankcommercial loans
China’s external aids fuel “ship-out” businessHousehold income distribution
to grid”3) Require grid companies to cooperate to
purchase DG power
Continuing to adapt our way of doing business in China during this transformation
Our unique value proposition
Coverage Agility
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Collaboration Branding
Aligning with the 'Go West' policy to tap new opportunities
Schneider Electric strategies:
> More than double city coverage
> Further improve supply chain footprint for productivity
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Hong Kong
> Optimize shared services resources
> Enhance talents (sales, R&D, engineering, business leaders)
East
West
Embracing e -commerce to expand our online footprint
Flagship stores at both third party market places and e-tailers
11.11 Online FestivalE-commerce DNA: End to end
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> TMALL.com
> Amazon.cn> JD.com> Suning.com
> 51buy.com> No 1 store
> Dedicated offers
> Full web promotion> Online operation> Supply chain
> 123 million advertising exposures
> More than 8,000 online queries per day
> Sales growth on the day: +1,019%
Leverage mobile capabilities, realize online-to-offline sales
Capturing growth opportunity from medium -range offers by excelling in China for China R&D
China for China R&D resources
> Strong investment in local R&D resources and competency
> Well defined go-to-market strategy by business in addition to R&D resources
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2009 2013
+100%
Local R&D headcounts China for China by business pla ns
Buildings & Partner
Industry
Infrastructure
ITB
China for China roadmap R&D resources
Why we need local partners:> Market access> Cost competitiveness> Technology
Leveraging local alliances helps to fill gaps and explore new operation models
Offer
> No.1 local brand in MV drive
> Strong R&D capability > Leading company
in ATS market
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Major alliances/acquisitions and their key capabili tiesGo to market
in ATS market> New offer (ATS)
and GTM team> Largest vacuum
circuit breaker plant in the group
> No. 2 local brand in LV market
> Whole capability to run at low-end
> No. 1 local brand in lighting
> Lighting retail channel
Conclusion
Schneider Electric China is
> A “Chinese” company with superior agility and wide geography coverage
> ONE company to maximize Schneider business opportunities
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> ONE company to maximize Schneider business opportunities
> A company has strong expertise in local partnership with solid track record