Schneider Electric Sa

Hello and good morning, everyone. Thank you for joining us for our 2026 Healthier Results presentation. I'm joined today by Olivier, our CEO, and by... Nathan, our CFO here in Paris. When it comes to the agenda, so you have the slides as usual, we will walk through the presentation first and then we'll make sure that we have ample time for your question. As always, I want to remind everyone about the disclaimer that you will find on the page number two. And with that, Olivier, I hand over to you.

Thank you Antoine. Good morning to all of you and thanks for joining us. So I will go straight into the results of H1. So we've delivered in Q2 a fairly high growth at 17%. What is very important for me is our two businesses are contributing to this high growth in the second quarter. You see energy management at 18%. but also industrial automation at 11% that shows that really we are starting to be back on track and to deliver more and more to our customers by delivering really the strengths of our two businesses. So great Q2, well on track for the rest of the year. When it comes to the market itself, you can see on the left-hand side really as a reminder what is the exposure of Schneider Electric. So fairly good and balanced exposure between Schneider, Thank you very much. In semiconductor, you can see that power grid, everything which is inside infrastructure continues to be very, very solid. So to get it short, you can see that all the segments of Schneider Electric from a demand standpoint are growing with a fairly high demand everywhere. And probably the only one which continues to be subdued is really the residential market. But all in all, that confirms that both with our strategic portfolio, but also with our exposure, Thank you very much. For me, it's very, very important because I came in front of you last year and in particular during our Capital Market Day with our riverized strategy, advancing energy tech to the next level of intelligence. But we also told you that we are launching internally our company program, which is really to align everyone inside Schneider Electric against what are the priorities, what are the key transformations we want to deliver strategically in the long term. Thank you very much. We will be slightly negative to neutral in RH1, so we are well in track with our plan. It translates also in an improvement of our adjusted EBD margin by 120 bps. And what is very, very important, and that continues to be the signature of Schneider Electric, it translates into a very high level of free cash flow at 1.6 billion. And what is equally important for me is always to measure how this is done, what is the contribution of the portfolio of Schneider Electric, and you know we are a company when we come back on that that want to connect the physical and the digital world and that's why measuring the contribution of our digital portfolio through the flywheel is extremely important and we continue to progress at 62% well in line with our 70% plus ambition at the end of the cycle. So we'll come back of course with Nathan later on in details on all those numbers but what I want to give you is a quick update on where we are. Thank you very much. When I say we want to connect the physical and the digital world, for 190 years Schneider Electric has been a leader in hardware in all the sectors. We have expanded our portfolio everywhere in the world. And since more than 10 years we were convinced that the acceleration of electrification and the acceleration of digitalization will help Schneider Electric to deliver more efficiency and sustainability to our customers. And that's why we have built this unique portfolio, which is made of hardware, edge layer, and with a very strong digital layer. Now, what we have learned also in the past five years, once you enter in the digital layer, there is something that is extremely important, which is data. It's not only about putting software on top of hardware, it's about how you can capture data from the physical world, Contextualize, federate those data and deliver more value to our customer. And we've been pursuing that goal. We refresh our strategy with you and we are doing the Capital Market Day. But that's what we do with the Data Cube. It's about how contextualizing, capturing all those data. Thank you very much. Thank you very much. When I say we connect the physical and the digital world, when I say we need to create a very, very, very strong data foundation, Cognite Data Fusion, amplified by Atlas AI, which is their genetic layer, is a very, very rare asset in the market. It's a unique technology, unique capability that they have developed. Thank you very much. Extremely excited to onboard, hopefully very, very soon, Cognite, who have great people everywhere in the world, but in particular with a very strong tech team in Europe, in Norway. Second update I wanted to give you today is we've made the decision also to accelerate energy intelligence in power grid. Thank you very much. Thank you very much. Real time to anticipate those kind of events and that we can plug inside what we have been doing with Schneider Electric in our smart grid portfolio to deliver even more intelligence to our customers. But of course our customers here again will have the choice to build the full solution of Schneider Electric or to continue to buy directly AI-capability which are growing very very fast every year. Third update I wanted to give you on the technology. I told you last year that a key part of our Thank you very much. The third part, which is important, which is not new for you, we told you many times that we are very excited by, of course, the growth of the AI infrastructure at the CapEx stage to build. But what was equally and even more important for us at Schneider Electric was really to be able to play across the lifecycle at the design stage, at the build stage, but also at the operate and maintain stage. And that's where data is very important. And if I connect to my introduction, we will continue to