Schneider Electric SE — Earnings Release 2012

Feb 21, 2013

Financial Information

Record high earnings and cash generation in mixed markets Adjusted EBITA up 10% at €3.5 billion, or 14.7% of sales EPS grew 11%, at €3.73 on adjusted basis(1) Record free cash flow of €2.1 billion and dividend of €1.87 Connect delivered solid results in line with 2014 ambition

Rueil-Malmaison (France), February 21, 2013 – Schneider Electric announced today the fourth quarter sales and full year results for the period ending December 31, 2012.

Key figures (€ million)	2011(2)	2012	% change
Sales	22,345	23,946	+7%
Organic growth		-0.7%
Adjusted EBITA	3,190	3,515	+10%
% of sales	14.3%	14.7%	+0.4 pt
Net income (Group share)	1,793	1,840	+3%
Adjusted net income(1) (Group share)	1,808	2,023	+12%
Adjusted earnings per share(1) (€)	3.36	3.73	+11%
Free cash flow	1,506	2,082	+38%

Jean-Pascal Tricoire, President and CEO, said: "In 2012, we delivered 7% growth in sales, doubledigit increase in earnings per share and record free cash flow in mixed markets. This illustrates once again the strength of our business model, the solid execution of the Connect company program, and the disciplined integration of our acquisitions. This strong performance allows us to propose a 10% increase in dividend to €1.87 per share this year.

Our effort to improve the solutions performance is paying off and we continue to grow our strong new economies platform. Together with what we have achieved in product and software innovation, tailored supply chain and organization efficiency, we have laid a solid base for our long term growth and profit.

For 2013, in an economic environment that remains mixed, we target a low-single digit organic growth in sales and a stable to slightly up adjusted EBITA margin."

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

¹ Adjusted for the non-recurring goodwill impairment charges

² The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statements

Financial Information

I. FOURTH QUARTER SALES INCREASED 2% TO €6.4 BILLION, WHILE ORGANIC SALES DECLINED 1.2%

Fourth quarter 2012 sales reached €6,439 million, up 2% on a current structure and exchange rate basis and down 1.2% on comparable basis.

Q4 2012			Full Year 2012
€ million	Sales	Organic growth	Reported growth	Sales	Organic growth	Reported growth
Power	2,227	-0.3%	+2.9%	8,738	+0.5%	+5.8%
Infrastructure	1,686	-2.2%	-0.5%	5,366	-1.5%	+9.6%
Industry	1,111	+0.2%	+2.9%	4,483	-3.8%	+2.0%
IT	970	-1.0%	+2.9%	3,677	+2.7%	+13.6%
Buildings	445	-4.8%	+3.2%	1,682	-3.1%	+8.4%
Group	6,439	-1.2%	+2.0%	23,946	-0.7%	+7.2%

Organic growth analysis by business segment

Power (35% of Q4 sales) growth was nearly flat at -0.3% on comparable basis, reflecting more favorable product dynamic but declining solutions business. The product business grew on better construction market in North America, natural resource and infrastructure investments, particularly in Russia, South America and South East Asia, and the success of mid-market offers. This offset lower demand in Western Europe, residential construction downturn in the Pacific and market softness in China. The solution business remained impacted mainly by the solar conversion and connection activity which suffered from substantial decline in investment, particularly in Italy, Germany and North America.

Infrastructure (26% of group Q4 sales) sales declined 2.2% like-for-like, with similar trends in both products and solutions. The product business was helped by secondary distribution products growth and the recovery of transformer activity partially offsetting the drop in primary distribution components, impacted by challenging market conditions in some key new economies. The solution business benefited from broad based growth in installed base services and sustained investment in oil and gas, mining and utility markets, particularly in Russia, North America, South-East Asia and some Nordic countries. However, it was dragged down by the weak performance of substations and equipments, weighed down primarily by reduced utility spending in Western Europe and India and fewer opportunities in renewable projects.

Industry (17% of Q4 sales) continued to improve sequentially, posting flat organic growth of 0.2%. The product business decreased on slower pace as some key markets in Western Europe and Asia stabilised. The solution business posted again double digit growth, lifted by the performance of services in all regions and the success of PlantStruxure enabled end user solutions in cement, mining, oil & gas and food & beverage sectors in South America, Africa and North America.

