Schneider Electric SE (SBGSY) Q1 2026 Earnings Call Transcript
Bullish Industrial - Machinery 174.10B France
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Schneider Electric posted a record EUR 40.2B revenue in 2025 with 9% organic growth, a EUR 25B backlog, and a clear path to 2026 with 7–10% organic revenue growth and 50–80 bps EBITA margin expansion driven by AI-enabled energy tech and regionalization.
⭐ Key Highlights
Record full-year revenue
Schneider Electric surpassed EUR 40 billion in annual revenue for the first time, delivering 9% organic growth.
Backlog at all-time high
End-2025 backlog exceeded EUR 25 billion, with 18% growth and strong visibility into 2026–2027, particularly for data centers.
Two-division growth acceleration
Energy Management grew above 10% and Industrial Automation returned to growth in 2025, with H2 momentum supporting margin expansion.
Digital flywheel and software transition advancing
Digital revenue reached EUR 25 billion (62% of total) with 15% growth; software/services now ~79% recurring, underpinning visibility and cash flow.
2026 plan and leverage on AI
Guide implies 7–10% organic revenue growth and 50–80 bps adjusted EBITA margin expansion in 2026, supported by AI-enabled energy/industrial intelligence and regionalization.
✔Positive Signals
- Record revenue >EUR 40B and all-time high backlog (>EUR 25B) with strong 18% growth
- Energy Management and Industrial Automation both contributing to growth; H2 momentum improving
- Digital flywheel reached EUR 25B (62% of revenue); software/services ~79% recurring
- Adjusted EBITA up 12% organically; free cash flow of EUR 4.6B with strong cash conversion
- ROCE >15% and progressive dividend policy maintained
✖Negative Signals
- Gross margin declined ~40 bps year-over-year due to tariffs and input costs; still recovering
- Near-term gross margin expected to be flat to negative in H1 2026 with tariff uncertainty
- Industrial Automation margin (~14.2% adjusted EBITDA) still below peers; some mix drag from AVEVA transition
- FX headwinds anticipated to persist in 2026, with negative EUR 0.85–0.95B revenue impact
- Restructuring costs and impairment in H2 2025 added pressure to net income
📊Financial Results
- Revenue: EUR 40.2B in 2025, up 9% organic
- Adjusted EBITA: EUR 7.5B, up 12% organic; adjusted EBITDA margin +50 bps organic
- Gross margin: 42.1% (down 40 bps organic) due to tariffs, inflation, and mix; offset by productivity gains in H2
- Free cash flow: EUR 4.6B, 3rd consecutive year above EUR 4B; cash conversion around 106% (111% including impairments)
- ROCE: >15% in 2025
🔮Future Guidance
- 2026 adjusted EBITA growth target: 10% to 15%
- 2026 revenue organic growth target: 7% to 10%
- 2026 adjusted EBITDA margin to rise 50–80 bps organically; target full-year margin ~19.1%–19.4%
- Pricing ramp expected to continue through 2026; gross margin to improve but first-half 2026 may be flat to negative due to tariffs and raw materials
- FX headwinds expected to persist with negative revenue impact of EUR 0.85–0.95B in 2026; ongoing sensitivity updates provided
💡Interesting Insights
- Schneider is accelerating regionalization into four hubs (North America, Europe, China/East Asia, Southeast Asia & International) to boost agility and speed while maintaining global governance
- Plan emphasizes AI-enabled data fabric and unified digital platforms across buildings, power, and automation to improve customer experience and lifecycle value
- Data center AI factory concept discussed with 800V DC considerations and sidecar architecture to address future hyperscale needs
Detailed Analysis
AI-generated summary of Schneider Electric SE earnings call transcript.
Schneider Electric delivered a record 2025, crossing EUR 40 billion in revenue with 9% organic growth driven by Energy Management (~10%) and Industrial Automation (3%), while achieving a 50 bps margin expansion and free cash flow of EUR 4.6 billion. The company highlighted a robust digital flywheel (EUR 25B turnover, 62% of total revenue) and a successful AVEVA/OSI integration, with recurring software now representing ~79% of their agnostic software. Backlog rose to over EUR 25 billion (+18%), providing solid visibility into 2026–27, especially in data center demand. For 2026, management targets 7–10% organic revenue growth and 50–80 bps additional EBITA margin expansion, aiming for an overall margin around 19.1–19.4% and continued investments in AI, regionalization, and operational efficiency. They also flagged near-term gross margin headwinds from tariffs and input costs, potential negative FX impact, and a planned ramp in pricing to offset raw materials, with H1 2026 expected to be flatter on gross margin before improvements in H2.
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