And welcome to the Quarter 1 Financial Release Schneider Electric Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Ami Sala, Head of Investor Relations. Please go ahead, sir.
Well, thank you, operator. Good morning, everyone, and welcome, early start than usual this time, but thanks for thanks for making it. We're here for the Q1 revenue release. It was released an hour ago on our website, the presentation and releases available. To take us through today.
We have Deputy CEO and CFO, Emmanuel Babbo. So we have about maybe 30 minutes of presentation and followed by followed by key. So with the usual disclaimer that you will see on, on slide number 2. I want to hand it over to Emmanuel.
Thank you, Amit. Good morning, everyone. Really pleased to be with you. And I just have to repeat what Amit has been saying. Thank you.
I know it's an early start for many of you. So thank for being with us. I suggest that we start immediately on Page 5 of the presentation. And As a starter, I would like to remind that Schneider is a simple and focused company. We have 2 businesses, And each of them is driving a major transformation of the world economy.
Both on one side, you have energy management driving energy transition. On the other side, you have Industrial Automation Driving Industry for the 0 for the 0. And each of them, of course, is accelerated by the digital disruption. And we are here making a difference with leading expertise in that in that field. All that is driving significant opportunity for our customer.
And when we talk about our customers, I talk about our 4 domain of expertise for end market building data center infrastructure and industry. And here you have a display of some of the benefit for the customer in terms of energy efficiency, productivity, of course, reliability and safety. And last but not least, when it comes to delivering sustainability, to the growth and to the development. I'm now moving on the on page 6 and, and all that, that simple, company focus with leadership, with this, a clear value proposition for the customer that is translating into continue, continued dynamism in our growth. And as you have seen, we are off to a good start in 2019.
I would say that I'm going to elaborate on that. All the ingredients that made our success in 2018, continue to deliver in Q1. So globally, 6 point 1,000,000,000 of sales growing organically plus 5.9 percent. And you see that the two businesses have been growing nicely. Energy management on one side growing 7 percent organically and industrial automation growing 4% that is making a retreatment and taking as a scope effect here, the end of a panel activity with low margin in the U.
S. And of course, based on that good start, we are reaffirming our 2019 target. Moving to Page 7. One of the reason for our success, I think, has been, of course, the successful strategy that we've been now implementing in a very consistent, I would say, persistent manners over the last few years now. And quarter after quarter showing its strengths and the result it does deliver.
It starts, of course, with the fact that we have a well balanced portfolio by geographies. You see here that Asia Pacific is number 2 this quarter behind North America. And it's certainly interesting to see that Asia Pacific is growing fast. Nevertheless, the best performer is North America this quarter. So this capacity to sees the growth wherever it is is a big plus for our company today.
The other dimension, which may be end up being well totally perceived is the fact that the company has been evolving and is now well balanced in terms of exposure to the various part of the economic cycle and we have a good balance between early cycle and mid late cycle exposure. And clearly, in Q1, we have seen the benefit of that. We talk about that when it comes, of course, to industrial automation. But I would say it's also the case when it comes to energy management. Moving to Page 8.
The strategic priorities have been also very clear for a long period of time now and we keep working on them and delivering. You know that the first thing is that we want to drive a more product and we want to maximize the growth on product. And they are still growing, I would say, nicely by 3% despite the fact that, of course, we are progressing through the economic cycle. So it means that we are able to globally with innovation, with the quality of the portfolio, with the geographical closure to keep delivering growth on product, even if the evolution of the cycle is less favorable for them. We want more services because they're coming with great margin, great return on capital employed.
And Q1 has been up slightly excellent in that respect at +11 percent. We want more software, and I don't think I need to argue why we think that we absolutely need to develop software, both for what they bring to the customer and of course, because they represent fantastic value creation. And once again, we are coming here with a quarter with double digit and we are extremely pleased with the AVEVA performance. We want EcoStruxure, which is really a powerful drive of our digital and integrated offer We want EcoStruxure to grow faster than the average of the group, and we keep delivering on that. We also want better systems.
