Hello, and welcome to Schneider Electric's Q2 revenues and half year results, from Paris this morning. We have John Pascultracourt, Chairman and CEO and Emmanuel Babaugh, Deputy CEO and CFO. The release and presentation are on our web site and on the wire. We will have a Q and A following the presentation. So, with the usual pointing out on the disclaimer on Slide 2, I'd like to pass on to Jo Pascal to take us through the strategy part of the presentation.
Thank you, Amit. I'm very happy to be with you this morning to share about this milestone of Altria 2018. And I'm going to move straight to slide 4. Just to, yes, really emphasize a very strong H1 2018 with an operating profit progress of more than 11% in organic. Terms, which confirms, by the way, the H2 that we had had in 2017, so 12 months in a row with an increase of operating profit at double digit.
And this is based on 2 things. First point, a margin, which is increasing by 50 bps at the top of the guidance we had given at the beginning of the year on second point is really on an accelerating growth, which is developing all, all around the world. So going into a central column of this slide, again, organic growth of the adjusted EBITA of 11% building by large, the indication we had given or the guidance we had given of 7 points, a margin at 14.4 a percent, up 50 bps. And if you take a longer view of a 3 years, an expansion of the margin in current terms of almost two points and inorganic terms of more than 2.5 points. So a persistent on continuous improvement of the margin in line with what we had described 2 years ago in our Investors Day.
Then this is, of course, boosted by an accelerated growth saw a stronger revenue growth in H1 of 7%. Actually, 7.6% if you include the non consolidated de Rishi in our accounts. And this is funded on our 2 business. Energy management, which is growing by 7% in H1. And if you go into the detail of energy management, Well, the good headlines is that medium voltage is back to growth.
So selectivity, as we said, is over. On Q2 is actually growing by 3.2 and that proves as the end of selectivity. Low Voltage At more than 9% in H1, actually, if you integrate the Rishi, which, again, is not consolidated. It's a double digit growth. So we are clearly taking market share in this very profitable business of Low Voltage and Secure Power accelerating in Q2.
You'll remember that we have questioned at times in the past 2 years about the dynamics of Secure Power But Q2 at +5percent while, frankly, we are facing in that business from 10 on deliveries and shortages and components. So we could have delivered more in a perfect supply chain world. And this is complemented with our as a business, which is Industrial Automation, which is really going fast and well plus 10% in H1. And there again, we are taking market share. So quite easy to summarize H1.
All region on all business grow in Q2 and show the great health of the portfolio. Now focusing on, on, on shareholders, that drives to a net income up 7%. At more than 1,000,000,000 first time in our history, all time high. And we keep delivering on our commitments to shareholders, share buybacks, in progress, we have a program of 1,000,000,000 following the divestment of, of DTN last year. We've done 1 third of it with 2,300,000 of shares in H1.
Remind you that H1 was active in signing or closing operations Of course, the signature of the agreement of buying Larson Tubo in India, which will make of India, our 3rd largest country for the group, on the closing of 2 operations in software at Veeva that we closed in H1 on IG X AO, which is supporting energy management. So on the base of that strong H1, on that accelerating growth that we see all across the geographies on the portfolio, we raise our target for adjusted EBITA organic growth for the year to 7 to 9 to be compared with a previously, declared 7% target for the same parameter. What is the growth based on? And again, remind you that Schneider is all about energy management on industry automation solutions, targeting to supply to our customers, full efficiency solutions, energy efficiency and process efficiency. On energy management, which is growing 7% during H1, is benefiting from the fundamental phenomenon of energy transition.
We see an acceleration of every electrification on energy consumption on everything, which is IT, which is powered by AI, storage, big data analytics that part of our portfolio is a faster growing and we have an unparalleled offer to serve this business. Then we see an acceleration of electricity as a vector of consumption of energy. You see it, of course, in the very, media published or media publicized electrical mobility, but you see that everywhere particularly in temperature control, where the way to control temperature, would it be cooling 18 is becoming more and more electric. You see a massive push for energy efficiency all over the world, catalyzed by digitization. And of course, in a way where the grid is sometimes not completely reliable and people want to get more autonomous, a trend to distributed decentralization Energy, which pushes a generation, which used to be upstream of the value chain, downstream into the natural territory of Schneider.
The other megatrend that, we are addressing at Schneider is industry 4.0, which is today boosted by software, internet of seeing on automation. So the combination of those 2 make that we propose to our customers full efficiency solution energy solution, process solution, integrated in EcoStruxure with its 3 layers, connected products, controls and advisors on software. So we keep in H1 we keep. We accelerate the deployment of our strategy, which is very simple on delivering on all engines. More products through our largest, some biggest network of partners around the world, plus 7 points, More services close to 10+9 and digital, which is growing faster than the group, The strategic focus for the next period for the next month is more of the same, which is More new products, therefore more innovations for our partners, acceleration on services, software, EcoStruxure, acceleration of cross selling and keep leading corporate social responsibility and be the preferred partner of our customers who are going into that direction around the world to supply them with digital and power solutions to answers that need.
So going into the detail of that, I'm going to go fast through, a set of, of, more explanatory slides. But more products in H1, we see products revenue up 7.3% and actually accelerating as we go forward. In energy management, that portfolio goes up 6.6%. If you take all the products from Medium Voltage, Low Voltage on on stage of power. Product sales are really growing in all regions.
Remind you that the tremendous success of Schneider is what we do on the home on small building segment, which is a segment we've been consistently developing and growing in the past years. On the back of acquisition, we did a long time ago that we have now consolidated on that we are, boosting with a lot of innovation, a lot of new products. So that used to grow in the past 2 years by mid single digit. That has clearly accelerated in H1, which we sell to small attrition small buildings, to a level of high single digit growth. So great success that we have there.
And we keep growing very fast in some targeted segments on products that we are systematically addressing across geographies. That's complemented by products of automation, which have been really growing fast in H1. And across all board, we grow particularly in connected products. So those products that used to be unconnected are now getting connected on looking for more value at the level of advisors particularly. When we set advisor on to make sure there is no confusion, advisor is a generic name that we have in EcoStruxure for analytics or AI module that we sell on the top of our systems to deliver value on the top of connectivity.
So when we speak about advisors, we are not speaking about physical people. We are speaking about virtual pieces of code that bring value from our systems. One thing I want to mention here in, in this slide, is the alliance that we have made with something and Danfoss, which is a convergence of what we do in the environment of home, to supply consistent systems and make sure that our customers, when they buy things, objects coming from, all of our companies can find them converging on any of our applications. Going to next priority, more services. You remember that The growth of services had slowed down last year, and that was due to a cleaning of a situation or rebooting of a situation in the U.
S. We are back to cruise speed in services, 9% in H1, growing all regions. This is getting accelerated by digitization of what we do once we are intervening on the installed base of our customers, we plug that installed base to go from one shot service to a 20 fourseven context on a lot of value delivered around asset performance, condition monitoring, on predictive maintenance. This is complemented with a very successful value proposition that we deliver today around the world. Which is energy on sustainability services, helping our customers based on the profile of their consumption to source the best source of energy on particularly renewable energy.
