Data Center Energy Efficiency, Sustainability Drive Schneider Electric Momentum

Schneider Electric is generating record revenues and net income amid strong demand for the company's energy management and industrial automation products and services, CEO Peter Herweck said in the company's mid-year financial report.

Among the highlights from Schneider Electric's Q2 2023 earnings, the company noted:

• Energy management revenues were €7.18 billion, a 15.6% organic growth rate.
• Industrial automation revenues were €1.96 billion, an 11.9% organic growth rate.
• Overall revenues were €9.14 billion, a 14.8% organic growth rate.

Schneider Electric also provided performance updates across its four end-markets -- Buildings, Data Center, Infrastructure and Industry. Among the takeaways:

• Buildings: Renovation and upgrades to existing building stock is seeing "relatively stronger dynamics compared to new build. Non-residential activity remained at a high level in specific segments such as Healthcare. The demand is underpinned by the decarbonization commitments of building asset owners. Activity in Residential was relatively weaker, with sales growth varied by geography...," the company said.
• Data Centers and Networks: Sales for the quarter grew double-digit for Data Center and Networks, fueled by customer investments to run artificial intelligence (AI) applications, the company said. The product portfolio -- involving Medium-Voltage (MV) and Low-Voltage (LV) switch gear, secure power, cooling, building management system (BMS) and software -- continues to enjoy strong demand across hyperscale and smaller data centers, Schneider Electric said.
• Infrastructure: Demand in the Electric Utilities segment experienced another strong quarter "driven by a focus on grid stability, sustainability and digitization. The increased electrical requirements from new and existing demand and growth in renewables underpin activity," the company said. Transportation (ports, airports and rail infrastructure) also had a strong quarter, the firm said.
• Industry: Sales into discrete end markets grew strongly though varied by geography, the company said.

Energy Management, Sustainability Consulting and Services: A Closer Look

Looking at the data through a product and services lens, Schneider Electric said:

• Energy management product sales grew double-digit, and industrial automation growth was high single-digit.
• Systems revenues grew 27% organic in Q2, amid continued strong demand for data center and infrastructure projects globally.
• Software and services grew 13% organic in Q2. The AVEVA industrial software business grew annualized recurring revenue (ARR) 15.1%. Energy Management agnostic software grew double-digit. And digital services grew "strong double-digit with growth in EcoStruxure Advisors across multiple domains, including Power, Building and IT."
• Field services grew 11% organic in Q2.
• Sustainability consulting and services offers (split between Digital and Field Services) delivered another quarter of double-digit sales growth against a high base of comparison.

In a prepared statement about the Q2 and overall first-half 2023 results, Schneider Electric CEO Peter Herweck said: “I’m pleased to report on a very strong first half of the year. We have driven strong revenue growth, up +15% organic, and combined this with a focus on profitability, with an adjusted EBITA margin of 18.0%, which represents a record high for the company. We continue to grow our backlog, reflective of strong demand trends primarily linked to Electrification in the New Energy Landscape and Artificial Intelligence driving increased traction for Data Centers. Our record operating cash flow reflects the quality of our business, and we expect this to translate into strong free cash flow in H2 2023. Our balanced geographical footprint and end-market exposure gives us confidence to continue to deliver profitable growth. As such we today upgrade our FY 2023 financial target.”

Schneider Electric: Sustainability and Green IT Business Milestones, Partnerships

Schneider Electric has announced multiple sustainability partnerships and milestones so far in 2023. Key moves include:

• July 2023: Global IT consulting firm HCLTech and Schneider Electric partnered to develop energy- and carbon-efficient solutions for data center customers in the Asia Pacific (APAC) region.
• July 2023: The company announced plans to acquire a climate consulting and net-zero solutions business from global IT services firm Atos Group. The M&A deal is expected to close in the second half of 2023.
• June 2023: The company opened the Schneider Electric Sustainability School -- a free digital platform for the company's partner ecosystem. The free online training programs are designed to help partners "Strategize, Digitize and Decarbonize," the company said.
• March 2023: The company announced its first annual Sustainability Impact Awards for North America. The six honorees included: Amazon Web Services for its manufacturing sector solutions; Hewlett-Packard Enterprise (HPE) for its cloud-to-edge solutions; KB Home for its residential homebuilding practices; Faith Technologies Inc. (FTI) for its construction, engineering, manufacturing and renewable energy expertise; SOATI for its industrial automation know-how; and World Wide Technology (WWT) for its digital transformation and IT modernization skills.

Business Focus, History

Schneider Electric's mission is "to be your digital partner for Sustainability and Efficiency." The company, founded in 1836, has roughly 162,000 employees -- roughly 80,000 of whom are listed on LinkedIn. The business is based in Paris, France.