Ladies and gentlemen, thank you for standing by. Welcome to the Schneider Electric third quarter 2019 revenues conference call hosted by Emmanuel Babeau and Amit Bhalla. At this time, all participants are in a listen only mode. I must advise you that this conference is being recorded today, 24th of October, 2019. I would now like to turn the conference over to your first speaker today, Amit Bhalla. Please go ahead, sir.
Well, thank you, operator. Good morning, everybody. Very happy to have all of you with us, as we discuss our Q3 2019 revenues, which we announced this morning. Of course, to take us through the results, we have Deputy CEO and CFO, Emmanuel Babeau. We will have a Q&A session after this. We'll ensure all questions are taken. I just want to refer you to slide two, which is the disclaimer as always. Without further ado, I hand it over to Emmanuel.
Thank you, Amit. Good morning, everyone. Great to be with you, to share about our Q3 sales number. I'm immediately going to go on page five of the presentation. Just a quick reminder for everyone, to say that Schneider is a simple and focused company today. We have two businesses, Energy Management and Industrial Automation. These two businesses are driving two revolutions, two of the main revolution of the global economy, powered by digital and innovation, of course. We bring to our customer for all their type of asset, efficiency, productivity, reliability, safety, and sustainability. You have on that page, a nice illustration of the kind of benefit that we can bring to our four end markets. Moving to page six, here you have the global picture of this Q3 for us. This is another good quarter of growth.
We are coming with EUR 6.6 billion of sales. It's up organically +3.1%. Once again, our two businesses have been growing. Energy Management +3.9%, Industrial Automation +0.4%. On the basis of this good quarter, we are reaffirming our 2019 target. Moving to page seven, what is certainly important to notice during this quarter is that the growth is coming from our priorities. The strategic roadmap that we've set is delivering. Of course, we are still putting a significant emphasis on connected product, and it has been growing despite the slowdown of some end markets, at a nice +2%. We are, of course, putting a lot of priority on services, a nice growth of +8%. We have another great performance coming from software, up double digit, during this third quarter.
Globally, we put, of course, a top priority on growing EcoStruxure, and EcoStruxure 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 asset under management. We have reached 2.6 million of asset under management, and it's a growth year-on-year of +45%. Last, but certainly not least, on system, you know that the focus is put on margin improvement. I'm not commenting, of course, during this Q3 sales call, the P&L, but we are continuing absolutely along this line of putting the priority for system on improving the margin. Next page. Of course, this success is the transformation of the trust of our customer into business for us.
You have as always, because we think it's essential, a number of nice example 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 in taking the first one on data center with TAS. TAS is a listed company in Italy. It specialize in payment system, and we're advising them on the energy efficiency and global efficiency of their data center. 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'm being told, I don't know whether it's true, but I'm sure it is. It's the first double-decker tunnel in Europe.
It's an essential place in the Netherlands to ensure the traffic between the northern part and the southern part of Europe. We've been delivering a full solution for efficiency, for reliability of the infrastructure, and that does include some AVEVA offering and a tab of SCADA, but also some PLC, some MV packages, and some UPSs. A pretty nice illustration of the value that we can bring to our customer when we combine our technology. Maybe a third and last one, moving to industry for the Aditya Birla Group. This is Nagda mill which is a transformation of a traditional pulp mill plant into a viscose staple fiber, which is an advanced transformation technology. Here we are implementing the AVEVA software suite plus our DCSs. We are also putting PLCs. We are installing temperature devices, and we are providing EcoStruxure Maintenance Advisor.
Another illustration here 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 next page, we've had plenty of moments of engagement with our customer in Q3. We've seen many of you actually, whether at the AVEVA World Summit in Singapore, which has been a tremendous success, or more recently, in our innovation summit in Barcelona, where we received more than 3,500 customers. 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. 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 good progress. We are absolutely in line with our roadmap, and with the targets 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 commitment on carbon reduction. We've been actually advancing by five 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 now planning for 2030 to be net zero operational emission, and we are now targeting to be net zero CO2 emission, including our supply chain for 2050. We keep raising the bar as we all see the urgency of action moving up.
