Dive Brief:
- Schneider Electric reported a strong performance in North America during the second quarter of 2024 and the first half of the year, driven by growth in its energy management group and strength in its data center and infrastructure end-markets.
- North America revenues, which accounted for 37% of overall second-quarter revenue, rose 13.3% organically year over year to $3.8 billion, or 3.5 billion euros, in the second quarter and saw an organic 10.4% year-over-year growth to nearly $7.1 billion in the first half of 2024, Schneider Electric said in an earnings release Wednesday. This growth was driven by an organic 15.5% year-over-year increase to nearly $3.4 billion in North America energy management revenue in the second quarter and an organic 13% year-over-year rise to $6.2 billion in the first half of 2024, the company said.
- The energy management group in North America continues to address supply chain challenges due to “unprecedented high demand,” the company noted in its earnings release. “We’ve started to enhance capacity quite rigidly…and spend very responsibly to be able to deliver to this unprecedented growth opportunity,” Schneider Electric CEO Peter Herweck said on an earnings call Wednesday. To that end, the group is bolstering its manufacturing output by ramping up new machinery, hiring new staff and building inventory, Herweck noted.
Dive Insight:
Total revenue for the company’s energy management group, across its North America, Western Europe, Asia Pacific and Rest of the World geographic regions, organically rose 9.8% year over year to $8.5 billion in the second quarter and organically increased 9.4% year over year to nearly $16 billion in the first half of 2024, Schneider Electric said.
The energy management segment’s 15.5% organic second-quarter growth rate in North America was driven by “good product growth in the U.S.,” supported by backlog execution, and strong growth in its systems business, led by its data center and infrastructure end-markets, according to Schneider Electric’s earnings presentation.
The company’s buildings end-market continues to be driven by a strong presence in non-residential buildings and a growing demand for renovations, retrofits and sustainability initiatives related to building energy efficiency, according to Schneider Electric’s earnings release.
As buildings become more electric, the group’s “comprehensive offers” across medium and low-voltage technologies and building management systems position it favorably, with healthcare organizations, hotels and retailers driving this trend, the company said.
On July 30, Schneider Electric signed an agreement to increase its ownership in the Planon Beheer building management software firm from a minority stake of 25% to a controlling stake of 80%. Becoming the majority owner of the business will help position Schneider Electric in building management and energy management as well as workplace and asset management, Herweck said on the call.
This proposed transaction would “further strengthen Schneider’s agnostic software strategy, with Planon’s established and strong footprint in the global buildings market, cloud-based integrated workplace management system offer and subscription-based software business model,” the company said in a separate news release Wednesday. This will place Schneider Electric in good stead to capitalize on the fast-growing smart building software market, per that release.
Product revenues, accounting for 52% of second-quarter revenue, organically rose 1% year over year in the second quarter amid growth in electrical distribution product sales across many end-markets and segments, while consumer-linked segments such as residential buildings and distributed IT remained stable, the company said.
Systems revenue accounted for 30% of second-quarter revenue and grew over 16% organically in the quarter, with strong double-digit organic sales growth in energy management, per the earnings presentation. “Across North America, we continue to see particularly strong growth in systems, with continued demand across end-markets, particularly data center and infrastructure,” Schneider Electric CFO Hilary Maxson said on the call.
Field services, accounting for 11% of second-quarter revenue, organically grew over 14% in the second quarter, with energy management services benefiting from strong trends in data centers and infrastructure as well as renovations of non-residential buildings in mature economies,” the company said.