You know that Schneider is part of the I100, a group of more than 100 companies, actually, moving together to source, to be, to be getting its energy from renewable sources And we are the biggest provider particularly in North America of Advices and of a digital platform that helps you, doing that. So what do we want to do here is continue to track on penetrate the installed base of our customers, which is still vastly on the served. And continue progressively in the headcount investment that allows us to deliver those services. More digital, 3rd priority, of course, it's the development of EcoStruxure that we are pursuing here. So we are continuously developing applications with within open ecosystem.
So we've got more and more developers working on, on EcoStruxure. We have a very good traction of our digital offers across markets. And we are investing also in a complementary startups to help us innovate at the fringes on the borders of our ecosystem, like Clarity in the field of endpoint cyber security, remind you also that, we have created a digital committee at the board and they've already gathered into two meetings since the beginning of the year. To check monitor and coach our team in what we do in, in digital. On the other side, while H1 was the time of the creation of AVEVA, of which we are very happy.
It feels very good steps. The integration is on track. Cost synergies, the plans have been put into place. We are building revenue synergies with putting together teams of Schneider and Aviva in front of a number of customers. And The market conditions are becoming even better at the moment as oil and gas is kind of reawakening from, the crisis we've known over the past 3 years.
So promising perspective on the, on the side of those key process industries. When you look at at EcoStruxure, the top 2 layers, a layer of control and advisors is growing above the group average. Which is already a strong base. And, while the assets on the management, what is getting connected on the, on our cloud, I'm not speaking all the connectable products that we sell is growing by, by 20% on accelerating. So with that, what we see is more and more traction for integrated EcoStruxure, the appeal of having 1 plug and play architecture, where people can address their double issue of efficiency, energy efficiency, process efficiency, and have one repository Well, you've got plenty of very interesting, projects here, including, by the way, more non decentralized energy, like connecting to your demand, a micro grid, a local micro grid to improve the reliability of your supply and also to improve the sustainability of the energy consumed by your installation.
The last point I want to mention, which is creating acceleration in the top line is cross selling across our market. And that's pretty much across all geographies. So strong cross selling between low voltage on the rest of energy management and, while power automation, EcoStruxure power in everything, which is building, residential, commercial and industrial, very strong traction in data centers and network, which as a segment for Schneider is growing double digit totally. So that's a very strong dynamic. I'm going to come back on it afterwards.
Industrial Infrastructure is there, again, double digit, very strong, there with a mix of not double digit on automation. Which, with a mix of fifty-fifty between energy management and industrial automation, on utilities, which is mostly a medium voltage play, complemented by, by low voltage. But cross setting is keeping on accelerating Here, you've got a number of examples, of segments on projects we have addressed. Proud to say that many of the stadiums that we all followed in the past, in the past period were powered by, by Schneider. And this has no relation with the conclusion of the cup, but we'll come back on that one later.
Commitment to sustainable development as you know, we have, as a sustainability impact, barometer, whatever index that we across the companies where we measure all our progress on those directions and we are on a good track. We've put here example of what we do in Circular Economy, making sure that we help our customers to deal with the end of lifecycle of their products And that's also a very promising place where digitization of course is helping a lot. On the number of recognition, during H1, to recognize all other things we've done. 1 of, of the elements we are very proud of is the recognition of the supply chain of Schneider, whatever the tension, the good tension because there was a lot of demand, and there is a lot of demand still, on our supply chain, Going up from 17 rank to 12's rank on a worldwide, on the worldwide scene as the best twelve supply chain in the world. So keeping on progressing, on being belonging almost to a top 10 supply chain the world.
Now I'd like to go into the detail of our portfolio beyond those trend vessel lines that I just described And I'm going to comment energy management on one side on industry automation on, on, on the other side. So if you look at the global picture of energy management that in most of the case is selling together medium voltage, low voltage, unsecured power, growing 7%, including Dalishi, profitability above 17%, still increasing by 40 bps, on, we want to keep developing that. 3 titles, medium voltage on 3 activities. We see major headlines, which are medium voltage is back to growth. That means selectivity is finished.
Second point is that 1 year ago, we told you we would do a strategic review of what we do in medium voltage. That strategic review is done. And we've identified actions on the portfolio. 2nd point, Low Voltage accelerating to double digit growth on really gaining market share together with the whole chain of energy management and secured power leading the charge at the level of the IT segment and reaching in Q2 growth, which is close to 5%. So very good, very good dynamics here.
What we see here as share priorities is keep working on key targeted segments, maximize the cross setting between those business on Develop EcoStruxure grid, EcoStruxure power, on EcoStrucher Building as a major vector of digitization of what we do. So zoom on Medium Voltage, So growing 0.4% on H1, 3.2% in Q2. So a clear change of inflection, if you remember, Q1 was negative. Adjusted EBITA growing by 110 bps, which is putting us on track to reach or to get to our target of an improvement of operating profitability for the year between 100 to 150 bps. What we see in H1 is a sound execution of our strategy, acceleration of product sales to partners, which are common with Low Voltage, acceleration of services, 1 year ago, we told you we would put into place in the next year, which is finishing today, an organization called policy stems streamlining what we do in the field of equipment and projects, and that has been deployed on the platforms.
On what we see in H1 is a strong contribution in the U. S. In China and in the data center segments. What are the priorities again, while more of the same? More products, more services, more automation.
And I want to insist for you. On the 2,000,000,000 that we have for review, we've identified 500,000,000, where we need to find solutions to improve the those, those 500,000,000, let's say, are underperforming with respect to the rest. And they are less energetic So we're going to find in the next 18 to 24 months solutions of all sorts to improve the profitability of that business. And it could be, could go as far as partnership disposal, but make sure that we correct those parts of the portfolio. Low voltage, nothing much to say.
I mean, plus 10% growth, we are gaining share in a very profitable business. We are increasing the profitability. Again, one of the stars here is everything we do at the level of the small attrition, home billing, but also in every kind of other segment where the synergies with Medium Voltage are really paying. Data center growing a big double digit. So on the back of what we do in Secure Power.
So what we want to do here is to keep growing ourselves through partners. Our distributors, our specifiers, our contractors across the world, well, strong partners of Schneider, accelerate digitization around EcoStruxure power and building and keep building synergies or build the synergies from the ASCO acquisition last year, which is serving applications like data center microgrid that I already spoke a lot about. And keep leveraging what we acquired in IG, X AO, to develop more software to help our customers deploy their system. No need also to mention that across all that chain, the acquisition of Larson Toubo on the plan of integration is a big focus of the player to come. Finally, Secure Power on good news on that side that there is a reaffirmed or growing growth as of of on H1.
So acceleration in Q2 to 4.7%. The order intake in H1 is actually double digit. So Here, due to some issues on the supply chain of electronics, we couldn't deliver everything that, we would have wished to So that means we are starting H2 with a good momentum. The adjusted EBITA is stable. And that is very largely due to things we had to overpay to or to pay at a more expensive price to keep supplying our customers who are in demand, component, transportation, airfreight.
This, the play which is working really, really well is everything we do in the data center, where the all group sales are growing double digit combining everything we have in EcoStruxure from building power and IT, the what we, the service we do in this space related to Secure Power is increasing mid single digit while on the same segment, MVLV sales are up by a very solid double digit. What we see also is that the smaller stage of power systems are boosted by the development of Edge The more our customers go to the cloud, the more they need to, beef up the edge on that edge needs to be supported by local power supply. We see more and more growth in non IT end markets that we synergize with what we do in medium voltage and low voltage. And services are up mid single digits. So I would say all the engines of Secure Power are up and running very solidly.