develop the most competitive portfolio ever Thank you very much. for our customers. And I remind you, we've done a lot also in Q1 with ETAP to create unique digital twins. And we continue that journey, again, to capture data across the lifecycle to deliver even more services for our customers. There is a shortage of manpower everywhere in the world. It's super important that we can deliver more and more digital services, condition-based maintenance services for our customers, and this is what we call EcoCare in the case of Data Center. But you can see really that, again, managing the data across the lifecycle will be a unique differentiation when you want to connect the physical and the digital world. Staying on data center, we continue to be very active in organic R&D. You asked us in the past two years a lot of questions about the evolution of the architecture. Indeed, we see that with the increase of the demand of the GPU, which will be more and more intense, that will require more and more density, power density per racks, it's very, very obvious that we will have to be able to provide different alternatives in terms of architecture. Thank you very much. We've communicated a lot about what we have done with our power rack, what everyone calls in the market the sidecar. But what is very, very, very important progressively in the next two coming years is to come with a very, very industrialized solution with what we call the power center. with new SST solutions that we have developed right now, that we have prototyped and testing already with a couple of customers and to make sure that we are ready with industrialized solutions when the demand in the market will accelerate. So great progress done in R&D and we'll continue to give you an update in the future on the way we are progressing. The second key pillar of Schneider Electric is really the way we want to deal with our customers. This slide, you've seen it, so I'll be very, very fast. But we want in a world which is more and more fragmented to build a unique model of differentiation, which is a regional model where we connect the way we innovate, we supply, we sell. And in every single region, we want to be differentiated. We want to leverage the ecosystem. We want to leverage our knowledge. We want to leverage our ecosystem of partners. And on top of that, for sure, there are a certain number of directions that will continue to be global, On technology, platforming, on the way, of course we manage our supply chain and we connect the different elements of our supply chain, but the way we sell. Just to give you an example, while a large part of the portfolio is sold through local, regional customers, we have an increasing part which is done with global customers, and here it's important that we keep a global dimension. So that continues to be really the compass for Schneider on how we drive our differentiation in front of our customers. And just to report a couple of progress here again in Q2, We have announced in the month of June that unique partnership with SoftBank wanted to make a massive investment in France in the field of AI infrastructure. And I do believe that the unique knowledge and presence of Schneider Electric in France, again, our knowledge of the local ecosystem, which is both our customer, which is both government organization from the top of the country to the lowest level in the region, The connection of Schneider Electric with utility like EDF which has power available. So we are a kind of connector of all this ecosystem and becoming in the future a partner of SoftBank, a technology partner. But where we will also commit on our side to build a new prefab factory which will be close to the data center. as soon as the deployment will start in the coming year. So that's a very, very interesting partnership and I think it was only possible thanks to the very strong presence of Schneider Electric in the local ecosystem. Another update I wanted to give you, we continue to make the most of the acquisition that we have done in the past, again with this willingness to give even more to our customers in every region. Just a first example, as I told you already, Motiver has been growing very, very fast, in particular in North America since we've made the acquisition. It was at the beginning of the acquisition, 95% of the sales of Motiver were done in North America, but our obsession since day one when we closed the acquisition was to get ready to expand, and now it's done. We are ready to manufacture our liquid cooling equipment, our CDU, both in Italy in Conselve, where we had historically our chillers manufacturing, but also in India, in Bangalore, that will help us to serve the rest of the market. So it's a very, very interesting shift that we have prepared in the past two years to get ready now to bring those customers to the rest of the world on top of North America. And as an example, which is interesting, you know that we've doubled down last year in Loris & Nuxon, our acquisition in India, which gives us, of course, a unique presence in India, which is now the third largest country of Schneider Electric from a sales standpoint. But equally important for me is how we leverage India to create this fourth regional hub. We call it the International Hub, but from India. Thank you very much. So that's the update that I wanted to give you when it comes to the customer differentiation. And the last one, which is very important to me, I've been extremely vocal last year in all our communication. We want to be seen as a very, very advanced company when it comes to technology. We want to be extremely close to our customers, to our regional model, but also our global customer. But what is equally important for me is that we go to the next level of operational excellence, the next level of cost competitiveness across the board at Schneider. So we built this plan that we announced to you with our executive committee during our Capital Market Day. We're on one side, we want to go to the next level of