(News Bulletin 247) – The specialist in electrical equipment and energy efficiency technologies revealed growth in the third quarter that exceeded expectations. But Schneider Electric has warned that its annual growth and operating margin will be expected around the lower half of the forecast range.

With the explosion of artificial intelligence (AI) applications and cloud computing services, large tech groups have had to develop their data center capacities at great speed.

This has resulted in increased demand for Schneider Electric products and services to reduce the electricity consumption of these data centers, which are inherently energy-intensive infrastructures.

At the end of July, the world number one in low and medium voltage electrical equipment reported “record” levels of turnover and operating profit over the first six months of the year.

For this summer, Schneider Electric therefore had to deliver robust growth so as not to disappoint a market that had become demanding. In the end, the activity of the CAC 40 resident once again proved up to par.

A surprise in the Industrial Automation segment

In the third quarter, Schneider Electric generated revenues of 9.72 billion euros, up 4.4% on a published basis and 9% on a comparable (organic) basis, well exceeding expectations of 8.5% for organic growth, according to a consensus cited by Oddo BHF.

The company once again benefited from this favorable momentum in demand for its solutions dedicated to data centers. For once, Schneider Electrics’ summer activity was clearly driven by North America, where its like-for-like growth stood at 14.5% over the quarter, with an increase of 16.6% in the “energy management” segment. The company indicated that it had further benefited from the dynamism of data centers in this region.

Quoted by Reuters, Chief Financial Officer Hilary Maxson said the data center sector was growing rapidly, with the business expected to account for more than 24% of the group’s turnover next year.

Oddo BHF notes that the positive surprise of the publication came from the Industrial Automation division, which recorded growth of 6% on a comparable basis. Schneider Electric is delighted with a return to growth in this activity, supported by the recovery of manufacturing markets and the performance of its software subsidiary Aveva.

Forecasts confirmed but…

Schneider Electric also says it has confirmed its objectives for 2025. The company still expects growth of 7% to 10% on a comparable basis and an improvement in its restated operating margin of 0.5 point to 0.8 percentage point. But she warns that these indicators will be expected “towards the lower half” of the indicative range.

On the Paris Stock Exchange, the prudence of Schneider Electric’s management is freshly welcomed by the market. The stock lost almost 4% around 12:30 p.m., which is not neutral on the evolution of the CAC 40 this Thursday, October 30.

Sixth largest capitalization on the Paris Stock Exchange, the electrical equipment specialist is in fact the largest weighting in the calculation of the flagship Parisian index, with 7.78%, ahead of LVMH (6.66%), according to Euronext data as of the end of July.

Given the gap and the downward revision to forecasts, the negative reaction from stocks is understandable, notes Barclays.