Solid Q2 From Schneider Electric Despite Temporary Supply Chain Headwinds; Shares Attractive

Strong product category demand and good execution lead to another strong quarter for Schneider Electric as well as an increase in management guidance for the year. Divisionally, the energy management division continues to be the stronger performer on growth and profitability. Group revenue grew by 10% organically with pricing as a stronger contributor than volume. Energy management grew by nearly 11% organically in the first half while the smaller industrial automation division grew by nearly 8%. We believe the above cycle growth rates are driven by a mix of temporary catch-up demand but also long-term structural drivers, these include lower energy consumption and higher automation adoption across sectors, and we reflect these tailwinds in our 5% medium-term revenue forecast growth rate. Management moderately raised its full-year forecasts. We expect to make modest changes to our near-term forecasts but do not expect them to materially impact our EUR 150 fair value estimate. We maintain our narrow moat rating.