leadership, cost-effectiveness on our portfolio. So for me, what is very, very important that we continue to deliver very strong productivity, very strong industrial productivity. Nathan will go more in detail, but we're extremely... Please to report 535 million of industrial productivity in H1 2026. But it's equally, not to say even more important, that at the design stage, when you design the next level of offering, you are extremely cost competitive. And we are averaging here a lot of R&D team in China. In India, with a very, very strong knowledge, again, because they are living in a very cost-competitive environment, on how we can be more effective and really to deliver cost-by-design in all our new offer. And when you start to embed Don's concept, you build more competitiveness at the launching. but that help you also across the life cycle of those products to deliver more productivity if you have anticipated. So very, very, very important point. Last but not the least, I said last year that we will continue to collaborate to leverage partner on technology but also on the supplier side because we don't need to do everything by ourselves and we are very pleased to report the partnership with Foxconn that I will explain in a minute. Last but not the least, but Nathan will go extensively on the detail, we want to be more efficient, We want to be simpler as a company to operate. We have a fantastic growth opportunity in front of us. It's important that we build a model which is simple, which is scalable, which is cost effective. That's why we have this obsession to drive an improvement year on year on our SFC, on our SG&E on sales ratio. And you have seen, and that has been a question you asked us last year in Q1, what are you doing in pricing? We've put a very, very strong methodology, process, discipline in place. I told you we were ready January 1st to hit the market and now you can clearly see that it comes and it flows to the P&L and Nathan will elaborate a little bit more but 280 million of pricing on products that have been delivered in H1. Talking about our supplier collaboration, I just wanted to share with you Thank you very much. Thank you very much. Thank you very much. Thank you very much. Loris & Nixon, Dublin Dunn last year, but also the recent acquisition that I just announced about Cognite and AI Dash. But all of that being extremely focused and contributing to the acceleration of our strategy. Last but not the least, we told you end of last year that we want really to progressively increase and to be more systematic in share buyback. And in line with that strategy, we have started to implement in H1 already 250 million that have been reaper shares. To finish my presentation, I'd like to give you a quick update on what makes Schneider Electric also a very, very different company. A very strong focus on our people, on the engagement of our people, but also the fact that we are an extremely reliable company. Thank you very much. More important is to see what are the drivers of that engagement, the trust in the purpose of Schneider Electric, the North Star, the fact that we have been committed, we are reliable, very strong sense of ethics, and the fact that we offer massive development opportunities in the career of our employees. And as a result of that, just to tell you, we have every year, since many, many years, a worldwide employee shareholding plan. I think the trust of our employees is well illustrated in the 62% of employees who are investing at Schneider Electric. who are investing in the company with three countries, China, France and India, even above 80%. So I think that gives a strong illustration of our commitment, of our employee that I want to thank today again for the great job they are doing at Schneider Electric. Multiple recognitions outside on that commitment to people and sustainability and of course always pleased to see when you are rewarded as the most sustainable company in the world in 26 for the third year in a row. As you know, we've launched our new sustainability impact program. This is the beginning of a new cycle. We are at the end of H1. I will not go into the detail, but we are tracking well with our target that we have fixed for year one. And I will just finish by telling you that my priorities, the priorities of the company are unchanged. It's very interesting, that's probably the first time since I've been appointed that I don't change one of my slides. This slide is exactly the slide we have used to enter in 26 with you, but also with our team. Everything that I said around technology, leading in this new energy landscape, being the most innovative company in this new electrical distribution world, Going to the next level of intelligence by bringing this unique data layer that we need to deliver more intelligence for our customers. It's a combination of being more software-defined in everything we do in our product portfolio, but delivering more value through AI, through software to our customers. And of course, continuing to have a very strong leadership in data center and all of that with more and more technology and supply chain partnership to accelerate our strategy. On customer differentiation, I've covered all the points. We will continue to be that unique company which is extremely regional, to be extremely close to the customer, with a certain number of areas where we want to be really global when it comes to some very important strategic fundamentals. and a very strong obsession at my level on operational excellence. But I do believe that at the end of H1, we are proving to you that what we said last year start to work, start to impact of P&L with a very strong focus on price, delivering better margin and continue to be very focused on productivity and efficiency. and we are also investing in AI internally to make sure that we prepare the next level of efficiency for Schneider Tree, but we'll get back to with more details in the future. On that, I'd like to hand over to you, Nathan, to go more in details into our financials.

