Schneider Electric SE (SBGSF) (H1 2026) Earnings Call Highlights: Record Revenue and Raised ...

Q & A Highlights

Q: The gross margin development was better than expected, and the 120 bps of adjusted EBITA margin is also better than expected. What has changed other than costs, which actually went up? Was this price realization being above plan or were there things like tactical cost savings that we should assume come back in H2? A: (Olivier Blum, CEO) We put a plan last year and communicated it internally. When we entered 2026, we had a high level of confidence we were well-aligned, especially on pricing. It's difficult to predict the speed at which such a large organization scales. We saw across H1, month after month, it got better and better, finishing Q2 very well. The work on operational excellence is amplified by more volume and growth. We finished H1 a bit ahead of the initial plan. The volume is also accelerating, demonstrating the great job of our salespeople. Managing the P&L is simple: great volume and great operational excellence lead to better results. This gives us the confidence to raise the guidance for H2.

Q: On data centers, one of your closest peers highlighted challenges in scaling more integrated solutions. How comfortable do you feel about execution risk as AI deployments become larger, more complex, and more modular? How do you ensure this doesn't become a constraint on growth or margins? A: (Olivier Blum, CEO) We've been in this industry for over 20 years. We speak to our 200 customers, including Hyperscalers and Colos, to get their gigawatt forecasts. This gives us visibility for the next 2-3 years, allowing us to increase capacity in less than two years, which we've been doing. We increase safety stock on components and expand capacity, like with Foxconn, to capture the opportunity at the right margin. We select customers for long-term partnerships with the right economics. On technology, we need to be ready when the first customer wants a quotation and places an order. We are doing extremely well and getting ready for the next phase. It's not easy with exponential growth, but our discipline in long-term planning and execution is working, as seen in our H1 results.

Q: Could you clarify the net tariff impact and how net price evolved in Q2 versus Q1? Did it come to breakeven or positive, and do you expect it to be positive in Q3? A: (Nathan Fast, CFO) On the mechanical read, you can add the $100 million refund to the -$104 million figure. We are monitoring and adapting to the net tariff world, which still has uncertainty. On the price ramp-up, we told you in Q4 and Q1 that price was approximately 2% of transactional growth. At 4 points in Q2, it's a 2.5 times realization versus Q1. This is the acceleration we've been talking about from the proactive price increases. (Olivier Blum, CEO) If we can repeat that performance in H2, we would be in a great position to compensate for the impact of raw material and tariff inflation.

Q: Industrial Automation revenue was up strongly, but margins were only up 30 bps. Why is that, and when will it get better? What are you doing to improve IA's drop-through? A: (Olivier Blum, CEO) Our IA portfolio includes AVEVA software and our legacy IA business. For the legacy business, we appointed a new leader in H2 last year to create a strategic turnaround plan with two horizons. The long-term priority is to refocus the portfolio, accelerate in some areas, and divest in others, all while accelerating growth and returning to profitability. Our commitment from the CMD is to turn that business around to its former profitability. AVEVA is contributing well, nearing the end of its transition. For the legacy IA business, we are on track with the plan. You can see it through the growth, and the profitability is on track, but it will take a couple of months to two years to reach the desired level. (Nathan Fast, CFO) It's on track to our 18% by 2028 target. We saw the same level of leverage on base costs and continue to work on gross margin.

Q: On data centers, there's been a fade in equity markets around AI with concerns about ROI. How do you feel about the wider AI debate and the path for the next five years? Did your customers' gigawatt plans not give you correct predictions? How are you feeling about the customer pipeline today? A: (Olivier Blum, CEO) We are at a unique point where we can capture data from the industrial world and deliver more intelligence. As a company, we will consume more AI, and our customers will too. On the infrastructure side, we need the right level to support this acceleration. We see a big acceleration in the US and also in the rest of the world, which is catching up. I don't think the demand will stay at this level for the next 5-10 years, but there is very solid growth. We are strict on our SG&A to ensure we can increase our spend on tokens where the ROI will come in 1-3 years. We predict the market by talking to customers and stick to the demand. As long as signals give us an indication for the next 2-3 years, we know how to be agile to serve the demand. This is the most important question, and it will create a strong differentiation for companies like Schneider in their capacity to execute.

Q: How should we think about your capital allocation and M&A strategy? On Cognite specifically, can you provide some color on how you envisage its growth and margin profile? A: (Olivier Blum, CEO) Most of our growth will come organically, as we have a lot in-house to deliver. However, I am obsessed with bringing technology to the next level at speed. For example, with Motivair, we saw the market accelerating and acquired a great company instead of developing organically for 4-5 years. Cognite is the brain for the next cycle of Schneider, creating a unique data foundation for energy and process. It has a rare technology with extremely positive customer feedback. Its mission is dual: to continue developing and selling the agnostic platform to customers who love it, and to leverage its technology inside all our offers to deliver intelligence to our customers. This will be a fast-growth foundation for the next cycle of Schneider.

Q: At the CMD, you set an industrial productivity target of between $2 billion and $2.5 billion cumulatively by 2030, around $500 million annually. In the first six months, you delivered more than $500 million. Was that exceptional or the beginning of a new trend?<

For the complete transcript of the earnings call, please refer to the full earnings call transcript .