So systems are not the priority, but we certainly want to grow them in a profitable and efficient manner. You see that they are growing by 10%. It does reflect the evolution, of course, of the economic cycle and we go for more infrastructure, more data center, more process automation project and that means more system. And it's good to see the capacity that we have to balance the growth through the cycle and to limit the volatility, thanks to this exposure to let and mid cycle activity. So that's what the system growth is reflecting that.
And of course, all this priority, all the objectives being then translated into the overall growth for sales. Moving to the page. 9, It's also our strategy about, being a focus and getting even more focus. And that start, of course, with the portfolio optimization that we have announced, the 1,000,000,000 to 1,000,000,000 revenue that are today under strategic review. First disposal occurred in Q1 with PELCO.
You know the term of the transaction. You know the impact on the company. We've been, disclosing that. We are here at the beginning of the process And of course, I'm not able yet to share a timeline and what's coming next, but you should expect us to come with more pruning of the portfolio, in the coming months the coming quarters, because by pruning the portfolio, we are making the business stronger, simpler And of course, there is a very strong merit on the focus on the quality of the execution and the strength of the execution. We are also making sure that we are, strengthening our core by gathering more strength or I would say, building new teams and the Carlyle partnership that we have announced for critical infrastructure and to make sure that together We build super efficient, sustainable, digital infrastructure with 2 nice projects at JFK Airport.
And the lone star ports, Arbor Island. And that's two projects that of course are just the beginning of what we think we could be together but it shows that there is today a need, for efficient critical infrastructure that we are extremely well placed, I would say, really with a strong differentiation and I guess why Carlisle has decided to partner with us. In that respect. And we see very nice, potential of development in that direction and through this partnership. Moving to Page 10.
We wanted to remind here the pillar of the growth and what the strategy is building upon. You know then the 4 pillars starting, of course, with innovation, we came up again with plenty of new innovation, whether on contactors, on new PLCs, you have here a new digit all protection relay. You have new UPSs. That is a big objective for us to continue to accelerate on innovation to make sure that this innovation is reaching our customer fast and that the share of a new product or innovation among the global shares keep increasing month after month. That's how we get differentiated and that's how, of course, we managed to bring value and price and price for it.
2nd pillar, the digital, we have been nice growing our asset under management by 39% year on year. We've been developing more advisor app on EcoStruxure. And for those who were in Hanover, you've seen the launch of our exchange platform which we think is going to be a nice collaborative, platform and a great ecosystem for improvement for sharing, and at the end of the day, for creating value, ultimately for the customer and for all our partners and people willing to work with us for the benefit of the customer. 3rd pillar, we are segment focus. We know that at the end of the day, expertise differentiation is coming with knowledge of given application.
And I would say intimate granular knowledge of the need of the various end market and to talk the language of the customer And we have a very nice progression of orders in a few of them which are, of course, critical like oil and gas and, and and and we are even growing double digit showing that we really managed to make a strong impact when we have this focus. 4th pillar, actually important, you know, it's the cross selling we see day after day that our customer are asking for this capacity to bundle technology together within energy management, I can see we really no longer speak about family of product or type of technology that we talk about, how Do you make my energy management efficient sustainable? And above that, of course, you have the cross selling between energy management and Industrial Automation, which is allowing us here again to make big impact among consumer goods, oil and gas, mining of or water wastewater. I think we really see in our performance the strength of the cross selling and Q1 is another illustration of that. Good to talk in general there, but also important to speak about, some detail and precise case of success of putting together and cross selling I have to start with the building 1 and the Tottenham Stadium.
I mean, yesterday evening, they were not playing in Tottenham, but not only, you know, with the new stadium, which is full of Schneider Technology, are they more efficient in term of energy saving, safer and globally improving dramatically the customer experience and the fine experience. Apparently it's giving chance at home because I think they haven't lost since they are starting their new stadium and maybe away as well, but 1,000,000,000, getting a little bit too far there. Data center, a nice project in China, where we are putting together the old power management and that has been attached to a Secure Power as well. Infrastructure, great project with the Marines where we are putting together both going for renewable, you know, getting greener and the I would say reliability and efficiency. So we are covering the efficiency, the reliability, but also becoming greener and it's not the 2 are not antagonist, of course, and they get on together extremely well.