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. 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 top ranked in the Fortune's Change the World list, which I think is a tribute to our commitment and action to move the planet toward more sustainability, as we see the pressure is growing. I'm now moving to page 13 and really digging into the results. Our sales have been amounting to EUR 6,646,000,000. It's up +4.2% versus the third quarter of 2018. Several component to that growth. Forex, positive nicely, +2.2%. That is mainly the positive impact coming from the U.S. dollar.
We are now seeing for the full year a globally positive impact of around EUR 400 million. We are moving up the impact on the top line. We have been giving the 10-20 bps negative range in term of impact on the EBITA 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, -1.1%. That is mainly the Pelco impact, but also the disposal of the U.S. panel business that is impacting here. That leave us with a net of +3.1% 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.
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. First 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, but we are still managing to grow product by 3%. It's a combination of course, volume and price increase, but that shows the capacity to keep growing product and more and more connected product in this environment. System, growing faster than product, that was of course expected in this environment. 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 System.
As I said, here it's about growing the top line, but of course, margin improvement is also a big, big priority when it comes to system progression. Last but not least, of course, growing services and software, which represent around 16% of the company today. You know that we have this ambition to grow that percentage very fast. 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. We are really firing and powering on two 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. Now let's move to Energy Management and Industrial Automation, starting with Energy Management.
Sales of EUR 5.1 billion, up +5.4%. Forex up +2.4%. Scope -0.9%, that's mainly Pelco, as I said. That leaves an organic growth of +3.9%. We look at the driver for that growth, we see clearly continued strong performance from residential and small building. We talk here of a growth about mid-single digits. We've seen really good growth in many geographies going on. Commercial and industrial building also continue to contribute positively in many markets. They've been a good contributor to the performance in this third quarter. Data center is also continuing to have a strong performance. 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 investment. That is having some impact on some of the energy management techniques that we can sell to them.
Last element on the trend, of course, good growth on services. One element which is important now, looking three year backward, you see a pretty consistent growth. We are at more than 4% organic growth on average over the last 12 quarters. Good growth. Certainly, nicely within the 3%-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 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.
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. Mexico, which has been globally a weak market. It's probably more pronounced for Industrial Automation, but that was certainly the case as well for Energy Management. Second performer, Western Europe, plus 4%. 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. They were all up nicely, showing good construction market in many of these country. Residential in France, for instance, is in good shape.
There was certainly one market which has been negative for us in Western Europe during this quarter for Energy Management. That's the U.K., where we were down low to mid-single-digit, for Energy Management. Of course, that is coming from uncertainty on Brexit. Asia Pacific +2% with another good performance coming from China. We are talking about mid-single-digit growth in China. Construction continues to be well-oriented and notably residential. We see good business in infrastructure, clearly. That has been continuing. That is big support for the growth because the rest of the region has been more mixed. That's maybe one of the disappointment and notably with India, where I think following the election, we were expecting a rebound. We knew that we are facing extremely high comps in India globally. They were growing 20% in Q3 last year.
Clearly India has not been at the level of growth that we were expecting. Australia has been down as well. We see some pressure on the residential market in Australia. When it comes to Southeast Asia and what we could call the ASEAN Five, we have to say that they've been impacted by the slowdown of the global economy and uncertainty on the global trade. I would say they are region that are certainly region of investment when 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 +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 negatively 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, EUR 1,540,000,000 of sales. It's up +0.5%. Forex is contributing positively by +1.9%. Scope is negative by -1.8%. That's, of course, the disposal of the panel business in the U.S., and that gives an organic growth of +0.4%. Many were asking whether we are at the right spread in term of exposure to compensate for the decrease in discrete automation, where we have here the illustration that, yes. We have today a business that is well spread on the various technologies.
