1 Products and solutions for web - Schneider Electric slide has been omitted. Schneider Electric – Investor Day – Products and Solutions ... Superior growth and lower cyclicality-16-6

Investor DayFebruary 22, 2012

Products & Solutions –Two complementary business models, a competitive advantage

All forward-looking statements are Schneider Electric

management’s present expectations of future events and are

subject to a number of factors and uncertainties that could

cause actual results to differ materially from those described

in the forward-looking statements.

Disclaimer

All forward-looking statements are Schneider Electric

management’s present expectations of future events and are

subject to a number of factors and uncertainties that could

cause actual results to differ materially from those described

in the forward-looking statements.

Disclaimer

Undisputable Product Leadership

Julio RodriguezEVP, Power Global

Schneider Electric 4– Investor Day – Products and Solutions – February 22, 2012

We have two strong and complementary business models

Differentiation through technologies that can be combined and integrated

Solution

- Customized Systems- Installed base services

- Energy management services

Product

- Best-in-class technology- Strong channel access

- Optimized quality & cost

Scale & pricing power

Low capital intensity& service opportunity

Customer intimacy feeding continuous

innovation and differentiation

Distributors and direct partners

End-usersand direct partners

Provide us the reach to small and medium size customers

Extend access to large end-users for our distributors

and partners


Product business at a glance

25% 75%

Direct partners Distributors

Product sales

Sales by customer channel

Power Infrastr. Industry IT Building

Product share within each BU

BU product contribution to Group product sales

38% 81%80% 44% 39%

48%

13%

25%

10%4%

Power

Infrastructure

Industry

ITBuildings

€ bn

of Group 2011 sales


We have the largest network coverage in our sector

This slide has been omitted


We leverage our access to multiple channels to generate cross-channel synergies

Power IT Power Buildings

Electrical Distributor

IT Distributor

Electrical Distributor

BuildingSystem

Integrator

Eg: UPS from IT to Power Distributor

Eg: CB from Power to Buildings SI

Eg: Thermostats from Bldgs to LifeSpace

Eg: light switch fromPower to IT


an innovative partner approach to boost product pull-through

Led by end user needs

Thru a dedicated program

Leveraging our network

● Simple & testedenergy efficiency solution kits

● Selected, trained and qualified partners to sell value-added offers

● Dedicated supportLibrary of tested solutions, audit & design tools, marketing tools

● First wave deployment in 8 countries

● Energy Efficiency for restaurantsResidential

Buildings

“ from installer to energy advisor ”

Temperature regulatedvariable speed drives for kitchen exhaust

Energy savings 20-50%

● Unchanged logistic flow through our Distribution network

● Solar panel for homes

● Electric car charging systems

Examples


The power of our signature brand

Global brand

Premium quality

Legendary Reliability

Trusted partner

Quality service

“ It is the most reliable brand in our country.”Channel, Mexico

“I think Schneider Electric is high quality, reasonably priced and offers many incentives.” Channel, China

“We have been co-operating with Schneider for a number of years and there is a relationship of mutual trust.” Channel, Italy

“They do have very good technical support. Communication level of their Customer Support is great.”Channel, Russia

“We have had a good experience with Schneider, they are a well known brand and it is easy to get parts.”End User, Sweden

Green


We have created a coherent and unique brand identity

Design is a fundamental part of our Offer Creation Process

Before After C

ircui

t br

eake

rsB

uild

ing

cont

rolle

rLV

eq

uipm

ent


We continue to drive innovation and have a growing pipeline of new product offers



Example: Acti9 offer launch - a key successA major breakthrough in installation and connectivity

● Plug-and-play• 1-click error-proof

connectors

• Automatic configuration at first run

• 40% time saving on control wiring

● Reduces project cost• Shorter design time and

quicker installation

● Easy to integrate• 100% compatible to any

facility management system

● Upgradeable to suit building usage evolution

Key customer benefits


Our brand and network give us the pricing power to cover input cost inflation



Let’s hear the voice of our customers…


We have a robust and powerful product model

Present in more than 1 out of 2 points of sales in the world

Broad network

Brand Power

Innovation

Pricing Power

Reliability and quality as key brand values

Growing product innovation pipeline

Ability to cover input cost inflation over time

Striving for Solution Excellence

Philippe DelormeEVP, Strategy & Innovation


Solutions answer to customer needs and provide additional growth opportunities

● The best product bricks that can be assembled into efficient systems

● Leadership in the key technologiesof energy management and automation

● The integration and service skillsthat end-customers lack more and more

● A focused organisation with segment specific expertise

Efficient buildings

Flexible and green electrical grids

Evermore cost effective plants

Efficient and reliable data centers

Schneider Electric has …There is a pressing market need for …

… that cannot be addressed only with products


Solution business at a glance

~25% ~75%

Services Systems

Solution sales

Sales by type of offers

Power Infrastr. Industry IT Building

Solution share within each BU

BU Solution contribution to Group solution sales

62%

19%20%

56% 61%

20%

37%10%

22%

11%

Power

Infrastructure

Buildings

IT

Industry

.

