Schneider Electric (OTCPK:SBGSF) capped off 2024 with a record-breaking €38 billion in sales, reflecting 8.4% organic growth, fueled by strong performances in Energy Management and Industrial Automation. The company’s strategic focus on data centers, infrastructure, buildings, and industry continues to drive significant revenue expansion, positioning Schneider Electric at the forefront of the AI-powered transformation in data centers.
Financial Highlights: Robust Growth Across Segments
CEO Olivier Blum reported a 14% increase in adjusted EBITDA to €7 billion, exceeding guidance and demonstrating the company’s operational efficiency. CFO Hilary Maxson detailed gross margins of 42.6%, an 80-basis-point organic improvement, and net income of €4.3 billion. The company also maintained strong cash flow generation, exceeding €4 billion in free cash flow for the second consecutive year.
- Q4 2024 revenue grew 12% organically, reaching €10.7 billion.
- North America led the way with 25% revenue growth, fueled by high data center demand.
- Energy Management surged, with data centers contributing 24% of total orders.
- Backlog increased 12% YoY to €21.4 billion, signaling strong demand.
Strategic Expansion: Data Centers and AI Drive Growth
With the rapid expansion of AI-powered computing and hyperscale data centers, Schneider Electric is positioning itself as a key infrastructure provider. The company announced its acquisition of Motivair, a leading liquid cooling specialist, further strengthening its role in the data center cooling market. Management expects double-digit growth in data center demand over the coming years, reinforcing the company’s long-term strategy.
Blum noted that Schneider Electric’s balanced market exposure—spanning infrastructure, buildings, industry, and data centers—provides resilience against macroeconomic shifts.
2025 Outlook: Sustained Growth and Margin Expansion
Management reaffirmed its 7-10% organic revenue growth target for 2025, alongside an adjusted EBITDA margin improvement of 50-80 basis points. The company expects discrete automation to recover in the second half of 2025, contributing to further revenue gains.
Maxson emphasized continued capacity investments in North America, India, and the Middle East, aimed at capturing growth opportunities in high-demand markets. Meanwhile, the AVEVA Group saw 15% growth in annual recurring revenue, underscoring Schneider’s transition to subscription-based models for long-term profitability.
Analyst Sentiment: Positive but Focused on Margins
During the Q&A session, analysts sought clarity on growth drivers and margin sustainability:
- AI-driven data center demand remains a top focus, with Schneider’s data center segment now accounting for 24% of group revenue.
- Customer concentration risks were addressed, with hyperscalers contributing less than half of data center revenues.
- Pricing normalization concerns were raised, particularly regarding system sales margins.
- Tariff and geopolitical risks were flagged, with Schneider Electric mitigating exposure through regional supply chain strengthening.
Quarterly Trends: Strong Finish to 2024
- Data center growth focus intensified, with the Motivair acquisition aligning with AI-driven infrastructure demand.
- Revenue guidance remains steady, but discrete automation recovery expectations have strengthened.
- Analysts shifted concerns from supply chain disruptions in Q3 to growth sustainability in Q4.
- Recurring revenue growth from services and software remains a critical driver, per management’s outlook.
Navigating Risks: Tariffs and Market Volatility
Schneider Electric remains vigilant regarding geopolitical uncertainties, tariff impacts, and margin normalization. Management noted that the Chinese market remains stable but is not expected to recover significantly in 2025.
Pricing strategies and supply chain agility will be key to mitigating tariff fluctuations in North America, while targeted capacity expansions ensure continued revenue momentum.
Strategic Positioning for 2025 and Beyond
Schneider Electric enters 2025 with a record backlog, strong market demand, and strategic acquisitions fueling growth. The company’s leadership in AI-driven data center infrastructure, energy management, and industrial automation sets a strong foundation for sustained performance. With 7-10% organic growth projected and margin expansion initiatives underway, Schneider Electric is poised to capitalize on the next wave of smart infrastructure evolution.
