Schneider Electric announced that its factories in China have been closed due to Coronavirus concerns. It will cost $324m.
Supplier of data center infrastructure Schneider Electric announced the closing of the factories in China. The company said that most were now reopened but it will affect its quarterly revenues by around €300m ($324m).
Coronavirus will affect Q1 and Q2 financial results
Chairman and CEO Jean-Pascal Tricoire said that it seems to him that the figures we get [coming out of China] are more encouraging.
He talked about the impacts of closings, saying:
“So it’s too early to say, but it will impact the first quarter and it will impact the second quarter but we think we’re going to repair or catch up on the impact within the year.”
Schneider has now reopened eighty percent of the factories that were shut down in China. It needs to note that around 15 percent of the company’s revenues came from China in 2019.
Because of fears of the spread of the virus, there were many global events that have been canceled. This threat also affects global markets and it is hard to estimate the long-term impact and the level of disruption of global supply chains. It depends on the duration and speed of the virus spreading. Recently, it is expected that manufacturing shortfalls will be covered at least until March.
Results are encouraging out of China
The company published its 2019 financial results last week. Schneider has organic growth over 4.2% with growth across businesses and all regions. For 2019 Q4, Schneider’s revenues were €7,310 million, up over 3.0% organically and up over 4.0%.
Jean-Pascal Tricoire commented on the company’s Q4 financial results:
“We strike a strong Q4, comparing to high base in 2018… We confirm a strong organic growth in Energy management, above 5%, clearly above market, and we grow in Industrial Automation, compensating the softness of discrete markets by a great performance in hybrid and continuous process and Aveva.”