Schneider Electric (SU) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues reached a record €9.3 billion, up 8% organically year-over-year, driven by strong demand in energy management, data centers, and growth markets, with all regions contributing.

• Energy Management grew 12% organically, while Industrial Automation declined 6% due to weakness in discrete automation, though early recovery signs appeared in China.

• Software and services grew 7%, with AVEVA's ARR up 15% as the business transitions to a subscription model and SaaS uptake increases.

• Strategic acquisitions included 75% of Motivair for $850 million to enhance data center liquid cooling, with full acquisition planned for 2028, and completion of Planon acquisition.

• 2024 full-year financial targets and guidance reaffirmed, with continued focus on megatrends like digitization, AI, and energy transition.

Financial highlights

• Group Q3 revenues: €9,311 million (+8.0% organic, +5.9% reported), with systems business and distributed IT as key contributors.

• North America and Rest of World delivered double-digit growth; Western Europe was flat to positive, Asia-Pacific up 2–5%.

• Products (51% of Q3 revenues) grew 2% organic; Systems (31%) up 19% organic; Software & Services (18%) up 7% organic.

• Foreign exchange and scope changes expected to reduce FY 2024 revenues by €450–550 million and adjusted EBITA margin by 40bps.

• Effective tax rate for 2024 expected at 22–24%; restructuring costs targeted to decrease toward €100 million per year.

Outlook and guidance

• Full-year 2024 guidance reiterated: organic adjusted EBITA growth of 9–13%, revenue growth of 6–8%, and margin expansion of 60–80bps to 18.1–18.3%.

• Strong demand expected in Q4, led by the U.S., India, and Middle East, with focus on capacity investments and continued growth in Systems, Software, and Services.

• Demand recovery in residential and distributed IT expected to continue, with discrete automation recovery mainly impacting 2025.