Yemisi Izuora
French electrical equipment producer Schneider Electric has expressed hope that its earnings growth would ease this year, but at a pace slower than the market expects.
The company said on Thursday it sees the 2019 revenue to grow between 3 and 5 per cent organically with an expansion in adjusted earnings before interest, tax and amortisation (EBITA) margin of 20-50 basis points, leading to an adjusted EBITA organic increase of 4 to 7 percent.
The analysts polled by Schneider had expected current year’s organic growth to be 2 per cent with a flat adjusted EBITA margin year-on-year.
The OEM demand in China is expected to soften this year, the group said, adding that the country remains, nevertheless, a growth market in aggregate with “dynamic” end-markets including construction, infrastructure and parts of industry. It also expects Western Europe to grow at a “moderate” pace, while the growth in the rest of the world, which also excludes North America and Asia-Pacific regions, will be contrasted based on country.
“While the increased level of inflation and tariffs will weigh on productivity in 2019, the group continues to expect a strong level of gross industrial productivity,” the company added.
The revenue for 2018 grew 6.6 percent organically, ahead of the company-compiled consensus of 6.3 percent, to 25.72 billion euros ($29.01 billion). Its adjusted EBITA came in at 3.87 billion euros, as expected, while the net income was a slight miss at 2.33 billion euros, mainly due to M&A and integration costs.
The group, however, upped its dividend for the year by 7 percent to 2.35 euros per share.