Foreseeing it's just a full monty. It's an ethanol plant in Brazil, where we've been delivering a combo of old power management, medium voltage, low voltage, take your power. We've been selling plenty of technology for Industrial Automation and plenty of software from AVEVA. And it really shows that, I mean, we're not dreaming about this projects, they are actually happening, and we see more and more of this project, months after months. Well, we know that, and I'm not going here to take you by surprise, driving sustainability, for our customer in the way we operate for the community we interact with and therefore globally for the planet is part of our DNA.
We are reporting quarter after quarter, our progress on the Schneider sustainability impact. You have here the performance at the end of Q1 versus where we were at the end of Q4. You have the final objective. And I have to highlight here that given the fact that we were progressing fast and really having a fast journey, we decided to raise the bar for some of the indicators. So we are making our target more demanding, more difficult to reach, but we are super happy to do that.
But it's just showing that we are on this various perimeter, making a good project. And of course, we have 1 branch, 1 division, which is epitomizing, the sustainability mission, that we we carry, which is an ESS energy and sustainability service. And here, we just wanted to put a nice project with the the city of Saint Joseph, where we've been working with them on, again, how to make their energy management, greener, more efficient, and, and certainly, with a very high degree of reliability and you have the testimony of, our partner there. It's one story along many, many other. Moving to page 13, I'm going to skip very well.
It's nice to see that, this particular feature of Schneider's emission that we have, is recognized. You have the list of the prize or the recognition that we have received in Q1, but it's just good to see that this is making an impact and this is seen by the outside world. All right. So now let's go to the numbers, but of course, the numbers are coming from what I've just been explaining. And let's start by the page 15 and global view on sales evolution.
So sales, amounted globally at 1000000000. It's up plus 8.7% versus the first quarter of 2018. Good to see that the Forex is moving positive at +2 percent. Biggest driver here is U. S.
Dollar. 2nd then is the Chinese run. And then we have a number of currency that have been negative for us. Whether in Middle East, in South America, the ruble has been the Russian ruble has still been negative for us in Q1. But in total, it's positive.
We see now for the full year based on the current parity, a positive impact on top line, which has improved. Now it's between plus EUR 300,000,000 and plus EUR 400,000,000. And on the FX, we were expecting something around stability. It could be slightly negative. I mean, it's really moving marginally, but it could be around minus 10 basis points because of some of the new economy currency that has been depreciating.
On the scope plus 0.8 percent, this is mainly, AVEVA, to be very clear. And that leave us with an ongoing growth of +5.9 percent. Moving to the detail of that. So I've already alluded to, the 3 components of the growth starting with, with the products, so plus 3% clearly, in the building end market, we have seen a continuation of a very good growth discrete industry has been moderating in term of growth, but globally still still growing up in line with our expectation and that's what we were planning for. And ready to deliver 3%.
It shows the strength of the portfolio. And I would say the impact that we managed to to have on the various geographies. I commented about the system growth, plus 10% It's good to have this exposure to process industries, to data center, to infrastructure because they are a nice contributor to the growth now. As you know, we are working on the quality of the system and on the profitability of the system, as well. It's a loss really to smooth the volatility and decrease massively the volatility through the cycle.
Last but not least, service and software, 12% growth in Q1, really growing extremely fast, both of them. And on services, I have to highlight the very nice growth on data center, and among our industrial customer. I talk about ESS that is doing extremely well. And you have seen, of course, the performance of IVR for the Q1. And they've been, closing the 1st year as a new AVEVA, and we are very pleased.
Of course, they will communicate their full year results in the course of May, but the top line growth has been extremely good and it's It's a great satisfaction for the 1st year to see already such a dynamism. Let's dig a little bit into energy management Industrial Automation, I'm on Page 17. I start with Energy Management, of course, 1000000. It's up the 9.6 percent. We really have continued to grow nicely on the residential and on small building.
We are planning on innovation. We are working on the channel, the cross selling is very important here. We have a good progression on the commercial industrial building And that's really the strength they're committed to be able to cover both residential, small tertiary, but also the CIB. That's a big strength of the company, and that has been playing across geographies. Good cross selling as well with Industrial Automation that has been showing and notably in oil and gas.
