SCH2017_DRF_EN_Livre.indb

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Overview of the Group’s strategy, markets and businesses Ambitious long-term financial targets for attractive shareholder returns

3. Ambitious long-term financial targets for attractive shareholder returns

Schneider Electric’s opportunities, strategy and business positioning have led its management to define ambitious long-term targets for the company. Over the long term, the key priorities remain focused on profitable growth, cash conversion and capital efficiency.

Two sets of targets have been defined: business performance targets and capital efficiency targets.

Across the economic cycle (1) performance targets: E Average organic revenue growth: 3 to 6% across the cycle; E Adjusted EBITA: margin between 13% and 17% of revenues; E Cash conversion: around 100% of net profit converted into free cash flow.

Across the business cycle capital efficiency targets: E ROCE (2) : between 11% and 15%; E Dividend: payout around 50% of net income; E Capital structure: retain a strong investment grade credit rating.

(1) Schneider Electric defines a business cycle as a period including a slowdown and an expansion, or a period in between. This concept allows investors to estimate the Group’s long-term growth potential across a business cycle. The length of a business cycle can vary and cannot be forecast. (2) ROCE is defined as: adjusted EBITA after tax/Average capital employed. Capital employed is defined as: Shareholders’ equity + Net financial debt + Adjustment for associates and financial assets.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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