Well, good morning, everyone. I hope you can hear me. I think there was some issue with the operator, so apologies for that. But we're going to get started. Thanks for joining us this morning for our first quarter revenue results.
I'm joined here by Hilary Maxton. Hopefully, you can see both of us on the screen. I'm joining from London, Hilary, of course, from Paris. The press release and presentation is available on the website and we go through the presentation first and we leave enough time for Q and A after. So Hillary, let me pass it over to you and to take us through the presentation.
Thanks, Amit, and good morning, everyone. Hopefully, you can hear me okay. I'm happy to be here with you today to comment on our Q1 2021 revenue numbers. So starting on Slide 5, I'll start with some highlights on the top line for the Q1. I think the key theme overall without doubt is growth.
We finished the quarter at 6 point €1,000,000,000 in sales and organic growth of 13.5%. Part of this growth, We would estimate around 3 to 4 points was driven by a combination of pricing and stocking. But what's clear is we see good demand dynamics across all of our end markets and most of our segments, and I'll speak more on that throughout the presentation. Both businesses contributed to this strong growth with a bit of divergence across geographies. This is the 3rd consecutive quarter of a year over year growth for Energy Management and for the group overall with Industrial Automation shifting now from close to flat in the Q4 to strong growth in Q1.
Moving to Slide 6, I want to spend a minute to remind you of our positioning as a company and how that relates to the current and future opportunities. It's true that part of our performance post Q2 2020 is of course market driven. But I'd also like to highlight our strategic choices and positioning that puts us in such a good place to capture current and future market opportunities. These aren't new themes, but we've been positioning ourselves as a leader in digital transformation across the lifecycle From design to build to operate for quite some time, both through our acquisitions as well as internal innovations. And we think digital transformation worldwide has only accelerated recently with more desire for remote operations, more desire for efficiency and resiliency and for digital as an enabler of sustainability.
Sustainability is now top of mind of customers, governments and increasingly consumers. And we've positioned ourselves not in small part due to our own internal commitments and sustainability journey as well as with innovations like SS6 free and our extensive digital service offerings as a leader in supporting customers to achieve their climate goals. And electrification is something we've spoken about for many years and is only increasing momentum. Across these themes, our approach to business as an company across both energy management and industrial automation also positions us strongly as these three themes are complementary. Turning to Slide 7 and our strategic growth pillars.
I'll speak more about performance in a few minutes, but I'd like to highlight a a few drivers of these pillars for the future. First on more products where innovation is a key driver. We launched the next generation of AAKEN and BLOCKSET LV switchboards with enhanced safety, reliability and connectivity, Also including a real time thermal monitoring solution. With IoT ready wireless connectivity, this Smart innovation makes it easier and safer to operate and maintain the low voltage switchboard. And as you may have seen at Hanover, we launched our Galaxy VL, a compact and more efficient 3 phase UPS for data centers, Which offers a 2 year payback to customers.
This innovation is designed to help our customers grow while minimizing footprint and And it fills a previous gap in the market for the mid range power segment. It's also a green premium product. Our second pillar is to grow more software and services. You're aware that we had a specific focus on this pillar in recent years. In Q1, we've added OSIsoft into the group through AVEVA having closed on that transaction, which will be consolidated from our Q2.
We're still awaiting regulatory clearance for our investments in ETAP and Uplight and feel good about the breadth of our software portfolio. I'll also mention that one of the key metrics we follow within the company is our growth of assets under management, which reflects specific assets Connected to the Schneider cloud. Happy to report this important metric continues to grow in Q1, up 47% year over year. And we've now added a pillar on sustainability as a growth enabler. An example of where we've enabled our customers to be more sustainable is with Kellogg's in the U.
S. Where we advise them on a virtual power purchase agreement with Enel. This VPPA covers 50% of the electricity used by Kellogg's North American manufacturing. It not only supports Kellogg's on its journey to reduce its scope 1 and 2 emissions, but also contributed to Enel starting construction on a new wind and energy storage project in Texas. I'm also happy to share that we've launched our 0 carbon project with our own suppliers in Q1.