So what our priorities here is confirm our leadership in data centers, keep growing the edge, keep growing the non IT market, a pretty simple roadmap for what we have to do. And finally, industrial automation where, of course, dynamic is extremely strong. +10 percent, 17.3 percent adjusted EBITA margin, 50 bps of improvement in current terms 10 bps in organic terms, strong growth across Discrete and hybrid on what we see that process markets are starting really to accelerate. Adjusted EBITDA margin 10 bps organic. Well, it has been there again, like in, in Secure Power impacted by a supply chain tensions on electronics that we had to somewhere else that impacted our cost.
OEM grows very strongly across region. Ecostructure machine on EcoStruxure plant is progressing well. The adoption is progressing well, very happy with the integration of AVEVA. On the perspective of the company, on all regions contribute to strong performance. So there again, no mystery.
It's about more products, through our partners and distributors, roll out EcoStruxure plant and machine, drive synergies with Aviva, And now that the process industry is accelerating, make sure that we balance opportunities because we are a full liner from discrete to continuous process. On this being said after the explanation about this BZH 1, gonna hand over to Emmanuel for the financial part.
Thank you, Jean Pascal. Good morning, everybody. Pleasure to be with you to go through, our H1 18 results and we're going to dip together, go deep dive in our financial performance. Just maybe one preliminary comment on this very strong set of numbers we're coming up with. This is of course coming from a conjunction of all our engine powering and, you have seen that in Q2, all our businesses have been growing and nicely growing.
You see that all our regions have been growing. We see the accelerated top line growth in Q2 and the very strong performance overall in H1 of course, the margin improvement, at the top end of, our objective. That's really the combination of all that, which is giving us this very nice growth. Now, let's go into, some detail. And of course, let's start with, sales numbers.
Sales have reached 1,000,000,000. It's up plus 1.2%. Of course, we've been very much impacted by the Forex impact minus 7.2%. We reflect it at the beginning of the year. We said most of the negative ForEx impact is going to be on H1.
That has been the case. Almost 1000000 negative impact coming from the Forex on the top line. We do expect a much lower impact on H2 based on the current currencies, with a vision for the full year of around 1,000,000,000 negative. So as you can see, H2 is going to be less impacted by the scope. When it comes to the margin, we have a negative impact of minus 30 bps for the first half of the year.
And here again, we think that, H2 will be less impacted because for the full year, we expect an impact to be around minus 20 bps. 2nd impact, out of the organic, this one is a scope, plus 1.4%. We still had some impact due to the disposal of DTN, but of course, we have the benefit of the acquisition of ASCO and the AVEVA business for 4 months over this H1. Now when you look at the overall organic performance, 7%, even almost 8% organic in Q2, actually if you build a pro form a with Delishe, you get to this 8% and you see that for the all H1, we know are clearly need growing in all regions. Asia Pacific still is a star +13 percent, China has continued to be a very strong double digit growth And we finish H1 with a high teen growth in China, quite a remarkable performance.
We certainly stay optimistic for China for the coming months, but we flagged at the beginning of the year that the growth that we are expecting for H1, would not be sustainable for the full year, but we still expect very nice dynamism coming from China in the second part of the year. China was not obviously the only country growing, in Asia Pacific in H1, a very nice double digit performance from India. Asian 5 doing very well with countries such as Indonesia, Vietnam, doing extremely well. And Australia also back to nice growth. So it's a kind of a full positive scorecard for Asia Pacific in H1.
North America, 2nd performer, +7percentaccelerationinq2@plus8percent It's, of course, 1st and foremost the U. S, but the performance in Canada and, in, the, in Mexico is good as well. But in the U. S, it's the confirmation that we are gaining market share, in, consumption in data center that we see a much better oriented market, when it comes to infrastructure or an industry investment and that translate into, the number of our U. S.
Market. Western Europe now plus 2%. That is, of course, the big acceleration of, the, Q2. Remember, Q1 was flat. We moved to plus 5% in Q2, very nice acceleration, which as expected, but that confirmed that we have a pocket of dynamism in Western Europe and plenty of countries where things are developing me well, but I will elaborate on that in a few seconds.
Last but not least, rest of the world, so the other new economy outside Asia Pacific stable nice performance around +5 percent, and we see globally new economy benefiting from increased price on energy or on, resources and raw materials, and that is helping the economy of many of these countries. So let's now dig a bit more, in some of the, region. And I'm commenting each one that I can anticipate one news for the Q3 is that no doubt the best performer in Q3 has been France with a 2 star. But joke apart and coming with Western Europe France has been flat in overall number, in H1. And, it's, it's, in fact, adding the very nice performance both in Low Voltage and in Industrial Automation in France.
So we've been, I would say, slowdown by the medium voltage backlog, which was low and therefore, it was expected. It impacted the overall performance, but clearly some nice area of dynamism in France. Excellent performance. I would say brilliant performance in Spain where we are gaining share where the economy is also in good shape. Very good performance in Italy where I'm not sure economy is growing that fast, but we're actually growing very nicely.
United Kingdom, actually, we've been growing, in the UK, in Q2. We've been saying for quite a while that we had some question mark on, you know, the continuation of dynamism in the UK. I think the question marks are still there. And we don't know what's going to happen in the economy where the wait and see attitude continue because of the uncertainty around the Brexit. But we've been doing pretty well, in Low Voltage, even in industrial automation in, in, in the first half of the year in the United Kingdom.
And Germany, down altogether, though this is adding a very nice performance in, industrial automation. And like in France, we had a very low backlog in Medium Voltage and that explain the performance in Germany. Moving to, the rest of the world, what I would like to flag here is really the nice news coming from some of the region that have been difficult in the past years, namely Middle East And South America, Middle East probably not coming as a surprise when we see energy price going up. That is, of course, improving the economy of many of these countries. South America accelerating not so much Brazil, which is close to flat, in fact, but in other countries in South America, Africa continued to be positive.
And Russia has really been, the country where we've been seeing some difficulties, notably because of the sanction, the uncertainties it, or their triggers. And that is slowing down the Russian business. So let's see how things unfold in, in, in the coming quarters. North America, I think I said it, I am not going to come back on it. And just in Asia Pacific, to highlight the fact that We maintain our positive view on China for the coming quarters and that China is not the only country growing nicely in Asia Pac far from that.
A bit of an analysis now, on the, growth, both at the top line level and the adjusted EBITA you see that when it comes to the growth, all businesses have been weather stable but at a very high level in the case of of low voltage or clearly accelerating in Q2, that has been the case of medium voltage. Jean Pascal commented it. That was absolutely expected. Secure Power accelerating and the order intake level was, even better than that. So we see a nice performance of energy management north of 7% if you include Delicino and Industrial Automation, at a fantastic performance, above 10%.
Again, gaining market share clearly in several end market and in several geographies. Now when you look at, at the margin, all margins are progressing or, in the less favorable scenario, they are flat. On Medium Voltage, we stay at 8.4% with a very strong negative impact coming from the Forex and the disposal of DTN. The organic growth is there. And as we see a much lower impact on Forex, and we are now with the scope impact behind us, we do expect a nice improvement of the medium voltage margin in the second half the organic growth targets stay in change 100 to 150 basis point.