Triple M, EcoStruxure is hitting the market with a great success. And continuation of a really great journey on data center with double digit. I must say the sequence that you have here on the right button part of the slide is impressive. The growth over the last nine quarters, it has been now, you know, several years in a row of good growth for energy management. And that is continuing in Q1.
Moving by geographies, I'm sure you've been impressed by the growth in North America plus 12%. So it is a combination of strength on building both resi and non resi Data Center doing very well. I talk about services growing well and the SS notably. So that was accounting for the 12% growth in North America. Asia Pacific plus 8, very solid performance in, in China.
We have been certainly further enhanced, I would say, by some distributor restocking, that certainly has been, I would say, helping the number. But fundamentally, what is happening in China is what we said would be happening, I believe that China is a growth market that despite the fact that we are seeing some very, very high comps in Q1. It's going to continue in Q2 We see the Chinese market as a growth market. We see construction going well. We are here flagging the fact that we believe that after a fantastic period of growth, the growth could moderate in the coming quarter.
I would say to a large extent in line with our anticipation already several months ago, but we see also all the energy management degree that we sell to infrastructure, to industry doing well. India has continued to deliver good growth and we've seen Southeast Asia and Australia also performing well, notably on data center and smart grid customer. Rest of the world growing 4%, good to South America back to growth, Africa that keeps growing as well. For the more negative, Middle East has been down with a number of a market like Saudi Arabia, the Gulf being more difficult. And CIS globally has been down a good trajectory I would say for a single link to residential, commercial building, much more difficult when it comes to the investments in oil and gas and therefore, all the energy management that we sell to that end market.
Western Europe, plus 3%. Good growth seen in Italy and Spain, good growth seen in the UK, but clearly, uncertainty is is increasing linked to the Brexit and that is having some impact and we see wait and see attitude and the level of project on which we are working with the customer, the pipe. I mean, all that is certainly impacted by the level of uncertainty. Germany has been a bit down and France has been down notably because of a weak utility market. Going to Industrial Automation, so up, plus 2.3%, but we believe that you really have to organically, we really have to treat the end of the panel builder, which was a low margin business in S.
And that's the reason why we decided to stop it. We have been delivering a 4% organic growth so without that impact. And there was a lot of question I know around what's going to happen to to the Discrete and the OEM business. We've been extremely clear on the fact that OEM has been scrolling down and sometimes significantly. That has been the case in China.
But nevertheless, we are still slightly up despite a slowdown in some of these geographies. Comps where I in Q1, they're going to be even higher in Q2 because all these discrete business was on fire in Q2 last year, but nevertheless, good to see that this is holding up, decently well. We have strong growth in process, and I agree that is continuing. And that boosted by late cycles demand that was expected that, you know, we would have the relay of this business through the cycle and actually process automation has been growing in all region, which is a good news. And I think the sign that Inventis acquisition, which had suffered of the Envone at the beginning, is clearly delivering today.
And we see that across the geographies. Now I have to, of course, finish that with AVIVA detail, double digit growth as you have seen again on the top line. And here, you have the combination of the strength of the new portfolio independently and autonomously, I would say, the fact that putting the 2 portfolio together is having a nice impact and create lot of dynamism for Aviso. And second, and it's very important as well. The fact that Schneider and Aviso together are a unique differentiated value proposal for the customer, and we see very nice traction behind that.
The sequence of growth was impressive for energy management, even more impressive for Industrial Automation. And you've seen that we've been from a mid single digit to double digit growth for the the last nine quarters. So a very, very strong business here within the installation. Just by geography, rapidly, starting with Western Europe. Western Europe is the only region we're actually Industrial Automation growing faster than energy management, good growth in France, in Germany, in Spain, and in the UK.
And actually here, good performance on OEM And Machine Solution really doing well. Of course, process and hybrid has been also good performer, but interesting to see the Discrete has been holding up pretty well for us in Western Europe. Then Asia Pacific, up plus 3%. China is still up, again, despite this OEM slowdown. And process industry doing well in Southeast Asia, India, growing across technology, I would say, and Japan, more difficult.
Year dispute automation has been clearly under pressure and declining. Rest of the world, growing +3 percent as well, good growth in, in South America, in CIS, in Africa, in Central Europe. And therefore, really places of difficulties have been Middle East and Gulf and Turkey in particular. And last, North America, growing plus 2% excluding panel, even if you just look at the U. S.
