Ladies and gentlemen, thank you for standing by, and welcome to the Schneider Electric Third Quarter 2019 Revenues Conference Call. Hosted by Emmanuel Babu and Ahmed Bala. At this time, all participants are in a listen only mode. I must advise you that this conference is being today, 24th October, 2019. I would now like to turn the conference over to your first speaker today, Amit Bala.
Please go ahead, sir.
Thank you, operator. Good morning, everybody. Very happy to have all of you with us, as we discuss our q33 2019 revenues, which we announced this morning. Of course, to take us through the results, we have Deputy CEO and CFO, Emmanuel Barber, We will have a Q and A session after this. We'll ensure all questions are taken.
I just want to refer you to Slide 2, which is the disclaimer as always. But, without further ado, I hand it over to Emmanuel.
Thank you, Amit. Good morning, everyone. Great to be with you share about our Q3 sales number. And I'm immediately going to go on page 5 of the presentation. And just a quick reminder, for everyone, to say that Schneider is, is a simple and focused company today.
We have 2 businesses, energy management, and Industrial Automation. And these two businesses are driving 2 revolutions, 2 of the main revolution of the global economy, powered by digital and innovation, of course. And we bring to our customer for all the type of assets, efficiency, productivity, reliability, safety and sustainability. And you have on that page, a nice illustration of the kind of benefit that we can bring to our 4 end markets. Moving to Page 6 and here, you have the global picture of this Q3 for us.
This is another good quarter of growth. We are coming with 1,000,000,000 of sales. It's up organically plus 3.1%. And once again, our two businesses have been growing energy management plus 3.9 percent Industrial Automation Plus 0.4 percent. And on the basis of this good quarter, we are reaffirming our 2019 target.
Moving to Page 7, what is, certainly important to notice during this quarter is that the growth is coming from our priorities. So the strategic roadmap that we've set is delivering. Of course, we are still putting a significant and focus on emphasis on connected product. And it has been growing despite the slowdown of some end market at a nice plus 2%. We are, of course, putting a lot of priority on services and high growth of +8 percent.
We have another great performance coming from software of double digit during this 3rd quarter. Globally, we put, of course, a top priority on growing ecostructure and ecostructure is growing significantly above the rest of the group. You have one number here, which is highlighting the success of our digital push, which is the number of assets under management. We have reached EUR 2,600,000 of assets under management, and it's a growth year on year of +45 percent. Last, but certainly not least on system, you know, that the focus is put on margin improvement.
I'm not commenting it, of course, during this Q3 sales call, the P and L, but we are continuing absolutely along this line of putting the priority for system on improving the margin. Next page, of course, success is, is the, transformation of the trust of our customer into, into business for us. And you have, as always, because we think it's essential, a number of nice examples of, business that we are developing with our customer and value that we bring to them. I would just like maybe to highlight a few of them on that page and not to go through all of them. Maybe taking the first one on data center with TAS.
TAS is a listed company in Italy. It's specialized in payment system. And we're advising them on the energy efficiency and global efficiency of their data center. And we've been selling to them, software for data center management and all our technology to make data center efficient and reliable. Another example, avenue 2, which is a great project.
I think being told, I don't know whether it's true, but I'm sure it is. It's the first double decertile in Europe. It's an essential place in the Netherlands to ensure traffic between the northern part and the southern part of Europe. And we've been delivering a full solution for efficiency for reliability of the infrastructure. That does include some AVEVA offering and the tobacco data, but also some PSC, some MZ heavy packages and some UPSs.
So pretty nice illustration of the value that we can bring to our customer when we combine our technology. And maybe a third and last one, moving to industry for the AVI group, this is a NAKA week meal, which is a transformation of a traditional pulp mill plant into a viscose stable fiber, which is an advanced transformation, technology. And here, we are implementing, the AVEVA software 3 plus our DCSs. We are also putting PLCs. We are installing a temperature devices.
And we are providing ecostructure adviser. So another illustration year of putting technology together, both process and discrete And of course, the benefit of combining AVEVA with the rest of our offering. Moving to the page, we've had plenty of moment of engagement with our customer in Q3. We've seen many of you actually, whether at the VIVA World summit in Singapore, which has been a tremendous success or more recently in our innovation summit in Barcelona where we receive more than the 3500 customers. But we are doing that, I would say, across the planet.