Low Voltage already at a very high level impacted by Forex, but still a nice, organic improvement. Secure Power, stable organic growth, Jean Pascal said it, we've been facing a lot of headwind coming from inflationary pressure notably on electronic components and off rate. Otherwise, the performance would have been significantly better, that give overall an energy management progressing by a nice 70 bps, and the adjusted EBITA margin. And when it comes to Industry Automation, it's a nice progression 7.3%. Here, the Forex has been, positive.
And it's an organic improvement of 10 bps. Again, inflationary pressure, cost on the freight lower productivity than last year because of the tension with this kind of increase when you grow at that speed, but I will come back to that. You start to see pressure on the supply chain. Otherwise, the performance would have been even higher. Okay.
So now let's move to the gross margin, analysis. We have a nice 40 bps improvement of the gross margin at 39.1%. What have been the drivers for that improvement? Well, first of all, let's suppose on, the price, evolution. So we could say, on price, you know, we were meeting outside China and transactional to price more than the Eremi impact.
Well, that has been the case. So we can say that this, I would say, initial objective has been reached and we have been increasing prices on transactional outside China, at higher level than the net impact of the or the impact of the raw material. When we look to China, we see the situation improving because there, we have a raw material, impact, which is still negative, but we are close to flat in terms of price evolution. So this is an improvement versus the previous year. Now let's be clear, in this very inflationary environment, I don't think that we can be satisfied by just meeting this initial objective of pricing up to the level of the raw material inflation for the transactional.
And therefore, that means that more actions are needed and more action will be taken to keep increasing price to face holistically, I would say, the inflationary pressure, not only on raw material, but on wage on inflation on wages. Elaborate on that in a second. On everything linked to procurement, we talk about electronic component, but we have inflation popping up everywhere in our procurement. We talk about freight and we need to price for that. And we're going to talk about tariffs and we also need to price for that and we need to make sure that we absorb the impact of tariff increase.
So that means that we are, of course, raising our ambition in term of price increase. We need to go and we want to go and we will go much beyond the raw material inflation. It's starting, now, you know, since the beginning of the summer, It's going to come progressively. You will have, of course, some impact in H2, but certainly, as we progress through H2, you will see a growing impact of this price increase on the bottom line. On the non transactional EMI, I mean, to always avoid any kind of confusion.
Remember, it is there, but of course, we don't track the price increase on systems. So you have here by definition a negative amount that is not compensated. Now let's move to productivity. 1.4. Of improvement on the margin because of productivity see last year, it was 1.7.
So yes, the productivity is under pressure for all the reason I mentioned. We are seeing increased inflation. We are seeing tension on the supply chain, which is not enabling the same kind of work to optimize, the footprint, which creates some inflation like the airfreight. What happened when you are running late? Because The order intake are growing extremely fast.
You need to meet very strong customer demand. You need to deliver where you use air freight and when you use air freight, that is increasing your cost and that decrease the productivity. So a number of element there that still allow us to generate a nice, productivity and a nice impact. That's the main driver for the margin improvement. But just to illustrate the tension that we have been facing because of this very strong growth, in H1.
For the rest, really, I mean, nothing, super surprising mix about neutral. So no specific comment to, make on the mix here. Labor inflation, I mentioned that. I mean, that's one of the component of the translation that we are facing, no surprise. R and D is going to keep increasing as we keep investing for notably our digital offering.
The FX impact is about neutral on the margin and then you have a slightly positive impact coming from the scope. Jean Pascal has been already commenting a lot on the Gartner performance and so on. Just one number productivity in H1 is giving us a boost to the profit of 174,000,000 it was slightly more than 200,000,000 in H1 of 2017. So we are roughly speaking 30,000,000 below. So you can see, it's still a very solid number, but we acknowledge that we are slightly below the productivity of last year, which was a record 1 and absolutely exceptional.
Remember that In H2, we were close to $230,000,000 of productivity. So that was clearly, a very, a very remarkable performance, last year in productivity. We're doing a lot of great things on our supply chain and, you know, beyond momentarily tension that we are seeing, we keep, improving on the long term, the efficiency of our supply chain, some of you, went to, China to visit how we are implementing our EcoStruxure technology to make our factory more efficient. We continue to build an optimized footprint and to build agility and a really tailor made approach for the suppliers. Therefore, I would say the underlying trend of the supply chain remains super positive.
We're going to deliver another solid performance in H2 But, we wanted to be very transparent with you on, on the pressure that we are seeing coming from inflation. And notably, coming from the freight cost. Many of you may have heard about tension on freight in the U. S. Because of, scarcity of truck drivers, I think that other company have been, have been reporting on that element.
So that gives us a gross profit of EUR 4,818,18,000,000. It's up organically by 7.2%. So slightly faster, of course, than the top line. The gross margin rate is improving nicely as we have seen. And below the gross profit, you see the SFC growing by +5.1 percent.
So yes, we are investing and we're going to continue to invest. We see nascent promising market. We want to take leadership there. We are building our leadership in digital. We accelerate in services.
We've been also accelerating on marketing and making sure that we optimize our commercial impact in the channels. But we still managed to generate a nice two point of difference between, the organic top line and, our SG and A, what we call the SFC, and that generates an extra layer of improved profitability. That gives an adjusted EBITA of 1,000,00769,000,000. It's up plus 3%, but organically up plus 11.1% and Jean Pascal said it. It's not 12 months in a row with more than 11% organic growth of the adjusted EBITA.
So very solid consistent performance and an adjusted EBITA margin of 14.4%, nicely up +50 bps. Below the adjusted EBITA, you have other income and expenses Of course, a lot of volatility on that line. Last year, you had the capital gain on DTN. This year, of course, you don't have that. But you have mainly the acquisition and integration cost for the various acquisition that we have done and on which we've been working, such as ASCO AVEVA or, LNG, of course.
And you have also some impairment of asset and notably AVEVA has been reporting on that. Some capitalized R and D coming from Schneider Software, which, among the synergy on R&D, are no longer going to be used and they've been depreciated. Restructuring, EUR 87,000,000 negative. This is what we said. We are back to normal crew speed on restructuring.
We said for the year between EUR 150 and 200. That's what we are expecting for the year. Amortization of intangible minus 1,000,000 growing slightly versus, H1 of 2017. That is due, of course, to the new acquisition that we have made and some of the intangible that we amortized, whether on ASCO or on AVEVA. Financial costs, 159,000,000 negative versus $184,000,000 negative.
That's a very nice improvement and that's a great work that we have been doing, in order to reduce the average cost of our debt. We are now quite neatly below 3%. And that's, I think, a very good news for the future because we also have been building a long duration for the debt. So we are well spread over the future in term of redemption of bonds. Income tax, a 23% effective tax rate for the group, which is in the middle of the 22% to 24% bracket that we shared with you at the end of 2017.
The discontinued operation impact minus 1,000,000. This is a solar business here with the loss of the H1 plus still some impairment. I do expect H2 to be much better, and, and therefore, we expect to come with much better news in, in H2 on the performance of the solar business. Last element, quite marginal, but certainly, a nice opportunity to pay attribute to Delixier Equity Investment And Minority It's slightly negative minus 7, but it's made of many, many things. And notably, you know, that we have in some JV in China, some minority partners.