This is in line with our new SSI linked, Schneider Sustainability Index and is using our to enable our suppliers to find meaningful CO2 savings in coming years. Moving to Slide 8 and before I turn specifically to our Q1 financial performance, I'd like to speak on some Q1 Trends and longer term opportunities in our end markets, including a few notes from recent external research reports. 1st, in building, there's some positive signs of turnaround of non residential construction. A A good example in the U. S.
Is the turnaround in Architectural Billings Index in the Q1 of 2021. And we continue to see stimulus actions in Europe and the U. S. With focus on energy efficiency in buildings and on building renovation. In data center, growth remains strong with an estimated plus 20% just in hyperscale CapEx in Q1 2021.
And here the longer term dynamics also remain strong with the requirements for digital only accelerating, particularly as digitization is a key driver for any step change in sustainability. In infrastructure, we now start to see the details of the proposed $2,000,000,000,000 infrastructure stimulus plan in the U. S. Specific areas for Schneider include a focus on clean drinking water, On electrical infrastructure, on transportation infrastructure and EV and infrastructure resilience. And in industry, expectations for acceleration in IIoT are increasing.
Here we show an analyst estimate of plus 17% IIoT taker through 2023. And of course, this circles back to impact data center. Overall, the dynamics across our end markets remain strong both in the shorter and longer term. Moving to Slide 9, I want to provide a bit more detail from a segment standpoint and based on our own internal order trends. This segment's view is a subset of the overall end markets trends I just described and represents a portion of our overall revenue.
In the chart, you can see an indication of our underlying order growth over the past 3 quarters in the first column on the left, Then a column for the Q1 orders and then the trend. As you can see, the trend is overall positive. And I'd like to draw your attention to which was significantly impacted in the last three quarters and is now back to growth in Q1. And oil and gas, which although still negative, Shows an improving trend in orders and orders pipeline. Residential buildings, data center and utilities, which were standout segments last year, Continue to be well oriented going forward.
Slide 10 and a few customer wins. I won't spend much time here and you have the details in the slide. One I will highlight is Supernap Italia where the customer went with our solutions for its advanced data center. Our ability to propose a fully integrated and highly efficient solution including a unique platform for easy IoT integration with 3rd party equipment was key to this win. And the other examples on this slide are just an illustration of many other examples depicting how we're combining our energy and automation digital solutions For the benefit of our customers as well as how we're enabling full lifecycle offerings as a value proposition.
And I'll highlight just a few points on our own internal sustainability journey before turning to Q1 financial details. First, you'd recall we announced our new SSI or Schneider Sustainability Impact Index for 2021 to 2025 At our ESG Investor Day in November. We start tracking and sharing progress of this new plan from this quarter. We achieved a score of 3.38 for the Q1 and are tracking well toward our year end target of 3.75. And our SSI is linked with our larger climate and biodiversity pledge and we all continue to work collaboratively across the company towards those goals.
Another point on sustainability. We continue to be recognized externally for our commitments and our achievements. Corporate Knights ranked Schneider as one of as the world's most sustainable company in 2020. And we were recognized as one of the world's Ethical companies by Ethisphere for the 10th year in a row. Turning now to details on our Q1 top line.
In Q1, revenues were €6,500,000,000 up 13.5 percent organic. As I already mentioned, this is our 3rd straight quarter showing positive year over year growth and Q1 is also positive versus 2019. Asia Pacific continues to be a key contributor with all geographies now positive and scope impacts are now positive due to the acquisitions of RIBS Software, L and T and Prolight with minimal impacts from disposals. FX impact was negative around $300,000,000 in the Q1 and full year impact is now estimated at minus $500,000,000 to minus 6 $100,000,000 on the top line and around flat on adjusted EBITDA. This impact is largely due to the U.
S. Dollar depreciation versus the euro. Most geographies were positive for the quarter as we continue to see a broad based recovery. Starting with Asia Pacific, we see plus 32% growth. I'll remind you that the strongest impacts from coronavirus In China, we're in last year's Q1 and we also started to see impacts at the tail end of the quarter in some other geographies, notably Western Europe.
In China, year to date results are up over 40% versus 2020 and up double digit versus 2019. The rest of Asia Pacific was up strong double digit with India really flying. Only Singapore where we had strong baseline and Indonesia were negative for the quarter. Western Europe was up 11%, positive in all key geographies with France leading the pack with growth in the mid-20s percent. France was also a bit impacted with strong lockdowns starting in the last weeks of March 2020.
