Schneider Electric Sa

Welcome to Schneider Electric's 2023 half-year results. Thank you for standing by. At this time, participants are in a listen-only mode until the dedicated question-and-answer session of today's conference. At any time, you may press star, then the number 1 on your phone to pull for a question. If you need to withdraw your question, press star 2. I would like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time. I will now hand you over to Amit Bhalla.

Well, thank you, operator. Good morning, everyone from Paris for our half year results for 2023. I'm delighted to be here together with our CEO, Peter Hervec, and our CFO, Hilary Maxson. The presentation will be followed by a set of Q&A. The press release and presentation should already be on our website. So with that, I'm going to kick start and hand it over to you, Peter.

Well, thank you very much, Amit, and good morning to all of you. I'm glad to be here to share our H123 results and also give you a sense of how we see the market and our opportunities therein. Let me dive straight into the numbers and I'm very happy to report a very strong Q2 and H1 with record numbers for the group. We've grown 15% organically in the first half with strong double-digit contributions from both our businesses and strong growth across all our four geographies, resulting in record H1 revenue of 18 billion euros. Also, both our businesses contributed to the organic margin improvement of 19 basis points, ending the half year again with a record adjusted EBITDA margin level of 18%. Of course, Hilary will go into many more details of the numbers, but I wanted to share a few of the headlines of the first half with you. We've continued to build backlog. During Q2, so that is another record high for the group, even if it's not shown here onto the slide, but something to remember. That 18% adjusted EBITDA margin translates as 3.2 billion euros, which is equally a record for an H1. We've also grown our bottom line strongly with adjusted net income up 13% on a comparable basis with our net income is up 33% because of the cost taken last year as you remember associated with our exit from Russia. Our operating cash flow continues to be very strong and free cash flow is also up nicely year on year and we expect of course a higher contribution of free cash flow in the second half of the year as usual. As this is the first time I'm connecting with many of you since I have assumed the CEO role just less than three months ago, I wanted to spend a minute to share on my few areas of attention since I've taken charge. Of course, I re-engaged deeply with the business, interacting with several groups of shareholders, traveling all to our key geographies, allowed me to cumulatively meet more than 130 of our large customers, partners, of course suppliers, and key industry buddies. In my attempt to go deep into technology, I've spent significant time with our R&D teams across the world to better understand the products, of course, the existing pipeline of new products, and I'm very attached to the respective return of those. Most importantly, I've, of course, spent time with our great people and taken time to engage and listen. I'm very mindful that I have had only limited interactions with our investors so far, an important stakeholder group. And, you know, in my mind, I'm taking, of course, time to meet with you and I'm close to the markets. I would also like to highlight a few key events that we've engaged in over the last quarter. Firstly, I wanted to share the event centered around energy efficiency that we co-hosted alongside the International Energy Agency in Versailles in June with representatives from over 80 countries, 30 ministers, 50 CEOs, more than 650 participants. It is very clear that energy efficiency is more important than ever. and there is building consensus around regulation to enable implementation. We also hosted our innovation summits as usual in different parts of the world, most notably in Saudi Arabia where we had more than 2,000 customers visit. It's a country that is reinventing itself and embarks on the latest technology trends and innovations. We're also honored to be listed the top 50 most innovative companies by BCG, something that we're very attached to. And as you know, I've spent the last two years at Aviva, so I also engaged with the other agnostic software businesses of Schneider, and I'm pretty excited with the overall potential to build something really special. Further, we continue to engage different industries in their journey towards net zero. Following the alliances we've built in the recent years in retail and pharmaceutical industries, we've just announced a partnership through our Catalyze program for carbon reduction in the semiconductor industry. That created quite a big engagement at the SemiWest just a couple of weeks back. Now turning to our own sustainability performance, we achieved a score of 5.28 in our Schneider Sustainability Impact in Q2, putting us on track towards our interim goal of 6 for the end of the year. Let me highlight some key drivers of our performance so far. Our SSI3, where we target to reduce CO2 emissions from our top 1,000 suppliers, they've made significant progress, reaching 19% through extensive engagement of suppliers, in particular through our iAccelerate Zero Carbon Days in Europe and in North America, which provides suppliers with training, solution overviews, and dedicated support to accelerate their carbon journey. We also made good progress related to green material content in our products and in providing access to green electricity around 42 million people cumulative since 2008 and we're well on track towards our target of 50 million people, a big number. We're focused on all our ambition commitments with the lens of making a significant impact to our customers and our ecosystem. It is important that we work towards those ambitions and challenging targets in order to drive positive behaviors in our own operations and the wider communities in which we do business. So apart from making progress on the SSI ambition, we continue to help our customers, of course, to drive their sustainability journey. I'd like to share a couple of examples. One is the Choice Hotels International, where we support their long-standing commitment to helping its franchises streamline operating costs and drive profitability through leading technology. Another example here is Therios, where they are standardizing to use the Aviva Pi system, which is the golden standard of industrial data platforms, to accelerate their plan to net zero across various sites in Europe. Also, I would like to highlight our partnership with Green Yellow to provide microgrid solutions to small and medium-sized businesses across Europe. Of course, we continue to participate in great customer success stories across all the industries where we are active with our complementary portfolio in the unique and open EcoStruxure architecture. So I'd like to highlight a couple of showcases here. Some client wins, two of them. So let me specifically highlight the following two wins. First is the Compass Data Centers, one of the Inc. Magazine's 5,000 fastest growing companies. They design and construct data centers for some of the world's largest hyperscalers. and cloud providers and campuses across the globe. We have formed a unique partnership with Compass, building together a state-of-the-art integrating facility to support AI-driven increasing demand for prefabricated modular data centers. The second one I want to highlight is Viralia, where our EcoStruxure power and process allowed the customers to decarbonize their process through electrification and automation. The replacement of gas furnaces with electric furnaces poses, of course, a challenge in process control paired with electrical distribution, which we could resolve uniquely in the industry. I'd also like to share many recognitions that we've won in H1 and this is a testimony of the great people of Schneider Electric and we are proud of our contribution to our customers, our stakeholders and society at large. Many recognitions of which I can highlight the green guidehouse leaderboard of microgrid integrations where Schneider earned the number one spot in the leaderboard which represents and recognizes our expertise in delivering at scale purpose and technology. Now equally proud of our recognitions regarding the gender equality metrics. This recognition highlights our ongoing efforts to increase gender equality across the company and nurture an inclusive and Caring Work Environment. I'm also happy to report that our Employee Engagement Index, which we just took in June, is at its all-time high as per the latest survey concluded just a couple days back. So I know you have a lot of questions regarding the economic scenarios and of course the impact on our markets and businesses. I will come back to you to speak about the expected trends, but before I pass the ball to Hilary to first take you through the numbers in more greater detail, I want to just reiterate that I believe We are very well positioned with our portfolio to help our customers across our four end markets to help decarbonize and drive energy and process efficiency. This is a pivotal time for several of our end markets and the investments required to drive electrification and digitization for greater efficiency and sustainability will drive growth for the years to come. As you are aware, we will host the Capital Markets Day on November 9th, and today we confirm that that will take place in London, and I'm looking forward to sharing more with you at this stage then. Having said that, let me hand over to Hilary to guide you through the numbers in more detail. Hilary.