Dive Brief:
- Schneider Electric posted consistent growth across its verticals in the third quarter, on the back of “good and sequentially” stable demand in nonresidential technical buildings and strong sales growth within its data center segment.
- North America represented 35% of the company’s revenue, up 16.9% in the third quarter, to $6.56 billion. Its North America Energy Management segment grew nearly 18%, while its systems revenue growth was robust amid strong demand across its data center and infrastructure end markets, Schneider said.
- Given electrification, digitization and sustainability trends, alongside predicted demand for data centers and grid infrastructure, Schneider said it expects a continuation of strong market demand in the fourth quarter and beyond.
Dive Insight:
Revenue from Schneider’s industrial automation business saw organic growth of 12.3% in North America, with double-digit growth in the U.S. and mostly flat movement in Canada, the earnings release stated. The company’s systems business had organic growth of 23% in the third quarter, due to strong organic sales growth in energy management amid continued demand for data center and infrastructure projects, according to its earnings presentation. Its process and hybrid industrial segments within the systems business showed double-digit growth.
Schneider’s overall products business accounted for 54% of third quarter revenue, with organic growth of 5% in the quarter. The company reported mild growth in its energy management segment. Backlog execution supported this business segment’s growth, it said. The company reported that its backlog increased by 11.5% over a six-month period ending in September, signifying ongoing growth and organic sales expansion in the third quarter.
The company noted that its sustainability business, which provides consulting and service across its digital and field services units, delivered double-digit sales growth against a base of comparison in excess of 20%, with strong growth from its EcoStruxure Resource Advisor. Sustainability and energy efficiency are continued focus areas that are particularly important in the retrofit of existing buildings, Schneider said in its earnings release.
While interest rates and back-to-work trends adversely impacted the construction of new office buildings in a number of markets, the company’s diverse footprint across technical building sectors like education, hotels and health care, along with its emphasis on renovation projects, “positions [Schneider] well for areas of strength in this market,” Schneider Electric CFO Hilary Barbara Maxson said on an earnings call.
Maxson also noted that Schneider’s data center and networks business remain strong, with AI-related orders now being booked, and sales and distributed IT returning to growth following signs of stabilization in the first half. The Aveva business, which Schneider acquired in January, delivered 16% growth in annualized recurring revenue as a result of strong growth in the adoption of its cloud-based software as a service.
Schneider said its energy management-agnostic software saw low-single-digit growth in Q3 “against a base of comparison in excess of +20%,” and the remainder of its digital offers delivered strong double-digit growth. Management attributed this growth to the strong contribution from its EcoStruxure software for the data center and grid markets, even as perpetual license revenue dropped due to customers transitioning to a subscription-based model.
The field services business was another bright spot for the company, growing 17% organically in the third quarter, with strong contributions from its energy management and industrial automation segments. Schneider said “good traction across end-markets and many segments” supported the performance of this segment.