We have a nice innovation summit as well in Cairo, in Bogota and in Jakarta. There is more to come in the coming quarters. And of course, You are always welcome to see and visit this event, where you can discover the innovation that we are bringing to our customers. Moving to the next page, which is the Schneider Sustainability Index. We keep doing a good progress.
We are at absolutely in line with our road map and with the target that we have for the end of the year and beyond. There was an important event in September, in New York when we have been stepping up, our commitments on carbon reduction. And we've been actually, advancing by 5 years the objective of becoming carbon neutral that was initially planned for 2030, and we are now planning to deliver that for 2025. We are not planning for 2030 to be net 0 operational emission, and we are not targeting to be net 0 CO2 emission, including our supply chain for 2015. So we keep raising the bar as we all see the urgency of action moving Last but not least in the sequence of, CSR component, as you know, a sense of purpose inclusiveness empowerment of people is absolutely part of our core DNA.
And we've been receiving many rewards once again during this quarter. One of which I think we are particularly proud is that we are really a top rank in the fortunes change the world list, which I think is a tribute to our commitment and action to move the planet to our more sustainability as we see the pressure is growing. I'm now moving to Page 13 and really digging into the results. So our sales have been amounting to 1,646,000,000. It's up plus 4.2% versus the third quarter of 2018.
Several component to that growth. Forex positive nicely plus 2.2%. That is mainly the positive impact coming from the dollar We are now seeing for the full year a globally positive impact of around 1,000,000. So we are moving up the impact on the top line. And we have been giving the 10 to 20 bps negative range in terms of impact on the EBITDA margin, we now believe that it could be in the high end of this range.
Scope effect is negative. Of course, that's coming with the strategic review program that is going on, minus 1.1%. That is mainly the PELCO impact, but also the disposal of the U. S. Panel business that is impacting here.
That leaves us with a net of +3.1 percent organic growth on which I'm going to elaborate now. Moving to the next page. I think that's an important one because that's where we see that we are really driving the growth of our group with the priorities. And here you have the year to date situation of the growth driver that we think is a good illustration of the priority and what is happening. 1st of all, of course, product growing 3%.
It's a good performance as the cycle is progressing, as we've seen a number of negative trends notably in Discrete Automation, which by essence is negative to product that we are still managing to grow product by 3%. It's a combination of both volume and price increase. But that shows the capacity to keep growing product and more and more connected products in this environment. System growing faster than product. That was, of course, expected in this environment.
And as we progress through the cycle, it's a 6% growth We've seen, of course, good momentum that was expected, in the backlog evolution, on the system. As I said here, it's about growing the top line, but, but, of course, margin improvement is also, a big, big priority when it comes to system progression. And last but not least, of course, growing services and software, which represents around 16% of the company today. You know that have this ambition to grow that percentage very fast. And of course, the higher growth that we generate with service and software almost 10% since the beginning of the year is going to contribute nicely to that objective.
And we are really a firing and powering on cylinders here because services are growing very fast, not 10%, but close to 10% and software is nicely in the double digit territory. All right. So now let's move to energy management and industrial automation analysis, starting with energy management. Sales of 1,000,000,000, up plus 5.4 percent ForEx at plus 2.4 scope minus 0.9. That's mainly PECO, as I said, and that leaves an organic growth of plus 3.9%.
When we look, at the driver for that growth, we see clearly continued strong performance from residential and small building we took here of a growth about mid single digit. And we've seen a really good growth in many geographies going on. Commercial And Industrial Building also continue to contribute positively in many markets, and they've been a good contributor to the performance in the third quarter. Data center is also continuing to have a strong performance, and that was reaffirmed during this third quarter. We've been, of course, impacted by the impact of the discrete automation players who have been reducing their investments.