His JV are doing very well. So here, we are retreting the profit that we are making there. But if you just look at the daily sheet net income, it's, 1,000,000 in H1. It's up 1,000,000. So it's a 66% improvement of the net profit with a combination of above 20% top line growth, but also a very nice margin improvement.
Let's move to the cash flow now. Operating cash flow growing very, very nicely at 1.5 1,000,000,000 that reflect the good growth that we are seeing on the business. Of course, when you grow So fast, the top line, the question is, well, you're going to see that in the CapEx and in the working capital. When it comes to the CapEx not the case. You can see that the CapEx are very well under control.
So we manage to cope with, the increase in volume without accelerating on CapEx minus 1,000,000 versus minus 1,000,000 last year. That gives an operating cash flow growing by almost 1,000,000. And then of course, the other impact, which is to large extent mechanical, and this is a working, capital impact. And notably in trade working capital, you have a 300,000,000 plus increase. We were expecting that.
It's coming for, I would say, twothree from inventory, one third from the receivable. There is probably a note of cautiousness on the level of inventory at the end of June. In order to make sure that we are able to deliver our customer, given the very strong growth that we have in the order intake. But that should, be under a more reasonable proportion in term of growth in the second half. Free cash flow of 1,000,000 indeed, 150,000,000 below H1 last year, which was a record high, but again, This plan is very strong working capital, component that I described.
Dividend, that's what we've been paying to our shareholder. Acquisition That's the mainly the AVEVA acquisition and the IG, Hixeo. Net capital increase, this is a share buyback. And on FX and others, this is, all the other impact on the cash flow, FX, but also contribution to the pension plans where we have a deficit. And that gives us a net debt of about CHF 6,000,000,000 at the end of, June 2018.
Remember, the vast majority of the cash flow will be delivered in the 2nd part of the year. We've continued discipline capital allocation. Many of you have been asking us on the structure on the LNC acquisition. I think we've been explaining that discipline on capital allocation was one, not the only one that one of the reason for it, we've been paying a significantly increased dividend, at the end of, of H1. Buyback is on its way.
We've been doing a bit more than one third of the buyback and nothing has changed on the M and A policy of you. We don't need to do M and A and we just look at M and A on an opportunistic basis. If we see things making sense and really strengthening the core of our portfolio. Well, that's it for the detail. Back to you, Jean Pascal for
Well, we have done a very strong H1 in terms of dynamic. We have very strong momentum. It's very well balanced between products and solutions, actually products, slightly overgrowing and what we have in in solutions. So we are upgrading, our target. And you remember that the core of our target is our operating profit.
So between 709, with respect to around 7% initially. And that's based on a balance of growth. 5 to 6 with respect to 3 to 5 initially because, again, we are starting H2 with a pretty strong tailwind in every direction. We are attached particularly to keeping on improving the profit. So maintained on actually narrow the guidance of 30 to 50 bps organic improvement of the adjusted EBIT.
They're recognizing anyway that there some headwinds coming in front of us, like the uncertainty of the geopolitical environment, tariffs, which are not dominant, but which are raising seeing. On inflation that we are actively, actively combating with pricings that we started last year during the 1st part of the year, but we are going to accelerate in H2. So well, we are riding very powerful waves at the moment that energy transition in industry 4.00 in a world where the economy is pretty well aligned. On positive in all parts of the world. And, firmly decided to increase our profitability while also gaining market share to create the ground of a more solid place with our partners and with our end users.
And I would say with that optimized note, I would open the place to questions.
All right. Thanks, Jean Pascal. So I think we have a lineup of questions on the line as well, but we start from maybe from the room. So Gail over to you. We try to keep it one question, 1, 2 questions, and so that we can accommodate everyone in the timeframe.
Thank you. Good morning. Gail DeBry from Deutsche Bank. Two questions really. The first one is about industrial automation.
I find it a little bit surprising not to see any operating leverage for the division, given such a strong growth environment. I mean, we've generally seen a much better margin momentum at some of your competitors. And I guess they've been facing the same sort of issues in terms of inflation, in terms of shortages of components, electronics, and so on. So could you perhaps elaborate a bit more on the mix headwind potentially you had in the first half comment a little bit more about the digital investments you've been doing and also in terms of how you see all these headwinds trending in the second half of the year. The second question relates to, Larsen and Toubro.
I think they've just published, relatively good numbers yesterday? I mean, can you give us a little bit of an update on, how you see this acquisition, obviously, in light of the recent numbers? Thank you.
Okay. Well, again, thank you for that question. On Industrial Automation, while you mentioned the comparison, it very important for us to grow that business. We consider that, you know, that in industrial automation, the market share is sticky for the future? Would it be on a machine or would it be within the end user standards, at the plant?
So we've got a very good traction at the moment for EcoStruxure machine and for EcoStruxure plant. And for us, at such a level of profitability where we are today that we can keep improving, it's really important to have such a strong dynamics of top line, right? On its accretive for the company. It's one of our best business at Schleiner. So I think it's fair to say that you need to compare both things, right?
Personally, we don't pay our shareholders in percentage. We pay them in euros, dollars, whatever, but in really solid profit, which are a combination of growth and percentage and really This is a business where, your presence, the conversion of customers is really important. That's one. 2nd point on the margin on the first part of the year there, there is real element on on the supply chain. And I know we speak some during this review today about the supply chain.
I think what we have to integrate is that supply chain is facing those kinds of issues when you have moment of breakthroughs or ruptures in, in the sales trend. And here, 2 years ago, we are kind of flat. Last year, it was more 3. And then suddenly, we are moving to very high levels. By the way, on certain lines of products, you are not speaking about 10, you are speaking about 200, you are speaking about new lines of products, which are getting very, very traction.
So those moments are the moment where you need to correct, and we've decided to privilege our customers, not to privilege at any cost, but to make sure that they would get delivered. We don't want a machine manufacturer, not to be able to deliver a machine because the product would be missing. So we had to do some pretty big things in H1 to make sure that the customer satisfaction of our customer would stay at the top And by the way, I'm very proud of what we have achieved in this space. We, as you know, measure for now number of years, the customer set of our customers every quarter on Industrial Automation is a place where we've been the best. Now I think we're entering in repair and now in H2 which will be much more favorable from that point of view because we've resolved a lot of issues that we had now for 9 months, 12 months.
I think we started to speak about that 2nd part of the year last year, on, I think most of the issues are behind us. On the other side, on EcoStruxure, You spoke about the digital investment, EcoStruxure Machine On EcoStruxure Plans, seeing the dynamics that we have here, we are putting more people to support the strong growth we have here. And I don't think we have the same, the only one speaking on the market of investing to support what is happening in the field of industry 4.0. For us, this point in time was a convergence of those things. But you know Schneider or you've been knowing Schneider for a long time, seeing that we have probably one of the strongest dynamics in the sector today, respect to where we are 15 years ago, on a very profitable business, on a business, which is very important for the future, is something very important to me.
And don't forget that unlike some of our competitors, a part of continuous process, is quite significant in our portfolio. And this one was less dynamic, not because of us, but because of the end market and that just starting, really to to, to come back up, which means that on everything, which is discrete on hybrid, our dynamics are much better, really much better. Some of the figures out there. And again, I mean, if you think beyond a few months, that's really important in that kind of industry because it's sticky. Not a one shot.