Perfect. Thanks, Olivier. And good morning, everyone. I'll start with our key financial highlights for the first half. Our H1 revenues are at 21.2 billion euros, a record for first half. In gross margin, as Olivier already mentioned, we see net positive outcome of 10 bps organic with strong productivity and acceleration in gross pricing on products, offset by inflationary costs, tariffs, and mix. After gross margin, we see strong positive evolution in our operating leverage, driving our adjusted EBITDA margin up 120 bps organic, and we retain good control on our SFCs. Our net income and adjusted net income both show strong positive evolution. Finally, as Olivier mentioned, we delivered a record free cash flow for H1 at 1.6 billion euros. Moving to H1 revenues, both businesses are contributing to growth. In energy management, we deliver growth of 15.4% as we see continued strong demand across all of our end markets, led by data center, but with strong contributions from all. In industrial automation, we deliver growth of 7.7% with strong contribution from discrete as the recovery continues, and we're pleased that process turns positive in Q2 in the longer cycle business after the demand had picked up in H2 of 2025. Scope impacts are now immaterial with Motivair considered for only two months in H1 as it is now part of our organic performance. And FX translation adversely impacted our revenues by close to 750 million euros, mainly due to the weakening of the US dollar and the Indian rupee against the euro. And as you can see at the bottom of the slide, if rates remain where they are now, we would expect Forex impacts of minus 450 to minus 500 million on revenues and negligible impact on adjusted EBITDA margin for the full year. In total, we were up 14% organic in sales with strong momentum going into H2. Sticking with the H1 view for just one more slide, we'll show here our digital flywheel with the weightage and percentage of the group sales. We see the continued progression up two points versus H1 last year to 62% as we execute on our strategy. And at Schneider, we really see the value in the flywheel. And the strong growth in connectable products sets us up well to deliver the energy and industrial intelligence layers, which, of course, are more recurring in nature, deepening our relationships with customers throughout the ecosystem and make our revenues more predictable and resilient over time. Now moving to Q2 and the revenues. Revenues were up 16.5% organic to 11.5 billion euros, a record for any quarter with all regions contributing. In particular, we have North America and China East Asia both delivering growth around or above 20%. And I note India is also growing at similar levels. So our three largest geographic markets are all booming. Scope impacts in Q2 were immaterial, while Forex eased in comparison to Q1. Turning to our mix of business models for Q2. Product growth accelerated to 13% organic. And as Olivier mentioned, price contribution increased sequentially versus Q1 represent approximately four points of product growth in Q2. The realization of price increases passed proactively at the start of the year now started to accelerate through the quarter. What that also means is that product volumes therefore also accelerated with contributions from both business units. If I go to systems, our systems business, where we primarily sell directly to end users, it continued with high demand and strong execution, translating into sales of 28% growth, driven by data center, but again, with growth across all four end markets. Finally, on software and services, they grew plus 6% with double digit ARR growth in Aviva and single digit organic growth. Thank you for joining us. North America, as you see at the top left, was up 25% with the U.S. driven by momentum in data centers, where we saw particularly strong growth from cooling, from prefabricated modular solutions, sorry, and three-phase UPS, with also semi-con and energy and chemical segments contributing to that growth. Canada grew double digit, while Mexico remained down due to certain trade uncertainty. In Europe, we grew at 8% organic, led by performance in power and grid, and also in buildings. Data center demand in the region did remain strong, and we see that demand coming, while the sales growth was impacted by execution on some larger projects last year. In Europe, all five of the major European economies were growing at mid-single digits or higher, with Italy and Germany leading the growth. In China and East Asia, we were up a strong 20%. Inside of that, China was a double digit led by data center, Semicon, and renewable power. Whereas in East Asia, we also grew strong double digit, but it was primarily led by data center, which is a reflection of the broadening in geographies boosted by the AI demand. In South Asia and international, we grew 13%, and it's a bit contrasted in performance by region. But as I mentioned earlier, India remains very strong with broad-based growth across the end markets. Australia was also very strong, benefiting from data center trends. While the growth in South America was a bit more subdued, with some good traction in grid-related projects, with a bit softness in the more short-cycle product exposure there. Finally, on Middle East, it remains of course subject to considerable uncertainty, and while we have adapted, the situation remains volatile and has impacted growth. Turning now to the geographic drivers of industrial automation, which grew 11% in Q2, showing the good momentum and return to revenue growth in process. North America grew 8%, with the U.S. up mid-single digits, led by growth in discrete and returning to growth in process, which we would expect to continue based on the backlog we've built and discussed in previous quarters. Canada grew double digits also in this business unit with strong contribution from the process segments, while Mexico in fact returned to growth against a low baseline of comparison. In Europe, we also grew 8% with a viva of strong double