Schneider beats profit expectations on data center demand
FILE PHOTO: The logo of Schneider Electric is pictured at the Global Industrie exhibition in Villepinte near Paris, France, March 26, 2024. REUTERS/Benoit Tessier/File Photo
Feb 26 : French industrial group Schneider Electric on Thursday reported stronger-than-expected core earnings, driven by robust data centre demand, and provided 2026 expectations that analysts saw as conservative.
The company also announced that its CFO Hilary Maxson would leave the company on April 5 and be replaced by Nathan Fast, who became head of investor relations in January.
The Paris-listed stock was up almost 4 per cent to 275 euros by 1015 GMT, its highest price on record.
Schneider, once known primarily for industrial components like fuses and circuit breakers, now builds the backbone of data centers, supplying everything from cooling units and server racks to critical power distribution equipment. Data centers and networks account for about 30 per cent of its total orders.
While the United States is driving data centres growth, demand in also picking up in Northern European countries and France, "places where they've put together permitting, electrical connection, with the governments pushing", Maxson told journalists.
The group reported triple-digit year-on-year growth within its pure data centre segment. Quarterly revenues grew organically by 10.7 per cent to 11.10 billion euros ($13.12 billion).
Full-year adjusted earnings before interest, taxes and amortisation (EBITA) totaled 7.52 billion euros despite pressure from a weakening dollar.
Analysts polled by the company expected on average fourth-quarter revenue of 10.90 billions and full-year adjusted EBITA of 7.48 billions.
CONSERVATIVE FORECASTS
Schneider said it expects organic revenue growth between 7 per cent and 10 per cent and its adjusted EBITA margin growing between 50bps and 80 bps this year, in line with targets it laid out in December.
"I can understand how they want to just set the base at the level that they can be very confident on and then maybe improve as you go through the year" after the abrupt CFO change and risks such as tariffs and pricing, UBS analysts Andre Kukhnin said.
JP Morgan also described the guidance as "suitably beatable".
The group, which makes over a third of its revenues in North America, said it expected a foreign exchange impact of between 850 and 950 million euros on its 2026 revenues, after currency fluctuations reduced its fourth-quarter revenues by 701 million euros due to a weakening dollar, Indian Rupee and Chinese Yuan.
Schneider sees an impact from import tariffs, including in the U.S., of "a little bit less than double" the incremental 160 million euros reported for 2025, Maxson said.
It is the latest company to provide bullish expectations for AI demand this year, following upbeat comments by chipmaker Nvidia overnight.
($1 = 0.8462 euros)