So on L And T, I don't want to comment frankly. Today, we are in the process of putting the 2 companies together. We still 2 different companies. Of course, there are very severe regulation on the topic everywhere in the world, but we believe, of course, that India will be one of the largest market for electrification and automation in the years to come. We have already built in the past 15 years, a strong presence there.
Very diversified with some business that we do on in India, by the way, we are really Indians in India on the combination of, of L And T. Gives us a full coverage of segments of territory, in a market which promises to be the places of the highest development in the years to come. I can't really speak to that. It's not, but, but all the things we say at the time of the acquisition are really confirmed that. And we confirmed that
the Indian market is in good shape. I mean, we've been growing nicely. So, no surprise that L And T is also doing well, and it's good news.
And I would say, you know, it takes a long time in our business to develop. I think most of my, time at Schneider has been developing new markets. Schneider had the privilege to be at the beginning of China on the beginning of some other countries. On India has been a thing which is very recent for us, and we've been really successful at doing it. I mean, there's been very good response of the Indian market, but face it, we are still not mature as we are in other emerging countries like spoke about Indonesia.
We've got 30 plus years in Indonesia of very strong focus. Markets in Latin America many, many years we are just at the beginning of how it's trading, and it's successful on it as a lot of possibilities for the future. On the balance is also our exposure, right? Some people sometimes look at us and say China, no, right? China is only part of what we do.
On, on we have balance across many countries. There is no other company, I would say, which is so balanced in between areas today on all of those regions. Are on delivering very solidly at the moment. And we have momentum, right? We don't see like kind of shaking.
All right. We move to the next question. I believe we have 8 or 10 questions. So can I request just to keep it to one question so that we can accommodate as many we'll take one on the on the video now?
We will take our first question from Andreas Willey from JPMorgan. Please go ahead.
Yes, good morning, everybody. I have a question on what you said earlier on Connected Products and that that's going well and that a driver for also your share gains in the low voltage business. Maybe you could elaborate a little bit more. What does it do to to kind of average selling price versus, as the portfolio moves to more connected products, do you fully recover the higher costs of making these products connected. And when you sell a connected product, can you track and kind of prove that that triggers then a higher attachment rate or higher pull through of services or solutions on top?
Or are customers looking at this pretty distinct in a way in terms of buying decision when they buy some of these products, and then when they buy stuff that goes on top solutions or so on, both in terms of low voltage, medium voltage data centers, that would be helpful. Thank you.
Yes, Andreas. Thank you for asking that question. It's actually a very interesting question because connectivity on automation on on supply and digital value is an old story in industry automation, which is getting regenerated by industry 4.00 and much more interaction between our merger, between IT and OT. But I would say in electrical distribution, it's the beginning of a story. Many, many, the vast, vast, vast majority of everything that was sold in the past in electrical distribution was unconnected.
And it doesn't make sense. It doesn't make sense because, the OpEx linked to those systems is huge because people don't know what's happening on which part of their installation. Do you see a future we are seeing would be unconnected? We don't see it. We think we have a huge potential in making sure that things which are in the basement of buildings, in the back of electrical room of plants would be connected on, by the way, interacting in real time with a grid which is proposing more and more commercial offers for green for better electricity and better energy.
So then is a lot of potential. 2nd point is that we are clearly leading this sector on gaining share and really gaining share. It took us time to put together our EcoStruxure agreed our cost structure power, it's coming all integrated. Our last products, like our ARC could break her called MTZ, is, I would say, software defined breaker that you can completely upload and download. And that means a lot of savings for our customers to adapt where what they have.
So now back to your question. When you sell a connectable product, it sells at a higher price. Does it sell today at a higher margin? The answer is no because many of those lines of products are in their infants So if we build the volumes and when the volume is coming to the right level, then you've got margins, which are exactly comparable, if not better, than what you have in the old products, but you have just not the old products, but the non connected products. But at the beginning, like for any product when the volumes are lower, you have to embark more cost and let's face it also.
As we are the infancy, we are still learning. So The good news with digital is that you can AB test and you can improve, but that means during the time you've got more cost into adjusting your product. There is some costs associated to the fact of selling our advisors, which are now starting to get a good traction when we sell resource advisor, power advisor, building advisor, and so on, asset advisor, and so on. You need consultancy with your customers. And at the moment, it's entertaining cost, but what we are watching, what we are monitoring is adoption.
Then after in terms of stickiness on the capacity to, to detect new services, it's completely another ball game. I mean, you go from the one shot sale to being always connected to your customer. So of course, the upgrades are much more obvious. The coming back on the interaction with your customers are completely different, but Look, I mean, it's first, we need to get connected. And then after we need to deliver the services, and there is some investment, associated to it, but it changes, completed the game of energy management as we knew it.
And somewhere, it was closer to what we have been doing for hedges in, in industrial automation, except that one world is 95% unconnected while the other world is probably 95% connected. And this is what we have to ramp up the next years to come, but we are all very excited to, to do that.
Thank you. We can take our next question from Ben Oglo from Morgan Stanley. Please go ahead.
And thank you for taking the questions. 2 very quick ones. Emmanuel, on pricing actions, obviously, we're still net negative pricing in the first half. Can you can you tell us how you're navigating it in the second half? Any, any positive signs in China?
And and is there a realistic scenario? How easy is it gonna be over the balance of the year to compensate raw materials? So that's question number 1. Question number 2, obviously, a lot of chat so far around supply chain and shortages. Obviously, we we've had new tariffs come in place on capital goods, since the beginning of July and and things like printed circuit boards diodes, resistors, etcetera.
In the market, generally, I'm not I'm not necessarily asking about Schneider specifically, But have you become aware of any new component shortages resulting from those tariffs?
Thank you, Ben. Happy to take the first one, certainly. So on pricing, actually, we are compensating making raw material inflation on transactional outside China. And we always said that that was the objective. So In H1, we are in line with the full year objective.
And I think we keep saying that on China, things are as we said better. Remember, prices were going down in the past 2 to 3 years, for the first half we are close to stability. But as we said, as the game is different in China and of course, the growth that we're experiencing there is driving a different play, on the margin and with a different dynamic. Having said that and I said it very clearly, the fact that we are actually today compensating the raw material inflation by increasing price is not enough. That means that we are going to accelerate further on price increase to go beyond raw material inflation compensation and take into account the other area of inflation that I mentioned in the procurement for the supply chain on the transportation costs on the tariff as I said.
So that's an action for H2. It's going to come gradually. It's 2, 3 months in order to have a full impact of a price increase. So it's going to come. It will have impact on H2.
At that stage, I'm not able to quantify, what could be the extra benefit coming from it, but we certainly expect some extra benefit coming from accelerated price increase.
On the impact of tariffs on the supply chain?
Well, that was on the shortage of component. I think that the question, just on tariff, we said that, based on what we know for the time being and I want it to be very clear, very difficult first to understand exactly what's going to be magnitude of the impact. Many, many question has been asked still to the U. S. Administration to understand exactly, how on which component the tariff would apply, but we believe that for 2018, we could have a negative impact up to 20,000,000.
