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Investing.com -- Shares of Schneider Electric (EPA:SCHN) tumbled 7% on Tuesday after the company reported weaker-than-expected first-quarter revenue and revised down its core profit margin forecast for the year.
The French electrical equipment maker posted organic revenue growth of 7.4% in the first quarter, reaching 9.33 billion euros ($10.67 billion). The result fell short of analysts’ expectations of 9.47 billion euros and a projected growth rate of 8.9%.
Despite the weaker start to the year, Schneider remains on track to achieve its full-year 2025 organic revenue growth target of 7% to 10%, supported by an expected rebound in industrial automation in the second half and steady demand from data center clients.
RBC Capital Markets analysts said the company’s post-first-quarter call “reaffirmed the strong underlying picture, including crucially in the datacenter segment and continued recovery in discrete demand.”
"We recently upgraded Schneider to Outperform in part because of its more resilient business mix and we see the underlying performance and 2025 outlook as supporting this," they added.
Schneider Electric CFO Hilary Maxson said that the decline in sales stemmed from weaker conditions in the residential building sector, especially in Western Europe and North America.
In Western Europe, Schneider saw limited growth as the residential sector remained under pressure from economic uncertainty and declining consumer confidence, while demand in non-residential segments proved more stable.
The group’s product division, which contributes around half of total revenue, posted a 1% increase for the quarter. In North America, the residential segment faced headwinds from macroeconomic uncertainty and elevated interest rates.
Schneider also reaffirmed its full-year outlook but lowered its adjusted EBITA margin forecast to between 18.7% and 19%, below the 19.3% consensus estimate from analysts.
Maxson said the margin revision reflects a full-year foreign exchange impact that “could be around 40 basis points.”