And that is having some impact on some of the energy management techniques that we can sell to them. And last element on the trend, of course, good growth on services. One element which is important now looking 3 year back backward, you see a pretty consistent growth And we are at more than 4% organic growth on average over the last twelve quarters. So good growth. Certainly, nicely within the 3% to 6% target that we have through the economic cycle and showing the potential and the nice outlook for energy management.
When I look at the region now, the good news is first, of course, that all region have been growing. The first one, North America, with still a very, sorry, very nice growth, plus 7% That is certainly due to a continuation of a very good performance in the U. S, where we continue to have a good impact on the building market. Good situation, as I said as well, on data center. And services have been growing nicely as well, notably thanks to ESS during the quarter.
On the more negative part for North America, certainly the industrial market, which is also buying, energy management and where We've seen some softness during the quarter and Mexico, which have been globally a weak market. It's probably more pronounced for industrial automation, but that was certainly the case as well for energy management. 2nd performer, Western Europe +4 percent. I'm not sure that everybody was expecting Western Europe at that level of growth, but that shows that most of our big geographies have been growing during this quarter. That certainly is the case for France, Germany, Spain, Italy.
I mean, they were all up nicely showing good construction market in many of these countries. I mean, residential in France, for instance, is in good shape. And there was certainly one market which has been negative for us, in Western Europe during this quarter for Energy Management. That's the UK. Where we were down low to mid single digit, for energy management.
And of course, there is coming from uncertainty, on Brexit. Asia Pacific +2 percent with another good performance coming from China. We are talking about mid single digit growth in China. Construction continued to be well oriented and notably residential. We see good business in infrastructure clearly.
That has been continuing. And that is big support for the growth, because the rest of the region has been more mixed, and that's maybe one of the disappointment and notably with India, we're asking following the election. We are expecting a rebound. We knew that we are facing extremely high company in India globally. They were growing 20% in Q3 last year, but clearly, India has not been at the level of growth that we are expecting.
Australia has been down as well. We see some pressure on the residential market in Australia. And when it comes to, Southeast Asia and what we could call the Asian 5, We have to say that they've been impacted by the slowdown of the global economy and uncertainty on on the global trade, I would say they are region that are certainly region of investment when the the exchanges are growing when the economy is growing, we've seen certainly some impact coming from uncertainty on this region during the quarter. Rest of the world, it's also plus 2%. Here, as always, I would say, given the diversity of the region, it's contrasted.
We have seen strong and nice growth in South America, in Central And Eastern Europe, when the situation has been much more difficult in Middle East and with a utility market negative oriented for Saudi Arabia and globally a tough environment in the Gulf. CIS is also down, and we keep to see a low growth environment for Russia. Moving to Industrial Automation. 1,000,000,000 of sales. It's a plus 0.5%.
ForEx is contributing positively by +1.9 percent. Scope is negative by -1.8 percent. That's, of course, the disposal of the panel business in the U. S. And that given organic growth of plus 0.4%.
Many, were asking whether we are at the right, spread in terms of exposure to compensate for the decrease in decreased automation, where we have here the illustration that, yes, we have today a business that is, well, spread on the various technologies. And we definitely have seen a continuation of a slowdown on the discrete end market. We can say that globally, this discrete technology, we have down mid single digit. And that has been almost most of the geography, even if there was some pocket of resistance in Germany, Russia or South America, but globally that was going down. That should continue to go down in the coming quarters.
That's what we expect for the time being. But the good news is that we managed to compensate that with good growth on process and hybrid automation, of course, including software And globally, on process and hybrid, we've been growing mid to high single digit. And when you look at the last same exercise, we've been looking at the last 12 quarters, the last 3 years. Again, overall, a good average growth 5% organic CAGR over the last, not CAGR, sorry, average growth over the last, the last 12 months. And we are nicely here again, I would say, in the 3% to 6% range.
If you look now at the performance by geography, which enables us that it tells a lot about the weight of discrete and the potential for process. There is, of course, a very strong performance in the rest of the world plus 11%. That's definitely a place where we have a nice presence for process and hybrid. All growth also has been growing, on the, on the region with one exception, which was Africa, particularly good growth in South America and Middle East. And clearly there, we have plenty of good projects in oil and gas, in mining, in chemical, in water, in infrastructure.