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 3)

IT (15% of Q4 sales) was down 1.0% like-for-like. Products grew, reflecting the healthy demand for secured power products in Asia, South America and Africa, offsetting market softness in the US and Western Europe and high comparison in Russia. The solution business growth turned slightly negative mainly due to cautious investment climate in key mature markets, particularly North America. However, it experienced sustained demand for datacenter projects in Asia-Pacific and South America, robust software sales, solid growth in both installed base and advanced design and build services.

Buildings (7% of Q4 sales) was down 4.8% organically. Product sales decreased despite growth in building management products as the challenging video security market continued to weigh on business volume. In the solution business, advanced services in North America declined as caution in government spending persisted and the UK and Australia faced high comparison. This was not compensated by the growth in security systems for airports and educational institutions, particularly in the US.

Solutions business was down 2% on a comparable basis in the fourth quarter and represented 43% of sales.

	Q4 2012			Full Year 2012
€ million	Sales	Organic growth	Reported growth	Sales	Organic growth	Reported growth
Western Europe	1,881	-4%	-2%	7,073	-5%	-1%
Asia-Pacific	1,756	-1%	+4%	6,507	-1%	+10%
North America	1,508	-1%	+3%	5,949	+2%	+14%
Rest of the World	1,294	+3%	+5%	4,417	+4%	+9%
Group	6,439	-1.2%	+2.0%	23,946	-0.7%	+7.2%

Organic growth analysis by geography

Western Europe (30% of Q4 sales) was down 4% year-over-year in the fourth quarter. Spain continued to decline double digit, while Italy and France decreased at a lower pace than the previous quarter. Germany turned negative, impacted by reduced investment by utilities and in renewable energy. The UK and the Nordics posted growth.

Asia Pacific (27% of Q4 sales) was down 1% like-for-like with still mixed markets. China declined but was sequentially stable. South-East Asia grew double digit, boosted by investments in natural resources, infrastructure and construction. India experienced moderate growth, supported by demand for power reliability, but faced a tough utility market. Japan was stable while Pacific was impacted by residential construction downturn.

North America (23% of Q4 sales) turned negative this quarter, down 1% like-for-like. The residential construction market in the United States and investment in manufacturing, mining and oil & gas segments supported the region. However, reduced investment in datacenters and government spending cuts in certain non-residential segments weighed on growth.

Investor Relations : Schneider Electric Carina Ho Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 Press Contact : Schneider Electric Véronique Roquet-Montégon Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95 Press Contact : DGM Michel Calzaroni Olivier Labesse

www.schneider-electric.com ISIN : FR0000121972

Phone : +33 (0)1 40 70 11 89 Fax : +33 (0)1 40 70 90 46

Financial Information (p. 4)

Rest of the World (20% of Q4 sales) grew 3% like-for-like. Russia and South America posted strong growth resulting from continued investment in natural resources and infrastructure. Central Eastern Europe declined due to impact of the economic situation in Western Europe. Middle East dropped slightly due to mixed trends in the region whereas Africa was stable.

Sales in new economies were up 2% on a comparable basis and represented 43% of total reported sales in the fourth quarter.

Consolidation and foreign exchange impacts

The impact of acquisition consolidation on fourth-quarter sales was limited to €31 million only, reflecting the Group's focus on acquisition integration since mid 2011.

Currency fluctuations generated a positive contribution of €174 million in the fourth quarter, due to the appreciation of most major currencies against the Euro, especially the U.S. dollar and Chinese yuan, while the depreciation of the Brazilian real had a slightly negative impact.