We definitely have seen a continuation of a slowdown on the discrete end market. We can say that globally, this discrete technology, we are down mid-single digits. That has been almost most of the geography, even if there were some pockets of resistance in Germany, Russia or South America. Globally, that was going down. That should continue to go down in the coming quarters. That's what we expect for the time being. The good news is that we managed to compensate that with good growth on process and hybrid automation. Of course, including software. Globally, on process and hybrid, we've been growing mid to high single digits. When you look at the last same exercise, we've been looking at the last 12 quarters, the last three years. Again, overall a good average growth, 5% organic CAGR over the last. Not CAGR, sorry.
Average growth over the last 12 months. We are nicely, year again, I would say, in the 3%-6% range. If you look now at the performance by geography, which at the end of the day 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, +11%. That's definitely a place where we have a nice presence for process, and hybrid all grows. All zones have been growing on the region, with one exception, which was Africa. Particularly good growth in South America and Middle East. Clearly there, we have plenty of good projects in oil and gas, in mining, in chemical, in water, in infrastructure. That's really what is behind this very nice growth for the rest of the world. Asia Pacific is also positive, +2%.
Here it's a little bit the reverse picture than for Energy Management. China has been a bit negative because of the negative trend for OEM, because on process as well, there was obviously some positive elements. We've been compensating this slight decrease by growing elsewhere, notably in India, but also in Australia, in South Korea, in Thailand. Several markets with good growth in process and hybrid. Japan was another one with an exposure to discrete to be negative. 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, -2%, which is clearly the continuation of a softness of the discrete end market and a particular drag coming from Mexico, with a very negative performance coming from Mexico.
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 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 investment. We've seen a good level of demand for process industry. Obviously that has been partially compensating for the decline in discrete and in Mexico. Western Europe, -5%. I would say, we've been seeing a negative trend in almost all geographies. A couple of exceptions, Germany and Nordics, which were stable or slightly up. A very negative trend in the U.K., where clearly, the Brexit uncertainty is biting. Here we are negative double digits 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 Larsen & Toubro closing. Remember, it's complex because it's an asset 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, that 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 EUR 1.5 billion to EUR 2 billion business that we consider as no longer a priority or that we see as less core, less performing, and with a lower margin. The most recent announcement is the one that we have been doing on the SESH.
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. That's oil and gas, that's mining, that's utility. That's a business that has been hit very hard by the sanction and the slowdown of the Russian economy. We are partnering with the Russian Direct Investment Fund, which is the Russian sovereign funds. 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 certainly to jointly work on improving the performance of that company, and we are very happy to have RDIF with us. They have a great portfolio of investment, and we are sure that they will allow us to establish a number of contact and business relationship with their companies. This is not, of course, the end.
We continue, and you should expect us in the coming months to, on a regular basis, to come with new announcements on this EUR 1.5 billion-EUR 2 billion program. That leads me to talk about Q4 and what we can expect from the market. What we expect for North America is 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 high comps in Q4. Remember last year, that's when North America started to grow at a double digit. 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 see for the market. 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. China, as we said and as we continue to say, that remains a growth market for us. We continue to see many areas of good dynamism in construction, in infrastructure, 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 a moderate pace. 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. We are reaffirming our target for 2019.
We are targeting an organic growth for the adjusted EBITDA between plus 6% and plus 8%. To deliver this ambition, we have two levers. First of all, of course, the revenue growth. We target an organic growth within plus 4% to plus 5%, the margin improvement, the improvement of the adjusted EBITDA margin, we target to be in the upper half of the 22-plus 50 basis points organic range. That ends my presentation, I'm extremely happy to answer your questions now.
Well, thanks, Emmanuel. We'll move to the Q&A. I think we have sufficient time to take all the questions. Again, I would request keep it to one question per analyst, and we'll come back for repeat questions as needed. With that, operator, can we please have the first question?
Thank you. The first question comes from the line from Andreas Willi from JPMorgan.