So that's really what is behind this very nice growth for the rest of the world. Asia Pacific is also positive plus 2%. And here, it's a little bit the reverse picture then for energy management. So China has been a bit negative because of the negative transfer OEM because on process as well, there was obviously some positive elements. And we've been compensating this slight decrease by growing elsewhere.
Notably in India, but also in Australia, in South Korea, in Thailand. So several markets with good growth in process and, and hybrid. And Japan was another one with with an exposure to this week to be negative. But I think it's a pretty good illustration of the fact that we managed to turn into positive territory, thanks to this process and hybrid business. North America, minus 2%, which is clearly the continuation of a softness of the, a discrete end market and a particular drag coming from Mexico is a very negative performance coming from know that Mexico is still being impacted by the uncertainty coming from the trade war and the risk that has emerged that maybe at a certain point in time, you could see some, a tariff on goods between Mexico and the U.
S. That is for us definitely having an impact on the decision for investment and the level of investments. That's where we've seen a good level of demand for process industries obviously, that has been partially compensating for the decline in Discrete and in Mexico. And then Western Europe, minus 5. I would say, we've been seeing a negative trend in almost all geography.
A couple of exceptions, Germany and Nordics, which were stable or slightly up, as a very negative trend in the UK, which we're clearly the Brexit uncertainty is biting. Here, we are negative double digit in the quarter for Industrial Automation. Moving to the evolution of the portfolio. First of all, maybe one word to say that we keep progressing on the last and 2, bro, closing. Remember, it's complex because it's a massive deal, and therefore, we need to transfer assets and not the shares of one company.
It takes a lot of time to, go through the administrative, obligation. It will present a number of advantage But let me explain why it's taking some time to close, and we are expecting a closing in the first quarter of 2020. We continue, of course, to work on our roadmap, to find a strategic solution for 1,000,000,000 to 2,000,000,000 Europe business that we consider as no longer a priority or that we see as less call, less performing, and with a lower margin. And the most recent announcement is the one that we have been doing on the SESH. So the medium voltage business in Russia.
It's a business that we have been acquiring in 2011, largely exposed to electro intensive player in Russia. So that's oil and gas, that's mining that utility. And that's a business that has been, it's very hard by the sanction and the slowdown of the Russian economy. So we are partnering with the Russian Direct Investment Fund, which is the Russian Sovereign France, we're going to create a JV to own this company. They are investing and we're investing with them some money in that company.
The idea is simply to jointly work on improving the performance of that company. And we are very happy to have our ADIAF with us. They have a great portfolio of investment and we assure that they will allow us to establish a number of contact and business relationship with their, their, their companies. This is not, of course, the end. So we continue and you should expect us, in the coming months on a regular basis.
To come with new announcements on this 1,000,000,000 to 1,000,000,000 programs. All right. So that leads me to, talk about Q4 and what we can expect from the market. What we expect for North America is a globally a continuation of the significant weakness in Mexico First, we also expect Discrete Automation to continue to be weak. And we are also expecting now to see icons in Q4.
Remember last year, that's when North America started to grow at double digit. So taking everything into account, we're expecting for Q4. Moderate growth for North America. When we look at China, I would say we've been very consistent and we stay very consistent in what we for the market. So indeed, there is a slowdown for the OEM market.
We are expecting construction and market to possibly moderate at a certain point in time in their, pace of growth. But China, as we said and as we continue to say, that's remained a growth market for us. We continue to see many area of good dynamism in construction in infax in part of industry, and we certainly ambition to continue to grow in China in Q4. We expect Western Europe to continue to grow also at the moderate pace. So I think you've seen the contrasted driver for the business in Western Europe.
And we expect when it comes to new economy to continue to see a contrasted picture. We expect South America and India to have a good Q4 and we expect Russia and the Gulf to remain challenging in many end markets. And we are reaffirming our target for 2019. We are targeting an organic growth for the adjusted EBITA between +6 percent and +8 percent. And to deliver this ambition, we have 2 levers First of all, of course, the revenue growth, we target an organic growth within plus 4% to plus 5%.