That's a very maximum. So I'm not saying that it's necessarily going to be 20,000,000, but up to 20,000,000. The full year impact, of course, would be higher and there are more measures that are going to come. But then of course, we're not going to stay in mobile and we're going to take action to address as much as we can these extra costs. So I'm not able to anticipate what the 2019 impact is going to be.
Then I think you had a question then on component shortage. I think it's something that we globally manage with our supplier and the supply chain. I'm not sure there is something specific linked to things that would be impacted by tariff.
Add to that, Ben, because it's kind of a strategy question. From the beginning, we've had a view on our supply chain that would be multi regional with respect to some of our peers. Because for one reason, strategically, we are more positioned on the smaller customers, on the more local and diffuse customers, And the more you go deep in the room, don't forget our global and very diversified presence, the more you're going to Local markets, the more the standards are different. And even by, I think the best epitome of that is, plug adapters at all of you transport when you go around the world. It's never the same on that what Schneider faces.
Therefore, respect to our peers, we have a very regional setup in geographies, which in the time of, let's say, bit more contentious, tariff issues becomes a real asset because we are already configured regionally.
That's very helpful. Thank you.
We will take our next question from Daniela Costa from Goldman Sachs. Please go ahead.
Hi, good morning. Thanks for taking my question. 2 quick things. So the first one on growth on our any growth. I guess you moved the target to 5% to 6% but you did better than that in the first half.
So there's some deceleration implied. Is this just pure comps or do you think some of those macro pressures you're seeing can lead growth to slow down a little bit going forward? That's my main question. And then the second thing, the strategic review for a medium voltage is now completed. You seem very happy across the portfolio that you're gaining share.
And with everything, does this mean that we're maybe now in the next phase more about M and A than, for revisiting parts of the portfolio like we've, like you've done over the last 3 years, 3, 4 years. Those are my two questions. Thank you very much.
Yes. On the organic growth for the full year, I believe that we expect another strong 6 months in H2. We flag the fact that China would remain, very well oriented, but remember that we've been facing, high teens growth in China in H1. So the simple fact, if you want, is creating some differentiation in between H1 and H2. And that explain why we are not necessarily expecting for H2, the same growth than in H1, but we do confirm that we expect a continuation of a very nice momentum on the top line.
The guidance is clearly highlighting that and we see what is the final performance. On the M and A, do you want to?
Yes. On, on, on, on, I would complement what Emmanuel has said, we've been through a very good acceleration our top line, which is good and you have to integrate a certain number of uncertainty. So that we integrate in, in what we tell you for the second half, all right? And sorry for not being completely able to predict everything in the world, but I think we're all facing the same the same questions. On M and A, I would say frankly, no change.
First, let's start by we keep on pruning the portfolio. And now we've zoomed on what we want to do in medium voltage, but it's not the only part of the portfolio. We start to screen for what 18, in the past 2 years, we've divested a significant number of activities that made our portfolio stronger and better. And it was not only about profitability, it was about the strategic performance of what those things were doing at Schneider. So that's number 1.
And at the same time, we don't change our approach to M and A. It's going to be, we do M and A only when it brings a very strong strategic value to Schneider on at a very good return inside the portfolio. But we've been very clear since, I would say, in fences, that we are in a new phase of the portfolio. So thank you very much for asking the question, right, because I believe it's important to reiterate this.
Okay. Thanks Daniela. Next question, please.
Thank you. We can take our next question from Alastair Lizzley from Societe Generale. Please go ahead.
Hi, good morning. And a couple of questions, please. Just firstly on productivity, I thought that looked pretty decent despite the negative impact from component shortages and additional freight costs. Can we assume that the kind of underlying was around the usual run rate of 1.7%, 1.8% of sales or perhaps even a little higher due to the kind of sort of strong top line? And just to get a sense of the headwind from additional costs in H1 and how that could improve in the second half, And then just secondly, just on kind of growth.
Obviously, it was a kind of you set a clear goal to prioritize growth for the beginning of the year. You're kind of delivering on that. Does that approach continue as forcefully into the second half? Do you still see as many opportunities today to tap as you did at the start of the year? And where's the greatest potential still in terms of further market share gains?
You flagged gains in low voltage. Can that continue at the same current momentum over the next few quarters?
I think the productivity. So on the productivity, I said it we're still coming up with a very solid number despite of the few headwind that I mentioned We, as I said, certainly view the underlying productivity remaining strong. And therefore, we don't see any kind of change in the trajectory on the productivity that we managed to generate in the past and until last year. So yes, we have a number of things to absorb. The tension are there, and I describe how it can create extra cost in the supply chain.
I think if anything, we are having day after day, a more efficient, more powerful tool. So we are extremely confident on the fact that productivity is going to remain strong, very strong at Schneider. And again, H2 was a record 1 last year with 200,000,000 productivity. We are, I'm not saying that we're going to get there, but it should be a nice H2 in term of productivity and the story continue beyond 2018 for strong productivity generation.
And just to correct an impression of, the priority is always on starting from H1 on the improvement of operating profit. So that's how it starts on things. And after, While we've been really encouraged by the dynamics that we have for our offers in geographies on the traction that we've had, The mix is coming in different fashion across the world, but we see a continuous traction for what we propose. It comes from several specs, it comes from the fact that we have a very strong partnership with thousands of partners around the world, and we are enlarging their offer. Is that they can tackle more, more solution.
It comes from the engines of our growth that we have been systematically pushing over the past years. Some of it come with the cost of investment. In services, it's more account on the road in digitization, it's more people to convince or to work together with our customers to architects their digitization. So there is a cycle time, there But we see the same opportunities coming in front of us. And as those business gain more maturity, their deployment is getting more profitable.
On the top of it, I, because I think we discussed already that, I think in H1 because the strong acceleration, we face more issues on the back office costs that hopefully we're going to have in H2.
All right. Thank you. I think we got another 10 minutes or so, so we'll try to fit in as many questions as we can in that space. Next one, please.
Will now take our next question from James Moore from Redburn. Please go ahead. Your line is open.
Yes, good morning, everyone. My first is on SFC And Productivity. On the 137, you split inflation reinvestment and gross savings last year. I wonder if you could do the same this first half and talk about how you think those pieces move into the 2nd half. And on productivity, you're clear that the 2nd half will be down from the 2 24 last year, but will it be below the $174,000,000 in the first half, or should we think about similar or up on that?
And my second question is on China. Your high teens comment, Emmanuel, at least, quite a wide range of options for the second quarter. Can I assume something like a 12 in the second versus 20 in the first? But more importantly on China, can you help us on how it looks sequentially in and industry on a sort of organic basis, how it's running momentum wise.
Thank you, James. On China, you can assume it was above 15%. So, much higher than what you seem to have, to have in mind. On the SFC Productivity, let's be clear. It was less, of the priority, but it doesn't mean that we've been absolutely, not delivering on that one.
So we don't split for that result, because again, that was laser focus, but yes, there was still some productivity being implemented And in fact, an idea of the level of effort that we are putting in order to support our digital race and that we are doing as a leader, everything we are doing on services to build the team and the capacity field services, but digital services, as well. And of course, the marketing investment with a lot and a lot of marketing action during during each one. So, you, you, you, I'm sure you can make your estimate of inflation. There was still some productivity generated on cost, although not at the same level than in the past 2 years. And the differentiation is what we've been doing in order to make this a great top line performance and build a future, I would say.