North America is up 2% with some growth in the U. S. Versus a strong baseline in 2020 and double digit growth in Canada. We see strong demand through the year in the U. S.
With the Q1 impacted by weather events in the Southwest. Mexico remained down in the Q1 impacted by continued lower investment in industry and infrastructure. And rest of world was up 9% with good growth in all key geographies. Products were up 17% for the quarter versus 2020 and up 10% versus 2019. This growth is driven by market demand in our shorter cycle business segments, plus we continue to leverage our strong global network of partners To transactionalize more of our business with the end user.
And as I mentioned prior, there's an impact from pricing and customer stocking impacting the Q1. In systems, we were up 10% for the quarter versus 2020, But are still minus 5% versus 2019. We see strong demand across most of energy management systems driving positive sales With process segment still tracking negatively. Software and services was up 6% from a relatively strong baseline in 2020. Field services grew around 7% in Q1 with good contributions from from both businesses.
Software and digital services showed good growth despite AVEVA being impacted by a high base of comparison and timing of renewals. Excluding AVEVA, software and digital services grew double digit organic. Turning now to our results by business starting with Energy Management. Revenues in Energy Management were at $5,000,000,000 up 13.7 percent organic. Scope impacts were quite positive with contributions from L and T and RIB.
Trends across our end markets and segments remain positive and primarily accelerated from 4th quarter. Residential building remains strong in both construction and renovation with demand accelerating even further. In non residential building, where I'll remind you that our exposure is more than half on technical buildings, we continue to see good demand in hospitals, Healthcare, Life Science and Logistics. Data center demand continued strong and across geographies. And I'd note that transportation, which for us includes port, rail, road and airport saw good demand.
By geography, North America was +4 percent for the quarter with good growth in the U. S. With further acceleration in residential data center and industry and infrastructure. Weather in the Southwest of the U. S.
In February and some temporary impacts to global supply chains impacted the quarter. Canada grew double digit while Mexico remained down. Asia Pacific primarily followed the group trend, up plus 29% strongly driven by China and India. In China, we continue to see a strong demand rebound across the board supported by a strong economic recovery. In India, the economic recovery seems to be gaining momentum in Q1, but a high degree of uncertainty remains with the recent uptick in coronavirus cases.
Western Europe was up 13% with strong growth in most countries, notably France. Europe was impacted by lockdowns in March of 2020, but we also see a broad based uptick in demand, Particularly in data center and residential. And rest of world was up 10% with all key geographies positive driven by project execution and higher demand. Turning now to Industrial Automation, and I'll take the time to mention here That you may have seen in our press release that Peter Hervek, who is currently Executive Vice President of Industrial Automation, will be on request of the AVEVA Board to the role of AVEVA's CFO sorry, excuse me, AVEVA's CEO. In Industrial Automation, revenues were at $1,600,000,000 up 12.9 percent organic.
Were slightly positive with contributions from L and T and Prolight. Trends in discrete markets remain positive with double digit growth, particularly supported by China. Sales in process and hybrid markets remain muted with some recovery in China, Latin America and Europe offset by the U. S, France and rest of Asia. AVEVA results are included in Industrial Automation and were impacted by a high base of comparison and timing of renewals.
By geography, Asia Pacific was up plus 40% with particularly strong growth in China followed by India, which grew in excess of 25%. In China, we continue to see strong momentum in OEM and continued improvement in hybrid. North was down 9% for the quarter driven by the U. S. Process and hybrid markets continued weak with potential recovery in sales not expected until 2nd half of twenty twenty one.
Conversely, our discrete business in North America is off to a good start with high a single digit growth for the quarter accelerating in March. Western Europe was up 4% with France particularly positive. Demand in discrete was primarily positive across the board. Rest of world was up 6% with growth in most key geographies, particularly in discrete. Regarding capital allocation, just a small update I'll mention here and that we sold our Northern European cable support business.
This brings us to around €700,000,000 in disposals out of our €1,500,000,000 to €2,000,000,000 a program and that's in revenues planned through 2022. Like I said in our full year call, we expect to update you on the timing of our share buyback a I'll finish with our 2021 targets. Since we last Spoke in February. We now see 1st and foremost a further acceleration in demand trends across our end markets and most supported by economic recovery worldwide. We've also seen an acceleration in raw materials and other input costs and continue our tactical pricing actions.