And the margin improvement, the improvement of the adjusted EBITA margin, and we target to be in the upper half of the 22 plus 50 bps organic range. That ends my presentation, and I'm extremely happy to answer your questions now.
Thanks, Emmanuel. We'll move to the Q And A. I think we have sufficient time to take all the questions, but Again, I would request keep it to one question, per analyst and then we'll come back for repeat questions as as needed. So with that, operator, can we please have the first question? Thank
you. The first question comes from the line from Andreas Willi from JP Morgan.
Yeah, good morning, Emmanuel. Good morning, Amit. My question is a bit more kind of medium term So you reiterated with the release as well, the target to improve margins by 200 bps over the next few years to 2021. Maybe you could talk a little bit about what you're changing in terms of your approach to that investment priorities, cost savings, and so on to to still support and achieve that target in an economy that clearly gives you less market growth in terms of how you're trusting that plan to still achieve that target?
Good morning, Andreas. We absolutely stay committed to the improvement of the 200 basis points improvement over 3 years. I mean, as we say and as we stated in our target, it's our ambition to nicely start this journey in 2019. And we've always said that we were not necessarily expecting the global economy to keep growing at the pace of 2018 when we announced that target. So We see, and I think your question is, of course, a question on what's going to happen in 2020 and beyond.
Clearly today, there are plenty of question mark, plenty of uncertainty. Well, I have the feeling that maybe the Q4 is starting to bring some uncertainty on Brexit. We are not there yet, but apparently, the risk of a new deal seems to be more remote at least today. There is maybe some beginning of, answer, or stopping escalation between the U. S.
And China will whether in November, there are more good news coming. So it's certainly too early to say what 2020 is going to be. We can, and it's, of course, important to answer your question, reaffirm that we are committed to, this 200 basis points that we intend whatever is the environment to grow faster, that, the market, so to keep gaining shares if you want. And as you know, we have several levers well identified to work on this margin improvement. We are working first on the non organic part.
And you should expect us to continue to work on this non organic part. And on the organic part, as you look forward to see, our clearly on the things that are going to contribute to margin improvement. And as we signal, we have leeway, we have margin of maneuver on our cost evolution. We certainly intend to keep investing, but we are also in a plan to generate significant productivity on all our cost base. And of course, we'll be able to use that to, to deliver the 200 basis point objective.
So that's really where we are today. And, and I can only, you know, just reiterate the fact that we are committed to this somewhat basis point, margin improvement objective.
Thank you, Andreas. Next question.
The next question comes from the line from Andre Kugnein from Credit Suisse.
Yes, good morning. Thanks so much for taking my question. I would like to talk about North America in a bit more detail and kind of how that likely to play out in terms of kind of cadence for the 2020. You've got a construction market that is kind of near the peak or over the peak and lead indicators telling us that we're rolling over. At the same time, you've had a substantial drag from Mexico that I think we're going to be annualizing quite soon.
So I wonder if you could just talk about that kind of the dynamics of these 2, how they're likely to play out over the next 6 to 12 months?
Well, sure. I can definitely try. 1st of Mexico, I think it's difficult to see a rebound in for today, but it doesn't mean the rebound could not happen next year. We'll be probably facing in a much easier comp. So I don't know what's going to happen in Mexico.
We know that the volatility there can be more important. On the U. S. Market, whether they are a number of sign of slowdown of some growth, but it doesn't mean that we are turning into negative territory. So when it comes to the construction market, whether resi and non resi, I mean, we're still seeing growth.
It doesn't mean that the growth is, of course, at the same level as a few quarters ago. But we are definitely still seeing growth. We are seeing growth clearly on data center. We are seeing growth on infrastructure investment So I don't see today, a view where everything in the market would to the red. And, and therefore, that's the view that we have on the U.
S. At the same time, noticing that we are facing much higher comps from now on. That's for sure. And that's it's still growing, but it doesn't mean it is growing at the same pace as a few quarters ago. So that's globally the picture that we have for for the U.
S. For the foreseeable future.
The next question comes from the line from Alice Dallas Lee from Societe Generale.