€ million	2011(3)	2012	% change
Adjusted EBITA	3,190	3,515	+10%
% of sales	14.3%	14.7%
Restructuring costs	(145)	(164)
Other operating income & expenses	(8)	(10)
EBITA	3,037	3,341	+10%
Amortization & impairment of purchase accounting intangibles	(226)	(475)
Net income (Group share)	1,793	1,840	+3%
Adjusted net income(4) (Group share)	1,808	2,023	+12%
Adjusted earnings per share(4) (€)	3.36	3.73	+11%
Free cash flow	1,506	2,082

II. FULL YEAR 2012 KEY RESULTS

3 The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statements 4 Adjusted for the non-recurring goodwill impairment charges

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 5)

SOLID START OF THE CONNECT PROGRAM LEADING TO RECORD ADJUSTED EBITA OF €3.5 BILLION, DESPITE NEGATIVE VOLUME

Full year adjusted EBITA increased 10% to €3,515 million, reflecting the solid execution of the Connect company program. The higher profitability, achieved despite negative volume and unfavorable mix, was driven by strong pricing discipline, continuous push for operational efficiency and improving margin of the solution business. As a result, adjusted EBITA margin improved 0.4 point to 14.7% of sales.

The key drivers contributing to the earnings progression were the following:

• Pricing actions undertaken by all businesses continued to yield results, adding €226 million to the full year profit. Raw material price evolution became a tailwind in the second half of 2012, contributing €73 million to earnings, excluding foreign exchange impact. Over a twoyear period, total price increases fully covered the raw material inflation.
• Industrial productivity gains were in line with expectations, reaching €289 million despite negative production volume. As in previous quarters, this was primarily the result of purchasing savings, procurement concentration, lean manufacturing and continued industrial footprint rebalancing.
• Support function costs decreased €56million, excluding scope and currency impact. The support function costs to sales ratio dropped 0.2 point as efficiency gains offset wage inflation and investment for future growth.
• The depreciation of the Euro against most major currencies, in particular the U.S. dollar and the Chinese yuan, added €171 million to the profit.
• Contribution from acquisitions, net of divestments, amounted to €74 million.

The benefits of the above drivers were partially offset by the following impacts on profit:

• Volume decreased 1.7%, reducing profit by €185 million. This reflected the challenging business conditions of some of the Group's key end markets and regions.
• Mix impact remained negative at €241 million due primarily to the relative weakness of geographies with higher profitability, the stronger growth of solutions versus products and the costs related to major new product launches in 2012 (including the innovative Acti9 low voltage breaker range and Premset medium voltage switchgear).
• Production labor inflation reduced profit by €84 million, a level similar to previous year.

In line with the ambition set under the Connect program, the profitability of the solutions business improved. The Group estimates that the adjusted EBITA margin before corporate cost was up by 1 point to about 10% of sales in 2012. Higher selectivity, focused execution on offer simplification, reference designs by end-market segment, solution centers set-up and strong push on services contributed to the improvement.

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 6)

By business, four businesses reported margin progression in 2012. Adjusted EBITA of Power amounted to €1,813 million, or 20.7% of sales, up 0.1 point year-on-year due to sustained pricing and productivity gains, offsetting negative geographical mix and costs related to new product launches. Despite negative growth, Infrastructure reported 13% increase in adjusted EBITA to €575 million, or 10.7% of sales, up 0.3 point year-on-year, reflecting strict cost control and synergies delivered by acquisition integration. Industry demonstrated strong resilience to negative volume and unfavorable mix, generating an adjusted EBITA of €823 million, or 18.4% of sales, up 0.8 point thanks to pricing discipline, productivity and good cost control. IT achieved the highest improvement with adjusted EBITA margin up 2.8 points to 19.0% of sales, or €698 million, helped by positive volume, price actions, productivity gains, and improved solutions profitability. Adjusted EBITA of Buildings was €107 million, down 2.9 points at 6.4% of sales, reflecting the softness of the construction markets in its key countries and difficulties of the video security activity.

Corporate costs amounted to €501 million or 2.1% of sales, a stable ratio compared to previous year.

The intensification of restructuring efforts resulted in total restructuring costs of €164 million, in line with the initiatives outlined under Connect.

Reported EBITA reached €3,341 million, after accounting for the above restructuring costs and €10 million of other operating income and expenses.

ADJUSTED NET INCOME EXCEEDED THE €2 BILLION MARK, RESULTING IN 11% GROWTH OF EARNINGS PER SHARE ON AN ADJUSTED BASIS

The net income adjusted for non-recurring impairment charge reached €2,023 million for the first time, up 12% year-on-year. This resulted in earnings per share of €3.73 on an adjusted basis, up 11% compared to previous year.