U. S. Has been growing plus 5%. Clearly, good performance on process industries. Oil and gas, food and blades have been I've been doing well.
If you just look at Discrete And OEM, it has been stable. So, again, it's still growing in North America. Despite this slowdown on this All right. So that leads me to the conclusion for the rest of 2019. I'm on page 22.
So what should we expect for the rest of the year after this Q1? And we are, if you want, confirming and sometimes refining the vision for the various markets. On China, I think we keep repeating that China is a growth market. We are facing as we said, high basis of comparison and the softening OEM markets, we flagged the fact that construction infrastructure and many parts of the industry should continue to do well, and that's what we are expecting. And we are here highlighting the fact that construction could soften, could moderate in terms of growth in the coming quarters.
North America has been very good in Q1 and we expect North America to continue to be good for the rest of the year. We see a large country in Asia Pacific such as India and all the big geography in East Asia to continue to enjoy a good momentum. In Western Europe, we expect to see continued, moderate growth of course, the Brexit is a big question and what could be the impact on the rest of the world. We expect to see a continuation of the contrasted picture. That's exactly what been experiencing in the first quarter.
So we are, of course, reaffirming the, the, the target for the year. We do expect a good growth in aggregate in 2019. And Q1 is of course just confirming this ambition and the target. We are globally targeting for 2019 and organic adjusted EBITA growth between plus 4% and plus 7%. And as you know, we're going to use the 2 levers to deliver that.
The first one is the top line organic growth. We are targeting to be between +3 +5 and the other one is the organic improvement of the adjusted EBITA margin and we target an improvement and organic improvement between plus 20 and plus 50 bps. That ends my presentation and we are now moving to the Q And A. I would be very happy to answer your question.
Thank you sir.
Session.
You.
Yes. So just to reiterate, I think we do see several questions in queue. So let's keep it to one question per person and then time permitting, we'll come back so that everyone gets a chance. So with that, let's move to the first question, please.
Thank you. Our first question comes from Andreas Willi of JPMorgan. Please go ahead.
Yes. Good morning, Emmanuel and Amit. My question is about data centers, which based on your commentary, seems to have a strong growth in Q1 across many regions. Maybe you could tell us what the overall vertical growing currently and what do you see on the order intake whether this can continue in the coming quarters?
Yes, Andrea, thank you. I mean indeed data center has been growing nicely. I would say a continuation of the trend that we have seen. So it's not as if suddenly there was a big acceleration that has been there. We've been flagging the fact that we were having a nice, nice success on that market.
It has been growing across geographies. You are absolutely right. So North America was good, but clearly, you know, many new economy have been good, many countries in Europe have been good as well. So that's a good momentum that we are enjoying. We know that the cycle is also explaining that.
I mean, there is That's a business where you have acceleration on the growth and then the growth can be softening. We are still seeing a good momentum and good dynamism. I'm not able to say how it's going to evolve in the coming months. But we are certainly taking the view that for the year, data center growth should be a nice contributor to the growth. No doubt about that.
Thank you, operator. Next question please
Thank you. Our next question comes from Andre Kukhnin of Credit Suisse. Please go ahead.
Yes, good morning. Thanks very much for taking my questions. I'll ask about China, if you could maybe quantify the amount of, restock help in Q1 and AM and what your expectations are for this geography for the year, maybe for EM and for Industrial Automation where, I guess, growth was, surprisingly robust still in Q1. You've got tougher comps that you flagged. Thank you very much.
Yes, Sandra. I can try. I mean, always extremely, extremely difficult, of course, to give a growth outlook for the year on China. We started around 7% again, with the number of elements that has been helping. I'm back to my comment on the fact that the Chinese market is a growth market and should be a nice contributor to the growth.
I'm not sure that it's going to reach Q1 for the overall year. And probably today, I would say the underlying trend is probably around mid single digit growth as a kind of underlying impact without the working day and all that, knowing that Q2 is a mountain declined again in China because Q2 was again enormous and notably for industrial automation. So that's a kind of underlying and and could be a vision to be confirmed for the full year.