Your question on the manufacturing productivity, so please allow me not to enter into what is going to be higher than lower than I think we said it 2017 for the second half was a record high, which close to 230,000,000 And I think I said it very clearly. I don't expect that we can match this very, very high performance record actually for the group. But it doesn't mean that we cannot expect a nice H2 for productivity. So a good number, but not at the level of last year as I said.
If I may add on, on China, of course, there is, all, kind of uncertainty produced by the noise of of the trade war, but just I think you have to integrate a few things. I mean, the German B going down, which is giving back some competitiveness. And everything around the development of China with other countries I mean, we very often see the world from the West, but there is more than the West in the world on, therefore, comparison. And on certain points that story of February is pushing tremendously, China to invest in its vertical integration. On its own industry.
So we see quite a lot of investment going into creating capability, competing with things that we are sourced. Before from other continents. So all of this has to be put in a complete holistic view on what we see. Clearly, we had a very strong H1, which is coming from a success that we are very proud, but we are confident for the months to come.
You, James. Next question, please.
Thank you. We can now take our next question from Andre Kukhnin from Credit Suisse. Please go ahead.
Yes, good morning. Thanks for taking my questions. I just want to follow-up on SFC first. How should we think about maybe beyond this year, is this something that, should grow in line with with with top line? Is that how you see it?
And the second question is on supply chain tensions impact. If you could quantify that for us, in the first half, so that we can think about the benefit you could have, from having resolved that, during the first half, that would be great.
On SFC, you should certainly expect us to cons to target a nice difference between the top line and the SFC evolution. So I'm not saying that every 6 months period, allow for that, because you may have some impact on the top line or a special investment. But I think we've been pretty, pretty solid on that trend for several years in a row. Our objective is to increase the margin and clearly having an SFC on sales ratio decreasing over time that our global presence, our leadership should enable, is a big objective. So you should expect on average SFC to continue to grow at a lower pace than the top line.
On supply chain, I'm not sure I can say much more than what I've been saying. Think we are very clear and you have all the number for H1. We continue to say it's going to be a nice, a solid activity, though, no at the level of 2017, which was a record high. And, I don't think, as I said, we can be more specific than that. I think we are already saying a lot, on the drivers or on the various component of the buildup of our margin.
All right. Thank you. Next question.
Thank you. We'll now take our next question from Timon Tonison from Berenberg. Please go ahead.
Yes, good morning, everyone. My first question, Jean Frisco is on Medium Voltage And Secure Power. I mean, Secure Power had no growth the past 5 years between up until 2017. Medium voltage. Obviously, you did some form of portfolio change and it was sort of down 2% over the past 5 years.
There's obviously structured growth in both businesses. And you've commented, I think, last quarter that mediumvol has seen a pretty good order backlog the past 6 months. You're now saying SQL Power, I believe, you said, is growing double digit orders. How should we think about those 2 businesses sort of over the medium term? Do you think those can be sort of GDP type plus GDP plus type growth businesses going forward, as some of the structure growth accelerates within those businesses?
And the second question, just for housekeeping, Emmanuel, If I look at scope, you guided $400,000,000 impact at the beginning of the year. It seems Aviva is doing a lot better, maybe not versus your internal projections, but from our side. It's obviously accelerating a lot. Why do you keep the guidance? Is there some divestments that are missing And just on FX in the same kind of, in the same area, you're obviously slightly lowering the headwinds, but keeping the margin impact the same.
Maybe you can just elaborate 2. Thank you so much.
Good question and thank you for asking it. I mean, on medium voltage on Secure Power, I think we are pretty much the only company delivering full energy solution that is reporting those activities separately. And for one reason, when we speak with a customer, we deliver them together. There are very few customers where you just piecemeal one part of the, of Maybe if you do just more accretion, it's going to be just lower voltage on Secure Power. Maybe if you are in a utility, it's going to be mostly minimum voltage.
But for the rest, core the core of the core of Schneider, if you want to address industry infrastructure building, you need medium voltage, low voltage on more modes of power because but you need to secure your power, right, especially for electronics, critical processes, and those kind of things. So we see them as 1. And if I summarize where we are today, Central Power may have been flat in the past 2 years, but data center had been growing mid single digit over the year. On the core of what we do in data center is search on power, you don't get you don't get the rest, to the scale where we are, you don't lead the architectures in those sectors. And if I look At the first part of the year, it's not mid single digit.
It's double digit. So that has been the best growing business of Schneider. To a scale that nobody else has in the industry. Only three important because you need to deploy your solutions on a very large scale with customers that can be sometimes very local, but very often, they can go through our geographies. On Medium Voltage, it's all a question if you want to be in industry on building.
I mean, if you want to stay in homes on small buildings, you can stay only on the voltage on Segel Power. You want to get access to the biggest part of the market, you need to start with Medium Voltage. But Medium Voltage in the segments, which are important for that all value chain that we, we deploy and we develop. So I would say on both cases, Probably, the fastest growing thing is only really depends on the sectors, but you take data centers, the fastest growing is medium voltage and low voltage packages. On the back of your presence in Secure Power in other segments is going to be a low voltage on the medium voltage once you are well repositioned which are having dynamics, which are very similar and very close to each other.
So I consider them as very important parts of our portfolio. And when you look at medium voltage, credible competitors that we have in the places where you have identity of energy, which are infrastructures and industry on building must have medium voltage. But I think I answered Secure Power is our anchorage in IT, which is a faster growing. A large part of the segments, the largest part of the segments we are covering in power distribution, associating systematically medium voltage and low voltage on more and more central power.
And I don't know whether I can help you with the housekeeping. On the scope for the time being, I don't have the element, to change the indication that we've been sharing with you. But of course, in due course, when I have the information and we can share that with you, we'll, we'll do that if relevant, if needed. And on the Forex, frankly, that's the latest vision that we have based on the current parity of currency. So I'm not sure I can be more explicit than that.
That's what we see for the time being. With the current Forex evolution. I think this is the beginning of the year, the dollar is a little bit weaker versus 0, but, or stronger, sorry, but the yen is a little bit weaker than what So one is probably compensating the other. And that's why at the end of the day, we don't have a big change in the whole vision for the year, including on the fact that H1 is close to 80% both for the top line and the impact on the bottom line of the overall negative impact from the ForEx. So H2 will be much less impacted by the Forex.
All right. Thank you. I think we're getting to the closing time before I give it to Jean Pascal for any closing comment. Just, just refer you all to one of the slides in the appendix, which which you can see we are planning in the U. S.
In November as well. The IR team is, of course, available to answer questions following this call as well. Jean Pascal, any
We're going to be meeting you, anyway during various road shows that will happen in, in September. But look, I mean, let's look at it. I mean, we are coming to a very special time when the world is coming to the direction of the things where we have invested decenturization of energy, digitization of everywhere. The economy is Whatever the ambient noise has never been as good as today in the past 10 years. And we have a very focused on very synergistic portfolio at the time where a part of the industry is spending a lot of time to take care of their own, of their own portfolio.
So it's for us to execute and to make sure that, we keep delivering on all the engines that we have been explaining to you or prospecting to you in the past year. So very excited by the time and see you very soon.