Schneider Electric's shares rise on better than expected 2019 outlook

(Reuters) - Shares in Schneider Electric climbed on Thursday after the French electrical equipment maker said earnings growth in 2019 would ease at a slower-than-expected pace this year and committed to buy back more shares.

It said 2019 revenue would grow between 3 and 5 percent organically with an expansion in adjusted earnings before interest, tax and amortisation (EBITA) margin of 20-50 basis points and an adjusted EBITA organic rise of 4 to 7 percent.

Analysts polled by Schneider had expected organic growth to be 2 percent and a flat adjusted EBITA margin year-on-year.

Credit Suisse analysts said the company's forecast and new share buy-back are "clear strong positives."

The company announced a new share buyback programme worth 1.5 billion to 2.0 billion euros over the next 3 years, after completing a 1 billion euro buyback last year.

Shares in the company were trading up around 5 percent at 0806 GMT. The stock has lost nearly 9 percent since the beginning of 2018 but is now up 6.8 percent in 2019.

In the medium term, the company said it targeted adjusted EBITA margin expansion of 200 basis points, assuming no major change to the macro-economic outlook.

The company said growth in China was expected to soften this year but it would remain a growth market, particularly in the construction and infrastructure sectors.

It said Western Europe would grow at a "moderate" pace, while North America would still have momentum, it said.

"While the increased level of inflation and tariffs will weigh on productivity in 2019, the group continues to expect a strong level of gross industrial productivity," it said.

Revenue for 2018 rose 6.6 percent organically, ahead of the company-compiled consensus of 6.3 percent, to 25.72 billion euros ($29.01 billion). Its adjusted EBITA came in at 3.87 billion euros, as expected, up 10.3 percent organically.

"2018 is another year of acceleration of our strategy execution ... which creates a solid base for growth in 2019," Chairman and Chief Executive Jean-Pascal Tricoire said.

Schneider profited mainly from growth in the North America and Asia-Pacific regions, which posted organic revenue growth of 7.7 percent and 10.3 percent respectively. The regions account for more than half the group's revenue.

Schneider's net income was 2.33 billion euros, just below forecasts of 2.36 billion euros, mainly due to merger and integration costs. Last year, the group combined with British Aveva and bought French software firm IGE+XAO.

The group raised its dividend for the year by 7 percent to 2.35 euros per share.

($1 = 0.8867 euros)

(Reporting by Piotr Lipinski in Gdynia; Editing by Shreejay Sinha and Edmund Blair)