Schneider Electric (SU) Q4 2023 earnings summary

Executive summary

• FY23 revenue reached €35.9bn, up 12.7% organically; adjusted EBITA rose 24.5% organically to €6.412bn, with margin up 180bps to 17.9%.

• Net income was €4.003bn, up 15%, and free cash flow reached a record €4.594bn, up 38%.

• Record backlog, especially in Systems, and resilient demand supported FY24 guidance for 8%–12% organic adjusted EBITA growth.

Financial highlights

• FY23 revenue was €35,902m, up 5.1% reported and 12.7% organically; gross margin reached 41.8%, up 120bps reported and 200bps organically.

• Adjusted EBITA was €6,412m, up 6.6% reported and 24.5% organically; adjusted EBITA margin was 17.9%, up 30bps reported and 180bps organically.

• Net income was €4,003m, up 15%; adjusted net income was €4,066m, up 2%, and adjusted EPS was €7.26, up 2%.

• Free cash flow was €4,594m, up 38%, with 115% cash conversion; operating cash flow reached an all-time high of €5.5bn.

• Q4 revenue was €9,480m, up 9.1% organically and 1.7% reported; Systems and Software & Services each grew 17%, while Products grew 2%.

Outlook and guidance

• FY24 target: organic adjusted EBITA growth of 8%–12%, supported by 6%–8% organic revenue growth and 40–60bps organic margin expansion.

• FY24 adjusted EBITA margin is expected at 18.0%–18.2%, including estimated scope and FX impacts; FX could reduce margin by ~30bps.

• FY24 FX impact is estimated at -€400m to -€500m of revenue; scope impact is estimated at -€300m revenue and approximately flat on adjusted EBITA.

• FY24 effective tax rate is expected at 22%–24%; restructuring costs are expected to move toward €100m annually.

• Medium-term ambitions for 2023–2027: organic growth CAGR of 7%–10%, organic adjusted EBITA margin expansion of ~50bps CAGR and average cash conversion around 100%.