Thank you. Next question.
Thank you. Our next question comes from Alsabeth Lesley of Societe Generale. Please go ahead.
Hi, good morning. Thanks. I was just wondering on the systems growth and your comment about kind of working to ensure profitable growth there and the suppose the implied mix impacts on margins. I'm just wondering to what extent the strong growth in data centers is influencing that growth and really well at this that has any impact on the traditional margin profile that we kind of think about for the systems business?
Sure. So, no, absolutely. I mean, the system growth is is partly partly only and because you have also positive information, you have everything on infrastructure, where we sell a lot of energy management technology, EcoStruxure. So these are contributed to the system growth So data center is a contributor. I wouldn't say that the profile of margin is sufficiently different because they're not the only growth contributors.
So you have also other elements. So I noticed that it sufficiently is different to change the profile of the margin. And we have globally, and I would say an objective to improve the margin on system. We've been doing that For the last 3 years, we want to continue and it's a big objective to make sure that we keep improving the margin and the return on capital on system. Now at the end of the day, it is clear that systems growth is going to bring some negative mix impact.
In front of that, of course, we are coming with a price increase. We are coming with a policy We have services growing fast. We have software growing fast. We are working on our SFC even if I'm going to surprise you that we we are, investing to, keep our leadership on innovation and digital. But we take all these dimension and I can tell you that, of course, include the impact of system when it comes to working on our margin improvement.
All right. Next question please. Thank
you. Our next question comes from Jonathan Mundy of SI BNP Paribas. Please go ahead.
Hi, yes, good morning. Thank you for taking my question. So on the runoff of the Powell Builder business in IA in the U. S. And just thinking about the balance of the year, so what is the impact on the top line as we run this through the year.
Obviously, it's quite significant in North America in Q1. Is that a kind of a drag that we should be modeling it annualizes over the next three quarters?
So we'll be, happy to provide you Jonathan with, of course, the impact. That is, I mean, you have the drag on Q1. You had already an impact on Q4 last year. And I think we flagged the fact that for the full year, that was about one point, one full point of growth for industrial automation at the group level. All right.
So, that, therefore, you know, if you start with a bit more than 6,000,000,000, it's around 60,000,000 impact for for the year. So we'll be happy to provide you with an expected phasing of that.
All right, Jonathan, we'll come back to you on that. And, next question please.
Thank you. Our next question comes from James Moore of Redburn. Please go ahead.
Yes. Good morning, everyone. Morning, Emmanuel. Please can I return to China? You mentioned, hopefully, the 7%.
I wondered if you could do the same for IA and EM, I was thinking to a 9%. And you mentioned China construction could moderate in the coming quarters. Can I ask what prompt you just say that? Is it based on comparatives or something more specific like land sales or tender activity or something else?
Yes. So I understand that question on China. So, clearly, I'm happy to provide some details between Energy Management And Industrial Automation, if it was your question. Energy Management was growing, high single digit when industrial automation was rather growing mid single digit. Okay.
So that's the mix of that, which is giving the around 7% growth. And on the moderation, that's what we can try to cope with the very icon that we were having and some exceptional growth last year. And also, when we look at the new starts, when we look at the environment, that the feeling that we are that the growth could moderate, we have to be very cautious, but because, of course, a decision could change that very rapidly, on access to credit, for instance, or giving more new permit or whatever. But that's based on that, if we have the feeling that this could soften, growth could soften in the coming quarters.
Just to be clear on that, you're talking more about comparatives than any great visibility of order deterioration or tender deterioration? Yes, thanks. Thanks.
All right.
Thanks, James.
Next question, please.
Thank you. Our next question comes from Gail Divri of Deutsche Bank. Please go ahead.
I had a question about industrial automation and, within industrial automation, about Western Europe in particular, which outgrew other geographies this quarter. And I mean, some of your competitors had previously flagged some delayed investment decisions in Europe, particularly in Germany, talking about mission builders becoming more cautious on the outlook. So I guess you've not been really impacted by this quarter. So the question or the questions I have is, would be, I mean, what's driving the superior growth in Industrial Automation in Europe now, why do you think you're getting share in Europe and how easily could you actually replicate this European success elsewhere in other geographies?
