Schneider Electric seeks buys in Brazil to expand solutions in process automation and energy efficiency, South America president says
Schneider Electric (SU: FP), the French energy management company, is seeking complementary acquisitions in Brazil to expand its product and service portfolio, said South America Zone President Tania Cosentino.
Speaking on the sidelines of an energy conference organized by the newsweekly magazine Carta Capital earlier this week in Sao Paulo, the executive noted that acquisitions have played a key role in helping Schneider Electric increase its global revenues from EUR 8bn around 15 years ago to EUR 25bn in 2014.
In order to keep fostering its growth, Schneider Electric will continue to carry out acquisitions in key markets, including Brazil, where it has bought a few companies in recent years, she noted.
The company´s M&A strategy is designed to strengthen its supply of products and services through the purchase of targets with complementary expertise, the executive said.
In Brazil, Schneider Electric is interested in targets operating in the software and services sectors that are specialized in providing real-time information to enhance its solutions for process automation, Cosentino said.
The executive explained that Brazil holds great opportunities for Schneider Electric because of its growing population and increasing energy consumption. The country´s old power grid also means good business opportunities for the company, as it will demand growing investments in energy management and automation.
Trends in Brazil´s energy management industry
The rise of the Brazilian energy tariff, which increased by roughly 70% over the past 12 months, combined with the country´s energy crisis caused by severe droughts, has forced local companies to become more concerned about energy management issues, said Carlos Alberto Schoeps, founding partner at the Sao Paulo-based energy consultancy firm Replace Consultoria.
“Most of these companies have the same budget to cover electricity costs so they have been turning to process automation and energy efficiency initiatives to make the magic happen,” Schoeps noted.
Companies within the industrial sector are the ones most concerned about enhancing their energy management because they are naturally more structured to take advantage of such initiatives than players in the services or retail spaces, Schoeps said. While an industrial facility can invest in process automation and cut its electricity costs right away, a supermarket chain, for instance, would need to implement process automation solutions in every unit to achieve such a goal, he noted.
According to Schoeps, IT solutions, such as software able to gather energy consumption patterns and generate analytical information to help design tailored energy efficiency programs, has been driving the interest of most players in the domestic energy management industry.
A couple of Brazilian players that provide remote energy management solutions similar to Schneider Electric´s platform Webenergy include the Sao Paulo-based Gestal, which holds a partnership agreement with Siemens (ETR: SIE), and the Sao Paulo-based ACS, Schoeps said.
M&A track record
According to the Mergermarket database, Schneider Electric has made at least two acquisitions in Brazil in the past four years. In 2012, it bought CP Eletronica, a company engaged in manufacturing power systems for data centers, hospitals, retail chains, offices, banks, and energy companies, for an undisclosed sum. CP Eletronica generated in 2011 revenues of BRL 33.4m (USD 17.9m at the time).
In 2011, Schneider Electric purchased Steck, a manufacturer and distributor of products and systems for electrical installations, which expected to generate sales of BRL 180m that year.