The Group share in reported net income reached €1,840 million. This included in particular:

• a non-recurring non-cash charge of €250 million related to the impairment of goodwill in the Buildings business. This charge resulted in a net impact after tax of €183 million, in line with the announcement made in the third quarter sales release.
• amortization and depreciation of intangibles of €224 million, compared with €208 million in 2011.
• financial expenses of €405 million, including the interest component of defined benefit plan costs (for €43 million) and negative currency differences of €21 million.
• income tax of €568 million, corresponding to an effective tax rate of 23.1%. The amount included €67 million of tax credit related to the above mentioned non-recurring charge.

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 7)

RECORD CASH GENERATION DRIVEN BY GOOD WORKING CAPITAL MANAGEMENT AND THE ROLL-OUT OF TAILORED SUPPLY CHAIN

Operating cash flow was up 10% year-on-year and reached €2,802million.

Free cash flow ended up at a record €2,082 million due to strict working capital management and higher inventory efficiency achieved by the implementation of tailored supply chain, one of the key initiatives under the Connect program. Change in trade working capital requirement added €78 million to free cash flow, driven primarily by inventory reduction of 210 million, or 1 point (5) drop in inventories to sales ratio. Non-trade working capital increased by €79 million. The capital expenditures amounted to €719 million in 2012, or 3.0% of sales, which was slightly lower than the amount in 2011.

SOLID BALANCE SHEET, NET DEBT TO ADJUSTED EBITDA RATIO DROPPED TO 1.1x

Schneider Electric's net debt amounted to €4,395 million (€5,266 million in December 2011) after the dividend payment of €919 million and acquisition spending of €242 million. The net debt-toequity ratio was low at 26% as of December 31, 2012. The Group's net debt to adjusted EBITDA ratio was down from 1.4x to 1.1x in 2012 (based on an adjusted EBITDA at the record high of €4,155 million).

III. PROPOSED DIVIDEND OF 1.87 EURO, UP 10%

At the Annual Meeting on April 25, 2013, shareholders will be asked to approve a dividend of €1.87 per share, compared with €1.70 last year. The proposed dividend will be paid fully in cash on May 7, 2013.

The dividend corresponds to a payout of 50% of the 2012 adjusted net income, which neutralizes the negative effect of the non-recurring charge.

IV. 2013 OUTLOOK

Schneider Electric expects the economic environment to remain mixed in 2013 with continued challenges in Western Europe, opportunities for acceleration in the new economies and a slow recovery in North America.

Based on current market conditions, the Group targets a low-single digit organic growth in sales and a stable to slightly up adjusted EBITA margin for the year 2013.

*******************

5 Based on average monthly inventory

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 8)

The financial statements of the period ending December 31, 2012 were established by Management Board on February 18, 2013, reviewed by the Supervisory Board of Schneider Electric and certified by the Group auditors on February 20, 2013.

The annual 2012 consolidated financial statements and the full year result presentation are available at www.schneider-electric.com/finance

First-quarter 2013 sales will be released on April 23, 2013.

About Schneider Electric

As a global specialist in energy management with operations in more than 100 countries, Schneider Electric offers integrated solutions across multiple market segments, including leadership positions in energy and infrastructure, industrial processes, building automation, and data centres/networks, as well as a broad presence in residential applications. Focused on making energy safe, reliable, efficient, productive and green, the company's 140,000 plus employees achieved sales of 24 billion euros in 2012, through an active commitment to help individuals and organizations "Make the most of their energy."

www.schneider-electric.com

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 9)

Appendix – Sales breakdown by business

Fourth-quarter 2012 sales by business were as follows:

€ million	Sales Q4 2011(6)	Sales Q4 2012	Organic growth	Changes in scope of consolidation	Currency effect	Reported growth
Power	2,164	2,227	-0.3%	+0.1%	+3.1%	+2.9%
Infrastructure	1,694	1,686	-2.2%	-0.2%	+1.9%	-0.5%
Industry	1,080	1,111	+0.2%	+0.3%	+2.4%	+2.9%
IT	943	970	-1.0%	+1.0%	+2.9%	+2.9%
Buildings	431	445	-4.8%	+4.3%	+3.7%	+3.2%
Total	6,312	6,439	-1.2%	+0.5%	+2.7%	+2.0%

