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Schneider sees Brexit impact in coming quarters

By Alan Charlish

(Reuters) - French electrical component maker Schneider Electric (SCHN.PA) said it expected its UK business to be hit by the country's exit from the European Union as it announced measures to boost profitability.

The company, which provides products and services for sectors ranging from food & beverages to electrical utilities, said its business in the UK remained "slightly positive" in the third quarter.

It said the weak British pound had an impact on sales at its IT operations, without giving further details such as the effect of Brexit on its UK order book.

"The group anticipates the impact of Brexit on the UK operations in the coming quarters and is adapting to an inflationary environment while reviewing its cost base," Schneider said in a statement.

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It said it saw continuing investment in hotels and potential in education and healthcare in the UK.

The company said it planned boost profit margins through a return to organic top-line growth:

• Targets average organic growth of around 3 percent over the next 3 years, excluding its Infrastructure segment.

• For 2016 the company aims for flat organic growth, excluding the impact of its strategy of not taking on projects with lower margins, which is expected to have a negative impact of about 2 percent in the second half of the year.

• According to a note published by Jefferies in September, the company's organic growth has averaged zero since the first quarter of 2012.

• The company said it targets a 4-7 percent improvement annually in adjusted earnings before interest, taxes and amortization (EBITA), driven by top-line growth

• Schneider raised a cost savings target for 2015-2017 to 1.7-1.8 billion euros.

• The company reported third-quarter revenue of 6.06 billion euros, down 1.7 percent on an organic basis.

• Sees a year of difficulty in the Middle East - conference call

Further company coverage: [SCHN.PA]

($1 = 0.9169 euros)

(Gdynia Newsroom:; editing by Tom Pfeiffer)