Hi, good morning. So one question, two parts So really within IA Industrial Automation, you're understandably calling out subdued demand for Discrete in coming quarters, but How about on the process side? Do you think there's enough momentum in those markets to compensate and we can continue to sort of see flattish growth overall for I. A. In the coming quarters as we saw in Q3?
And then linked to that just on China, I think you called out only a modest decline there. I think OEM, as you call it, so that sort of discrete export orientated businesses already slowed down in Q3 last year for you or at least started to. Should we be kind of bumping into some reasonable some reasonably favorable comps there now? Are you seeing any signs of a pickup in demand around factory automation in China?
Thanks, Felicia. So on Discrete Process, the net of the 2, I mean, the good news is that a few years ago, when Discrete was going down, we had no way to compensate I know that there was some skepticism on Q3, whether we'd be able to compensate and we more than offset coming slightly in positive territory. I can tell you that the momentum on process is there. Certainly it could have been probably even higher without some of the tension and exaggerated to those economy because of that, but it's there definitely. And, and it's going to contribute positively.
To the growth of industry. Now what's going to be the net of the 2? I wasn't able when I was asked to tell it for the Q3. I'm not able to Q4. Is it going to be a net positive, net negative.
I think there is opportunity that's going to be a net positive, but I don't know. But the good news is that clearly we have a strength. We have a positive momentum coming from Process And Hybrid, and it's going to stay there. On, on China, well, I think you're right. I mean, at certain point in time, we're going to be facing easier comps.
Is it going to be, at the beginning of next year or rather, you know, later next year? I don't know. But, but we're certainly going on that path of the Chinese business going to be facing easier comp at the certain point in time. And, and hopefully that's going to be good news for us, in the coming quarters, but too early to say exactly when, when we're going to say, I would say, things are bottoming out.
The next question comes from the line from Gail De Bray from Deutsche Bank.
Good morning, everybody. Good morning, Emmanuel. Can I ask, in your experience, with all the various cycles you seen now at Schneider, and given the usual time lag between the trends observed in discrete industries and those in process and hybrid, for how long would you expect the growth gap between, discrete and process to be maintained like this? So that's a question number 1. And the second one, that's a quick one.
Could you comment on how you see the level of inventories in the channels in the U. S. For both EM and IA products? Thank you.
Good morning, Gal. First question, frankly, on, and I don't know whether any cycle is similar. I think that the process is going to be beating discrete for certainly several quarters in a row. No doubt, as Discrete has been beating process for several quarters in a row. So Is it going to be 12, 18, 24 months, 20, I don't know.
Could we see some wind shoot on this grid as early as sometime next year, that's possible. I was alluding to the fact that comps are going to become easier and that maybe in some market, it's going to start having an impact. But frankly, I'm not able to tell you when it's going to play. Once again, the good news is that as we have this 2 engine not working necessarily, you know, at the same time, that is a way to significantly decrease the volatility on our industrial automation business. On inventory in the U.
S, And I will probably make a global comment on inventory. I think that what we've been facing already and we may have a bit more of that ahead of us. As always, when you have some markets slowing down, some negative impact coming from inventory reduction. And therefore, a selling for us being actively below the sellout. And that's exactly the other way on that accelerated, and you can have the sale in above the sellout, because of natural behavior of the distributor, whether because it believes the market is going to accelerate or slow addressing their level of inventory.
Well, I have the thing that today, the level of inventory in the U. S. Is absolutely normal and there is nothing specific to report on that one. I know that globally, at the Schneider level, there have been some impact of disturbing for instance in France in Q3, which have played negatively, but I don't have anything to report for the U. S.
Specifically in that respect.
Next question please.
Thank you. The next question comes from Alexander Virgo from Bank of America.
Thanks very much. Good morning. Manuel, good morning, Amit. I wondered, could you just dig a little bit into the differences in dynamics between, in industrial automation, between the sort of service and software growth and the hardware growth? Because I'm guessing in line with your peers, your seeing and obviously you call that double digit growth in software, you're seeing quite a marked difference in trends.
I'm conscious that you do have a different end market exposure than some of your reporting peers. So maybe you could just dig in a little bit to that for us to give us some idea of how to frame the next few core as well. That would be helpful.
