Schneider Electric first half profits hit by weak demand

30th July 2014, Comments 0 comments

French electrical equipment maker Schneider Electric on Wednesday posted weaker-than-expected first half results dragged down by weak European demand and unfavourable exchange rates.

Schneider is the world's biggest maker of low-and-medium voltage equipment, products for cars and the water treatment industry, and is a key bellwether of European industry.

Net profit in the first six months of 2014 fell 1.0 percent from a year earlier to 821 million euros ($1.1 billion).

Societe Generale analysts noted a "disappointing performance in infrastructure," which accounts for 21 percent of group revenues, where growth stalled in the second quarter due to weak European demand.

Schneider, like many European companies, was also hit by the strength of the euro against other currencies such as the US dollar and Chinese yuan this year.

Adverse currency movements lost the company some 339 million euros and is expected to cost up to 200 million in the second half, it said.

The results dragged shares down 3.1 percent in Paris against a 0.89 percent fall in the broader market.

Chief executive Jean-Pascal Tricoire confirmed the group's full-year targets of "low single-digit" organic revenue growth, saying the company's "priorities for the second half remain unchanged".

"We will continue to focus on execution to drive organic growth, efficiency and smooth integration of acquisitions," he added in a statement.

Group revenue rose 3.2 percent, boosted by the acquisition of British Invensys group, and 8.6 percent at constant exchange rates.

Analysts at Morgan Stanley said "the fact that the main disappointment is related to a specific sector raises questions about the annual target".

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© 2014 AFP

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