Frost & Sullivan Commends Schneider Electric’s Outstanding Competitive Strategy Leadership

London, 10th July 2006. The 2006 Frost & Sullivan Award for Competitive Strategy Leadership is presented to French power and control giant, Schneider Electric. The company’s exceptional strategic thinking and creative vision have facilitated its rapid organic growth in the highly competitive European building automation and controls market (BACS).

“With sales growth of 13 per cent and a 22 per cent increase in its operating income in 2005 as against single-digit overall market growth, Schneider Electric has demonstrated its ability to grow in mature markets based on its sound strategy and innovative thinking,” says Frost & Sullivan Research Analyst Manoj Kumar S. “The company is currently positioned fourth in the overall European BACS marketplace and has emerged an important participant in many new markets across the world.”

A strategy based on selective acquisitions has enabled Schneider Electric to strengthen its core electrical distribution and industrial automation-related businesses, while broadening its product line and sales presence in many targeted regions including the emerging markets of Asia Pacific and Eastern Europe.

While the company generates nearly half of its sales in Europe, it has also been exploring new geographic opportunities and acquisition plans in contiguous industries as part of its strategy to achieve accelerated competitive growth.

The acquisition of TAC and Andover Controls has allowed Schneider Electric to consolidate its position in the building automation and control systems market. Moreover, the recent addition of Advanced Building Systems (ABS), which constitute United Kingdom’s leading Satchwell brand and other popular brands such as Atmostech, Controlli and Messner, has enabled Schneider Electric to boost its like-for-like sales in the BACS market by 30 per cent in 2005.

“Schneider Electric respects the culture of the acquired companies as well as their brand values,” comments Mr. Kumar. “It has around ten different brand names for its BACS solution, which is uncommon in the industry.”

Globally, the acquisitions of PMI, Elau, ABS EMEA, Juno Lighting and BEI Technologies in 2005 and that of Andover Controls and Kavlico in 2004 have contributed to sales worth $538.7 million, besides helping the company gain expertise in new areas. Driven by its acquisitions in Europe, the market share of Schneider Electric increased by 10 per cent in 2005.

“The structure of competitors in the European BACS market has been revolutionised by the Schneider group’s recent acquisitions,” notes Mr. Kumar. “By changing the competitive landscape, the company has dramatically increased the visibility of French companies in the previously neglected BACS market.”

In order to offer its customers innovative solutions, Schneider Electric invests 5 per cent of its sales revenues in R&D, which is a relatively high spend for an automation company. At the same time, it has also carried out innovative structural re-organisation aimed at facilitating new development strategies.

Frost & Sullivan’s Competitive Strategy Leadership Award is presented to the company whose unique competitive strategies have yielded significant gains in market share. Often, the recognised company has taken advantage of recent market changes to introduce unique methods of capturing and solidifying market presence or has executed an innovative strategy within the existing competitive landscape to gain the competitive edge.

Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.

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