of Group 2011 sales

€ bn


What is a Schneider Electric solution?S

yste

ms

Installed Base

Services

Energy Management

Services

Systems

Restaurant chain, USA● Energy sourcing and rate optimization

in 1200 locations● > $1 million savings over 2 years

Ser

vice

s

Solaire Direct, France● 20 year contract for preventive and

corrective maintenance of the solar array (4.2MW)

● Commitment to operational availability

HBIS steel plants, China● Energy management system for 10 steel

production plants● 180 m€ energy saving potential per year● Saving equivalent to 857K tons coal/ yr

Equipment

New Airport Berlin, Germany● MV distribution with Gas Insulated Switchgear ● Lower Total Cost of Ownership due to

reduced space requirements and less maintenance

Typ

ical

siz

e of

pro

ject

s0.

1-10

m€


Today, our solutions generate superior growth and reduce cyclicality

30%37%

-16

-6

4

14

2009 2010 2011

35%Solutions

Products

Superior growth and lower cyclicality

-16

-6

4

14

2009 2010 2011

Group

Services

Organic growth % Organic growth %


Solutions currently generate 9% margin and benefit from lower capital intensity

2011

Solutions represent 35% of group sales (H1 2011)

Solutions in 2011(€m and % of sales)

Adjusted EBITA before corporate cost (%)

Sales (m€)

9% margin

8,372

We are investing to ramp up solution capability for growth

2011 Operational Assets Efficiency(Operational Assets* / Sales, internal estimates)

Services are the most efficient in terms of operational capital employed

Products

Solutions

30%more

efficient

* Operational Assets = Property, Plant and Equipment + Inventories + Trade receivables – Trade payables

2012 – 2014 priority: improve solution execution and raise performance


We have set for ourselves 3 main areas of improvement to raise performance

3

Improve equipment

competitiveness

1 2Selectivity & robust project

execution

More services


Improve cost competitiveness of our equipment

Offer simplification

Industrial footprint

1

Skills ● Bidding skills and pricing skills

● Manufacturing efficiency

● Develop Customised To Order industrial model

● Plant specialisation

● Rationalize product ranges

● Standardize components & design

● Quality Value Engineering


We are setting up a robust project execution engine…

A unified model across geographies and businesses

2

Pipeline selectivity

Global processes to select opportunities

Higher gross margin hurdle rates

Focus on Global Accounts

Reference designs

Dedicated labs with segment expertise to

develop reference architectures

Skills

Schneider University to develop skills

Certification to confirm skills in key roles from tendering to execution

Differentiation through design

efficiencyCompetitive strengthProfitability


… supported by best-in-class solution centers2



We are drastically accelerating our installed base services…

Deployment of cross-business installed-base tracking tool● Systematic tracking to anticipate end-of-warranty● 30 countries targeted by 2014

3

Leverage installed base

Anticipate future needs

5,000 Field Service Engineerskey enablers to detect opportunities

Huge existinginstalled base

Revamping

Maintenance

End-of life

Installation assessment

Service opportunities:

Systematic service bid for each new system soldNew Process

New Tool


…and promoting energy management services3

Market size estimates

$4B by 2017- Pike research

~$8B - McKinsey

Demand-side

services

Significant energy efficiency services opportunity

Recent acquisitions provide offers to address this market

Energy Bureau organizationGlobal network to support remote

monitoring services

Accelerate customerconnection points

Deployment Target

Energy monitoring


Fast forward to 2014

GrowthGDP +3 to 5 points

Significant increase in customer connection points

CertifiedSolutions Architect

Robust Solution Centersacross 5 continents

Dedicated labs for reference design

Global Energy Bureau network

Systematic installed base tracking

Adjusted EBITA up at least 2 points

Services outgrow rest of Group by > 5 points

Solution ROA to reach the same level as Product ROA

Help people make the most of their energy

Documents

1 Products and solutions for web - Schneider Electric slide has been omitted. Schneider Electric – Investor Day – Products and Solutions ... Superior growth and lower cyclicality-16-6