Schneider Electric estimates coronavirus costs at 300 million euros

(Reuters) – France’s Schneider Electric (PA:) expects the outbreak of a new coronavirus to cost it around 300 million euros (£251 million) in the first quarter, it said on Thursday.

“The Group is assessing the impact of the coronavirus to the business,” the company said in a statement, adding that it will be felt mostly in China due to factory closures in January and February.

The virus, which originated in the city of Wuhan in western China, has so far killed more than 2,000 people, mostly in the country, and spread to more than two dozen other countries, causing widespread economic and travel disruptions.

The group, which markets products ranging from electrical car chargers and lighting control to transformers and production software, expects the impact to be almost entirely offset throughout 2020, mostly in the second half of the year.

Full-year sales in the Asia-Pacific region, which accounts for 27% of revenue, grew 4.4% organically, with China growing a high-single digit, delivering a strong performance in commercial and industrial buildings.

“China continues to remain a growth market with dynamism in many end markets and segments,” Schneider said, adding the demand in original equipment makers (OEM) could strengthen in the second half of the year.

For 2020, Schneider Electric sees revenue growing between 1% and 3% organically and expects to post an adjusted earnings before interest, taxes and amortization (EBITA) margin of between 16.0% and 16.3%, broadly in line with consensus.

Analysts polled by the company before the publication of the results had seen an organic revenue growth of 2.4% for 2020 and an adjusted EBITA margin of 15.9%.

The group reported a 65.4% rise in its 2019 free cash flow at 3.48 billion euros, beating analysts estimates of 2.65 billion euros. However, the rest of the results came in line with forecasts.

Schneider Electric proposed a dividend of 2.55 euros per share.

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