Full-year 2012 sales by business were as follows:

€ million	Sales Full-year 2011(6)	Sales Full-year 2012	Organic growth	Changes in scope of consolidation	Currency effect	Reported growth
Power	8,262	8,738	+0.5%	+0.5%	+4.8%	+5.8%
Infrastructure	4,897	5,366	-1.5%	+8.5%	+2.6%	+9.6%
Industry	4,397	4,483	-3.8%	+1.6%	+4.2%	+2.0%
IT	3,237	3,677	+2.7%	+5.3%	+5.6%	+13.6%
Buildings	1,552	1,682	-3.1%	+5.6%	+5.9%	+8.4%
Total	22,345	23,946	-0.7%	+3.5%	+4.4%	+7.2%

6 The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statements

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 10)

Appendix – Breakdown by geography

Fourth-quarter 2012 sales by geographical region were as follows:

€ million	Sales Q4 2011(7)	Sales Q4 2012	Organic growth	Reported growth
Western Europe	1,920	1,881	-4%	-2%
Asia-Pacific	1,689	1,756	-1%	+4%
North America	1,465	1,508	-1%	+3%
Rest of the World	1,238	1,294	+3%	+5%
Total	6,312	6,439	-1.2%	+2.0%

Full-year 2012 sales by geographical region were as follows:

€ million	Sales Full-year 2011(7)	Sales Full-year 2012	Organic growth	Reported growth
Western Europe	7,142	7,073	-5%	-1%
Asia-Pacific	5,933	6,507	-1%	+10%
North America	5,208	5,949	+2%	+14%
Rest of the World	4,062	4,417	+4%	+9%
Total	22,345	23,946	-0.7%	+7.2%

7 The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statements

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 11)

Appendix – Consolidation impact on sales and EBITA

In number of months	2012 Q1	Q2	Q3	Q4	2013 Q1	Q2	Q3	Q4
Lee Technologies IT business 2010 sales \$140 million	3m
Summit Energy Buildings business 2011e sales \$65 million	3m
Digilink Power business 2010 sales c. €25 million	3m	3m	-1m
APW President IT business FY 31/10/10 sales €18 million	3m	3m	-1m
Luminous IT business FY 31/3/11 sales c. €170 million	3m	3m	-1m
Steck Group Power business 2011e sales €80 million	3m	3m	1m
Telvent Infrastructure business 2010 sales €753 million	3m	3m	2m
Leader & Harvest Industry business 2011e sales \$150 million	3m	3m	3m
M&C Energy Buildings business FY 30/6/12e sales £35 million			3m	3m	3m	3m

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95

Financial Information (p. 12)

Appendix - Results breakdown by division

€ million	2011 Restated	2012 Reported
Sales	22,345	23,946
Power	8,262	8,738
Infrastructure	4,897	5,366
Industry	4,397	4,483
IT	3,237	3,677
Buildings	1,552	1,682
Corporate	-	-
Adjusted EBITA	3,190	3,515
Power	1,705	1,813
Infrastructure	511	575
Industry	774	823
IT	523	698
Buildings	145	107
Corporate	(468)	(501)
- Other operating income and expenses	(8)	(10)
Power	49	17
Infrastructure	(27)	(6)
Industry	4	(2)
IT	(17)	(3)
Buildings	(8)	(3)
Corporate	(9)	(13)
- Restructuring	(145)	(164)
Power	(75)	(84)
Infrastructure	(19)	(32)
Industry	(24)	(21)
IT	(9)	(4)
Buildings	(11)	(12)
Corporate	(7)	(11)
EBITA	3,037	3,341
Power	1,679	1,746
Infrastructure	465	537
Industry	754	800
IT	497	691
Buildings	126	92
Corporate	(484)	(525)

Investor Relations : Schneider Electric Carina Ho

Phone : +33 (0) 1 41 29 83 29 Fax : +33 (0) 1 41 29 71 42 www.schneider-electric.com ISIN : FR0000121972

Press Contact : Schneider Electric Véronique Roquet-Montégon

Phone : +33 (0)1 41 29 70 76 Fax : +33 (0)1 41 29 71 95