digits with contributions from various countries. There was good growth overall in discrete, led by strong growth in Germany and Italy, which are two of our largest markets there. While process also grew, although the market recovery in Europe was not quite as progressed as in North America. Moving in the circle, China and East Asia delivered very strong growth at 20%. Across the region, we saw strong double-digit growth in discrete markets and encouraging signs in process markets in some of the countries within East Asia. China grew strong double-digit led by good traction with OEMs, while East Asia grew double-digit with semi-con segment as a key driver. Finally, on South Asia and international, we grew 9% in the quarter, with India seeing strong growth in discrete and strong performance from Aviva in Australia. Like for EM, the Middle East remains subject to considerable uncertainty. Across both businesses, we see this as a challenge in H22026, but in the longer term, there are clearly strong opportunities to participate in the post-conflict recovery. Turning now to income statement and our first half income statement here. We finished H1 with adjusted EBITDA of $4.1 billion, a record for an H1, with organic growth of 22%, taking us to a margin of 19.3% of sales and growing 120 BIPs organic. This was driven by our strong top-line growth. Our focus, as Olivier mentioned, on operational excellence, driving strong productivity, driving strong product price with acceleration in Q2, and significant operating leverage. Our adjusted EBITDA margin in energy management was up 100 bps organic, broadly reflecting those same dynamics as the group. The adjusted EBITDA in industrial automation also improved year over year by 50 bps organic as we implement the margin recovery plan there to reach 18% by 2028. The last thing I'll notice at the bottom of the slide, R&D costs in the P&L remain stable at close to 6% of sales, representing our sustained commitment to innovation as we deployed around 1.2 billion on R&D in H1. Turning now to our gross margin bridge for the first year of the half, we finished H1, as I already said, with gross margin of 42.5%, up 10 bps. If I focus on a couple of levers, on net price, we see the benefit from those proactive pricing actions taken at the start of the year, which really accelerated strongly in Q2, but were still insufficient to offset the raw material inflation and tariff impacts we faced. which is a good moment to remind you that the impact from RMI and tariffs in H1 last year was close to zero. Related to tariffs, we saw the benefit of around 100 million euros coming from tariff refunds in Q2. For the full year, we are unchanged in our expectation that we will offset the impact of RMI inflations in value through our pricing actions. Moving to the second lever, productivity was particularly strong, as Olivier mentioned, above 500 million impact in H1, showing good sequential improvement driven by several factors, including technical productivity, supplier negotiation, and leveraging our capacity investment of recent years. One note of caution is that we delivered more than 70% of our full year 2025 productivity in H2, so the baseline does become a bit more challenging as we progress along the year. Mix was negative in gross margin, as expected, given the very strong growth in our systems business model. Moving on to support function costs, these grew at 8% organic compared to the top line growth of 14%. thereby, as Olivier also mentioned earlier, demonstrating considerable leverage with our SFC to sales ratio improving by 1.1 points. We continue to maintain tight control over discretionary costs and start to see the benefit of the structural actions we have taken to improve efficiency. And alongside this discipline on one side, we do continue to invest, as I already mentioned, in R&D, but not only. We also invest in our digital transformations and AI initiatives. Turning now to net income, on a reported basis, including Scope and Forex, our adjusted EBITDA was up 17%. Below the line, I'll pick just a few items to cover. In OOIE, we have an impairment of capitalized development costs. As you know, we have a strong emphasis on refocusing the industrial automation business as part of our overall operational excellence pillar. Part of that initiative involves simplification of our IA offer ranges, and we've been making progress on this in H1. If I move to the second line, on restructuring costs, we do see the uptick that we previously communicated, and you see the savings of that from the previous chart. There's no change to our expectation around the total envelope of incremental charges, but we do expect those to peak in 2026, with total restructuring charges of around $450 million this year. On net financial costs, the increase there just basically represents our bond refinancing and financing undertaken in 2025. And all in at the bottom, our net income lands at $2.5 billion, up 30%, while our adjusted net income, which removes those one-time charges we had last year, grows 21% or 29% at constant currency. If I move then to cash flows, our operating cash flow for H1 grew 28% year over year, reaching around 3.8 billion euros, primarily due to the strong P&L performance. Free cash flow was a record for an H1 at 1.6 billion euros, including the usual H1 build-up in working capital, which reflects the rapidly growing nature of our business. On non-trade working capital, we see the impact of a much stronger H1 performance, both on bonus accruals plus the one-time charges we had taken last year. We expect our cash conversion ratio to be around 100% for full year, which was in line with our communicated expectations. Finally, and Olivier mentioned the strength of the balance sheet, our debt ratios remain strong, supported by our continued strong results. And you will see in this slide that our credit ratings with S&P and Moody's have been reconfirmed following the proposed acquisition of Cognite. With that, Olivier, maybe I'll turn it back over to you.