So I guess your first question is between the process automation hardware and the software we set for automation, what's the difference in trends? So what One is a mid single digit growth, nice mid single digit growth. The other one is double digit. And quite obviously, on software, there is a mix of good end markets software growing fast because, of course, that's a great way to invest for more efficiency, more productivity and to get a great, a great return. There is also clearly the success of the Aleviva deal.
I mean, we've been building a news force and that really making an impact on the market among our customer. The customer proposition is unique. The end to end software from a design build operate. And I think we are entering into dialogue that did not exist before with many customers and we are having an impact on the market, which is absolutely unprecedented. So that is probably adding up if you want to the good situation of the end market.
Now there was also some a nice contract taken during, during this quarter for, for the software business. And, and we'll see what is, what is the trend. I'm not saying it's going to continue to be always double digit, but I certainly expect a very nice continuation of the growth on software in the coming quarters. Again, because of end market and because Aviva is is clearly a strong success in terms of strategic intent.
Next question.
Thank you. The next question comes from the line from Vazee Rizvi from RBC.
Hi, good morning. Thanks for taking the time. On the question, I just wanted to build on the North America Energy Management question. I mean, I noticed you called out growth driven by dual function circuit breakers. I was interested.
You mentioned that. I mean, was it big enough to move the needle, are you able to quantify how much that contributed to growth And then also, if you could just help me understand, what's going on there? Because I think those regulations have been in place for some time. Are you seeing an acceleration in states adopting it or enforcing it, or what's driving that and how big is it?
Good question. So no, I'm not going to quantify it. Precisely, but it's a significant impact. I mean, it's one of the contributors to the growth. As you can imagine, given the size of North America, the U.
S, it's not one driver making the performance. But it's a nice one. You're right. There was a change of regulation. And I think we're coming with, with an answer to this change in regulation, which is particularly relevant for the customer.
And it's a good performance and we are hopeful that it's going to continue.
Okay. And sorry. And just to follow-up, be able to help on how much you think that kind of roll out of that product is in terms of where it needs to be. There's been a long way to go, or is it going state by state?
So I think it's a progressive rollout. I'm not able to tell you, how long this adjustment is going to last. It has been here for several quarters already. And based on my understanding, it's not yet coming to an end, but I'm not able to give you exactly a date of when the whole market would be covered. I think it's going to still take awhile.
Thank
you.
All right. Let's take one more question.
We have one question, a follow-up question from Andre Kugnein from Credit Suisse.
Great. Thanks very much for taking my follow-up. I just wanted to ask about, the portfolio measures that you have taken already this year, the 400,000,000 plus the Samara Electric shield deconsolidation. Could you give an estimate of the margin impact from those for 2020, just kind of as a calculation?
It's a bit too early because, of course, it will depends on the exactly when we close Samara and so on. But, but it's going to be positive. I think for the time being, The only, only number that we gave was for Telco. We said they're fully a 10 basis point positive. Bear with us when we will close the Electro Shield deal.
Will try to be, to be more precise on the impact, but expect a positive impact on the margin in 2020.
Got it. And if I may, just on the last question, dual function circuit breaker, is there any chance of that being rolled out kind of rest of world or in Europe as well beyond U. S. As U. S.
Tends follow on these kind of high safety regulations?
I think that's a specific regulation, which is built upon North America Electrical Standards. And again, in terms of the rollout as well, I think there is clearly a a publicly sort of available rollout plan for specific states, which is going into the next few quarters as well. But as Emmanuel said, there's probably, there's more adoption that could happen, but which is not yet very clear in terms of its timing. But it's specific to North America.
Right. So there's no signs of Europe looking at this yet, because usually Europe I think follows, right?
Yes, we don't discard it, but
we don't see that in the short term.
Got it. Thank you for taking the follow ups. I really appreciate.
Well, Well, thank you, everybody. I think with that, we will close the call. Thanks for your time. And please get in touch with the IR team as required
Have a good day.
Bye bye. Speak to you soon. Thanks. Bye.
That does conclude the conference for today. Thank you all for participating. You may now disconnect.