World is going electric and MNCs are upbeat

Schneider Electric SE forecast higher profit for this year after a betterthan-expected annual result and joined European rivals in predicting growth linked to the world going electric.

Adjusted operating profit before amortisation slipped to 3.93 billion euros ($4.77 billion) last year, ahead of analysts' estimates, as demand for gear to power data centres and buildings helped blunt the impact of the coronavirus. The French company predicted earnings will jump as much as 15 per cent this year.

Schneider and rivals Siemens AG and ABB Ltd. have been among the best performers on their benchmark indexes during the pandemic. From rising data usage to connected buildings and electric vehicles, demand is surging for the companies' switches and automated controls. Electricity demand is expected to outpace all other fuels in the next 10 years, according to the International Energy Agency's main outlook.

"There's going to be a massive shift on the side of electricity," Schneider chief executive officer Jean-Pascal Tricoire said in an interview with BFM Business TV on Thursday. "The future will be electric, because all new technologies -- be it electric vehicles, electronics, IT and buildings - will be electric."

Schneider forecast organic sales growth of 5 to 8 per cent in 2021. Its shares rose as much as 2.8 per cent and advanced 29 per cent last year.

Siemens last week raised its earnings outlook, while ABB reported better-than-expected revenue thanks to a rebound in Germany and China and rising orders linked to data centres, EV chargers and renewable energy.

Smaller rival Legrand SA reported results on Thursday that were in line with expectations, with the fourth quarter "not matching the general trend in the sector for big profit beats," RBC analyst Wasi Rizvi said. Legrand predicted organic sales growth of 1 to 6 per cent, trailing Schneider's outlook.

Spending to modernise, expand and digitise grids will reach $460 billion in 2030, the IEA forecasts. The agency expects network expansion to rise 80 per cent from the previous decade. Tricoire said electricity's share of energy consumption will double to 40 per cent in the next 20 years.

Rexel SA, which distributes electrical supplies, including Schneider and Legrand products, said full-year adjusted earnings fell by about a fifth to 526 million euros.