Good morning, Emmanuel. Good morning, Amit. My question is a bit more kind of medium term. You reiterated with the release as well the target to improve margins by 200 basis points 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 still support and achieve that target in an economy that clearly gives you less market growth in terms of how you're adjusting that plan to still achieve that target.
Good morning, Andreas. We absolutely stay committed to the improvement of the 200 basis points improvement over three years. As we say, as we state in our target, it's our ambition to nicely start this journey in 2019. 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. We'll see, 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 marks, plenty of uncertainty. I have the feeling that maybe the Q4 is starting to bring some uncertainty on Brexit. We are not there yet, 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 U.S. and China.
We'll see whether in November there are more good news coming. 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 than the markets, to keep gaining shares if you want. 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. On the organic part, I think the priority are clearly on the things that are going to contribute to margin improvement. 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. Of course, we'll be able to use that to deliver the 200 basis point objective. That's really where we are today, and I can only just reiterate the fact that we are committed to this 100 basis point margin improvement objective.
Thank you, Andreas. Next question.
The next question comes from the line from Andre Kukhnin 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's likely to play out in terms of kind of cadence for 2020. You've got a construction market that is kind of near the peak or over the peak. Lead indicators are 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. I wonder if you could just talk about that, the kind of dynamics of these two, how they're likely to play out over the next 6-12 months.
Well, sure. I can definitely try. First off, on Mexico, I think it's difficult to see a rebound in Q4 today. It doesn't mean that a rebound could not happen next year. We'll be probably facing a much easier comp. 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, there are a number of signs of a slowdown, of some growth, but it doesn't mean that we are turning into negative territory. When it comes to the construction market, whether resi and non-resi, we are 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 still seeing growth, clearly, on data center. We are still seeing growth on infrastructure investment.
I don't see today a view where everything in the market would turn to the red, 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. That it's still growing, but it doesn't mean it is growing at the same pace as a few quarters ago. That's globally the picture that we have for the U.S. for the foreseeable future.
Thanks, Andre.
Thank you. Next question, please.
The next question comes from the line from Alasdair Leslie from Societe Generale.
Yeah. Hi, good morning. One question, two parts. Really within IA, Industrial Automation. You're understandably calling out subdued demand for discrete in coming quarters. 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 a flattish growth overall for IA in the coming quarters, as we saw in Q3? Linked to that, just on China, I think you called out only a modest decline. I think OEM, as you call it, so the 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 reasonably favorable comps there now? Are you seeing any signs of a pickup in demand around factory automation in China? Thanks.
Thanks, Alasdair. On discrete process, the net of the two, the good news 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 slowdown of the economy because of that. It's there, definitely. It got to contribute positively to the growth of industry. What's going to be the net of the two? 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 net positive, net negative?
I think there is a possibility that it's going to be net positive. I don't know. 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 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 later next year? I don't know. We're certainly going on that path for the Chinese business, going to be facing easier comp at a certain point in time. Hopefully, that's going to be good news for us in the coming quarters. Too early to say exactly when we're going to say, I would say things are bottoming out.
Thanks, Alasdair. Next question, please.
The next question comes from the line from Gaël De Bray from Deutsche Bank.
Yes. Good morning, everybody. Good morning, Emmanuel. Can I ask, in your experience, with all the various cycles you've 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? That's question number 1. 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.
Morning, Gaël. Tough question, frankly. 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. Is it going to be 12, 18, 24 months? Frankly, I don't know. Could we see some green shoot on discrete, 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. 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 two engine not working necessarily, at the same time, that is a way to significantly decrease the volatility on our Industrial Automation business.
On inventory in the U.S., I would 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, is as always, when you have some markets slowing down, some negative impact coming from inventory reduction. Therefore, a sell-in for us being actually below the sell-out. That's exactly the other way around that happen when things accelerate. You can have the sell-in above the sell-out, because of natural behavior of the distributor, whether because they believe the market's going to accelerate or slow down, adjusting their level of inventory. Well, I have the feeling 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 this topic, for instance, in France, in Q3, which have played negatively. I don't have anything to report for the U.S. specifically in that respect.