Thank you, guys. Difficult for me to say that we are gaining share because, of course, not many competitors so far have been reporting So not yet fully clear what has been happening. Well, I think we certainly have been quite efficient in growing, still with OEM, making sure that we've diversified industries through our distribution channel. We were, having success, certainly process automation you as well is accelerating and we see a number of investments. You have to bear in mind that we have very little exposure.
I would say, unfortunately, that to automotive and that maybe some of the slowdown that has been seen in Europe is starting maybe with automotive. So that could explain why, you know, we don't have that negative, that the drag on the performer. But I'm not sure I can comment more than that. I think it's really, again, innovation, the fact that we are spreading our exposure to the various technology. And again, maybe automotive could make a difference there versus others.
Thank you, Gail. Next question please.
Thank you. Our next question comes from Vasey Rusez of RBC Capital Markets. Please go ahead.
Hi, good morning. Most of mine have been answered. I guess one thing that didn't come up during the call, which I think you spoke about Q4 was a working days impact. It seems like you're it's been negligible in the first quarter, but I think you just specified it would be an issue for the whole of the first half. So I guess if you could talk about what you're expecting for Q2 and what you saw in Q1 plus?
Sure. That's important. So, no, actually, we had a negative, working the impact on Q1, which was close to 1% negative. Actually, Q3 is even worse, and that is going to be significantly more than 1%. So Q2, you know, it was the highest comp last year.
We have big working days. So that's going to be, that's going to be, a very demanding quarter in terms of comps and one off impact And then we're going to recover in H2 in term of working days. So for the full year, that should be about neutral. But H1 is very negative and H2 is going to be much more positive.
All right. Next question please. Thank
you. Our next question comes from Peter Riley of Jefferies. Please go ahead.
Good morning. Could you please give us a bit more color on what's happening in data centers? You talked about growth in all regions are you seeing a trend to smaller more local data centers for reducing latency and complying with local regs and And if so, do you think that trend has a long way to run?
Yes, Peter. Absolutely. I mean, really on data center, that the kind of positive chemistry that we've been experiencing for several quarters. Now you have a combination of on one side of regulation, of course, fundamentally starting with the growth in capacity that is absolutely needed because you keep having an exponential growth of the data that needs to be stored in data center. Regulation is, of course, helping because more and more, you need to have data center in specific geographies and you need to your data in specific geographies, and it's not going to ease.
And that is combining with the edge computing. Which is for us a great news because that means that many people are going to go still for a small medium sized data center where they will keep their, I would say, sensitive, critical data, and they reduce the latency time. They, of course, manage to exclude any kind of cyber risk by having a private cloud. And that is triggering a lot of investment as well. And therefore, The 2 cover the full ground of our technology, which are the small UPSs, the single phase UPSs, but also of course, a large data center 3 phase which are involving, as we know, also a lot of power management dimension.
So that is that's really the combination of the 2 that is explaining the dynamism at the level of of data center. And if I look at, as a family of products that you were reporting I think your power has been growing very strongly in Q1.
Thank you. Our next question comes from Daniela Casa of Goldman Sachs. Please go ahead.
Good morning. Thank you very much for taking my question. I just have one follow-up, wanted to ask you about sort of the guidance for the margin improvement. Last, a quarter, you had a comment about the margin improvement being more pronounced in the second half. And I think you removed that from the release now.
Can you help us understand given what you mentioned on mix and given the various comps and other things throughout the year? How do you expect margin progression to pan out in the year? Thank you.
Yes. I can try, Danilo. So it's true. We haven't been repeating that. That's a comment that we made at the beginning of the year.
That was a possibility. That is still a possibility. I mean, been flagging the fact that Q2 was a big, big comps and and with one off impact coming from the working days. That's that's a position that we are seeing a couple of months ago Now the year has started. We are of course off to a strong start.
That's good news. It could mean that what was a possibility won't materialize. But it's too early to say. So we said it. It's a possibility.
We see where we are at the end of H1. It is clear that we are starting the year on a good note, and that's a little good news. But I, there is nothing else I can add to that.
All right. Next question.
Thank you. Our next question comes from Denise Molina of Morningstar. Please go ahead.
