The Chinese economy, which has entered a new normal, is already having an impact on the performance of several multinational groups. France's schneider electric, one of the world's top three electrical giants, was forced to cut its earnings forecast, following US maker of construction machinery and mining equipment caterpillar.
Schneider lowered the earnings forecast for two reasons, falling oil and gas prices led to a general downturn in the industrial and energy industry; China's economy has slowed, and sales there have declined.
The Chinese economy, which has entered a new normal, is already having an impact on the performance of several multinational groups. France's schneider electric, one of the world's top three electrical giants, was forced to cut its earnings forecast, following US maker of construction machinery and mining equipment caterpillar.
Schneider announced its first-half results on July 29. Total revenue was about 12.85 billion euros (about 87.366 billion yuan), an increase of 9.8 percent, while net profit fell 12.4 percent to 719 million euros (about 4.888 billion yuan). The pre-tax margin was 12.5%, down from a previous forecast of a margin of 14%-14.5%.
Schneider said in an announcement that it would lower its earnings forecast for the year. Schneider, which had previously expected a single-digit increase in profit margins from last year, now expects only "flat organic growth." In 2014, Schneider's profit margin was 13.9 percent.
Schneider is the world's largest manufacturer of low and medium voltage equipment with a history of 180 years. In 2015, it ranked 367 on the Fortune Global 500 list, up 20 places from last year. Schneider has been involved in a variety of industries, including steel, heavy machinery, ship construction, and power and automation management.
Schneider lowered its earnings forecast due to two factors: lower oil and gas prices, which led to a general downturn in the industrial and energy sectors, and a slowdown in the Chinese economy, where sales have declined.
"The two headwinds, oil and gas and China, have been stronger than we expected." "Said jean-pascal tricoire, Schneider's chief executive.
The Chinese market occupies an important position in Schneider's sales landscape. According to the Financial Times, Schneider's sales in the Asian market accounted for 29%, more than Europe and North America, of which the Chinese market contributed most.
Schneider is not the only multinational to have cut its earnings forecasts in response to China's economic slowdown. Caterpillar, the world's largest maker of construction machinery and mining equipment, also cut its 2015 revenue forecast by $1 billion because of a sharp decline in the Chinese market and a broad downturn in commodities.
While Schneider has hit a wall in China, it has made up for it in other markets. The construction market in the United States and Western Europe is growing steadily, and India's economy is also growing fast, Mr. Zhao said.