Okay. Thanks very much.
Next question, please.
Thank you. The next question comes from Alexander Virgo from Bank of America.
Thanks very much. Morning, Emmanuel. Morning, Amit. I wondered, could you just dig a little bit into the differences in dynamics between Industrial Automation, between the sort of service and software growth and the hardware growth? I'm guessing in line with your peers, you're seeing, and obviously you call that double-digit growth in software, you're seeing quite a marked difference in trends. Conscious that you do have a different end market exposure than some of your reporting peers. 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 quarters as well. That would be helpful. Thank you.
Good morning, Alexander. I get your first question is, between the process automation hardware and the software we sell for automation, what's the difference in trends? One is a mid-single digit growth, nice mid-single digit growth. The other one is double digit. Quite obviously, on software there is a mix of good end market. Software growing fast because, of course, that's a great way to invest for more efficiency, more productivity, and to get a great return. There is also clearly the success of the AVEVA deal. We've been building a new force, and that's 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. I think we are entering into a dialogue that did not exist before with many customers, and we are having an impact on the market, which is absolutely unprecedented.
That is probably adding up, if you want, to the good situation of the end market. Now, there was also some nice contract taken during this quarter for the software business. We'll see what is the trend. I'm not saying it's going to continue to be always double digits, but I certainly expect a very nice continuation of the growth on software in the coming quarters. Again, because of end market and because AVEVA is clearly a strong success in term of strategic intent.
Thanks, Alex.
Thank you.
Next question.
Thank you. The next question comes from the line from Wasi Rizvi from RBC.
Hi, good morning. Thanks for taking the time. On the question, I just wanted to build on the North American Energy Management question. I noticed you called out growth driven by dual function circuit breakers. I was interested you mentioned that. Was it big enough to move the needle? Are you able to quantify how much that contributed to growth? 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 the States adopting it or enforcing it, or what's driving that and how big is it?
Good question. No, I'm not going to quantify it precisely, but it's a significant impact. It's one of the contributor to the growth, as you can imagine, given the size of North America, the U.S., it's not one driver making the performance. It's a nice one. You're right, there was a change of regulation, I think we're coming with an answer to this change in regulation, which is particularly relevant for the customer and the good performance. We are hopeful that it's going to continue.
Okay. Sorry, just to follow up, are you able to help on how much you think that kind of rollout of that product is in terms of where it needs to be? Is there still a long way to go, or is it going state by state?
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. 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 will be covered. I think it's going to still take a while.
Thank you.
Thank you.
All right. Let's take one more question.
We have one question, a follow-up question from Andre Kukhnin from Credit Suisse.
Oh, 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 EUR 0.4 billion plus the Electroshield - TM Samara 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, that will depend on exactly when we close Samara and so on. It's going to be positive. I think for the time being, the only number that we gave was for Pelco. We said a full year 10 basis point positive. Bear with us. When we will close the Electroshield deal, we'll try to be more precise on the impact. Expect a positive impact on the margin in 2020.
Got it. 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 the world or in Europe as well, beyond U.S., as U.S. tends to follow in these kind of fire safety regulations?
[Ali], do you want to take that one?
Thank you, [Lee]. Sorry.
That's a specific regulation which is built upon by the North America electrical standards. Again, in terms of the rollout as well, I think there is clearly a publicly sort of available rollout plan for specific states, which is going into the next few quarters as well. As Emmanuel said, there's more adoption that could happen, but which is not yet very clear in terms of its timing. It's specific to North America.
Yes.
Right. There's no signs of Europe looking at this yet. Because usually Europe, I think, follows, right?
Yeah. We don't discard it, but we don't see that in the short term.
Got it. Thank you for taking the follow-up, so really appreciate it.
Well, thank you, everybody. I think with that, we will close the call. Thanks for your time, please get in touch with the IR team as required.
Thank you all.
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.