Just a quick question on the portfolio pruning. If you look at the the announcement so far. I think it's like somewhere around the upper end 8% of the revenue. And it sounded like you were saying that there could be more that goes under review, which makes sense given that you're seeing growth in software and maybe you've got some other legacy businesses. I'm wondering if you're done, with the review of what we can spec more to come?
No, my comment was really to say versus what we've been announcing with Spellco, you should take more to come. So I'm absolutely within this 1,000,000,000 to 1,000,000,000. I'm not able to tell you where we're going to end up. But it is clear that we have this absolute willingness to become even more focused you have some huge positive knock on impact when you get simpler, more focus, the way you operate in the remaining business is even more efficient. You focus your investment on what is really making a difference.
You globally work in an easier more agile environment. So we're going to be uncompromising with that, but we are not coming with more than the $1,500,000,000 to $2,000,000,000 that's absolutely the envelope on which we are
working. Great.
Thank you. I think we've covered the we've covered the most all the institutions. We have about 5 minutes left. We can probably take another couple of repeat and within the time left. So let's go for the next one.
Thank you. Our next question is a follow-up from Jonathan Mounsey of Exane BNP Paribas.
Really it was just to ask what's the Q1 impact from price rises? I know that we're kind of annualizing price rises from year that we're catching up for raw material headwinds. I would assume therefore the price is materially positive in Q1. Can you give us the magnitude of that effect, please?
So Jonathan, I won't comment, on on on the number. What I can tell you for sure is that We said that, we wanted to be more ambitious on price. We said that it was no longer about just matching the raw material inflation, which we expect probably to be a negative for the full year, but not the same magnitude as last year and far from it. And I think that last year in H2, we showed the capacity to accelerate on price increase and to deliver more impact on the top line and therefore, of course, on the margin, that is certainly the way we've been addressing Q1.
Thank you.
All right. Let's take one more.
Thank you. Our next follow-up is from Andreas Willi of JPMorgan. Please go ahead.
Yes. Thanks for the time. I had a question on process automation. If you look at the Foxboro DCS business now that we see some investments coming back in the market, are you participating in this mainly in your historic installed base or also with new customers?
Thank you, Andreas. I think after difficult cycle, phase of the cycle, you're right, they are both green and brownfield. And what we have today with Avisa, the capacity, 3 cost structure to have, of course, the analytical level with Avisa and our advisor, is very well complemented by our DCS and by our safety system by therapeutics. So is it our ambition to certainly try to go for greenfield, including, you know, with new customers that maybe sometime in AVEVA could introduce to us. We believe that we've been, I mean, that was already 5 years ago, the acquisition of Invensys, we've been progressing.
We are becoming more relevant. So we have globally been gaining shares over the last 5 years on the DCS that in the market, which was relatively subdued. So that was certainly more difficult. Our ambition today is to accelerate. And I have, you know, we have a number of times that show that we are clearly developing among new customers, in, in oil and gas, in mining, in, for hybrid, in in, in some of the hybrid end markets.
I think the next 12 to 24 months are going to be important to watch to see the impact that we managed to do. My feeling is that in Q1, we have both in term of sell, but also in terms of order intake, good sign. We'll have to wait what the others have been doing in the same period of time.
I think we're coming to the hour. So, I just want to remind everyone of 2, 2 dates. So this year, we're doing the EPG. So, you know, most welcome to, to meet with us over there for the investors. And a specific sell side do there as well.
And secondly, just the 26th June, which is our capital day in our headquarters in Paris. So it's probably for those of you who haven't, please, please mark the date. So with that, thank you from my side. Emmanuel, any closing comments before we close the call.
No, thank you. Thank you all. Glad to have a good start to the year. Again, very much in line with our expectation we had various scenario when we build the full year, certainly, you know, they were not all that favorable for Q1, but it's good to start on on the good note. And that was possibility to continue.
And I think what is important for us is, again, clearance, consistency and persistence, the ingredients of the growth at the beginning of 2019 are the one that we have been experiencing and that have been working in 2018. Thank you and talk to you soon. I'm sure.
All right. Bye bye.
Bye. Ladies and gentlemen, this concludes today's call. Thank you all for your participation. You may now disconnect.