3rd, due to accelerating demand as well as some temporal events like weather in the U. S, We see some sourcing tensions on some components in our supply chain. We're leveraging our strong global supply chain, which is regionally administered, Partnered with our multi hub organization to stay close to our suppliers, our distributors and customers and expect any potential impact to peak in the Q2. Factoring all of this as well as what we know today about remaining key uncertainties, particularly the acceleration of COVID in a few places. We're upgrading our full year targets to adjusted EBITDA growth of between 14% and 20% organic expected to be achieved through a combination of 1st revenue growth of 8% to 11% And second of adjusted EBITDA margin expansion of 90 to 130 basis points.
I'll also mention that if and as we see of longer term demand trends over the next month. We'll continue to ensure targeted reinvestment into the business for the future. Thanks very much for joining. With that, I'll turn back over to Amit for Q and A.
Well, thank you. Thank you, Hillary, for that. I think we're going to move into Q and A now, and we'd like to keep it to 1 question a question for analysts just to make sure that we are able to accommodate all. I'd like to pass it back to the operator. Hopefully, the operator hear us and we can hear the operator and we can get into Q and A.
So operator, over to you for the Q and A.
Thank you.
Operator, can we go with the first question, please? I'm sure we have a bunch of questions waiting for us.
Certainly. Our first question comes from Andreas Willey. Your line is open.
Good morning, Hilary. Good morning, Amit. I have a question on price cost components. You mentioned that you're taking continued action on pricing. Maybe you could give us some indication on what you expect raw materials to do this year In the earnings bridge and whether you think that for the year overall, you should be able to compensate for that reprice It will take a bit longer like we've seen historically often.
And on the component side, can you maybe elaborate a bit on the impact on in terms of ability to deliver versus higher prices you have to pay to secure them or higher freight rates That you need to accept in order to get them. Is it more an issue of cost or of actually getting any components If you look like March April now in terms of the trends.
Sure. Thanks. So maybe starting With the price piece, so like I said, we definitely saw an acceleration in raw material prices and other components, in fact, partly tied to the second question that I'll also answer. Over the course of the Q1, particularly starting around mid February, So right after our full year earnings call. And what I would say there is that 1st in terms of timing.
So based on lead times and hedging programs that we have, We'd expect that at this point, the bulk of those costs are already going to be hitting the P and L, primarily in the H2. 2. So that will give you a sense. In terms of pricing, we have a strong track record, as you know, positive pricing over the cycle. We've well taken note of the uptick in pricing that we've seen both in raw materials, but other components in freight that we've seen this year and we have the teams tactically engaged on the ground day by day to really make the right decisions from a pricing standpoint.
And we'd expect that we would definitely be positive net price over this cycle as Well, calendar year, probably I'm a little bit less concerned about, but definitely we're Technically pricing where we can and where it makes sense. And of course, we've taken all of that into account in the upgraded guidance. 2nd component of the question, we did see increase in tension in the supply chain during the Q1, some from temporal like the Suez Canal, weather in the U. S, but also quite a bit contributed by acceleration in demand. There, like I said, we've been using our strong global supply chain organization with our multi hub organization.
And we've really been managing day to day. We have some limited instances of various product lines really in a small way that might be impacted limited impact in the Q1 and we continue to manage there On a day to day basis. So like I said, we'd expect to see any potential impacts peaking in the Q2. In terms of price, certainly, there's some component of price, of costs basically that's associated with that, like you said, with components with freight. We're doing what we need to do in terms of getting what we need to our customers.
So there's some impact in price and I think I'd answered the question on price prior that comes out of the supply chain. In some cases, some limited increase in lead times.
Thank you very much.
Thank you, Andres. Operator, next question please.
Certainly. And our next question comes from Alastair Leslie with Societe Generale.
Yes. Hi, good morning.
I was wondering if you could expand
a little bit more on the kind of growth you're seeing in data centers. That's at the the top of your demand trend slide, I see. Just wondering if that's driven exclusively by hyperscale and colocation or whether you're a strong pickup now in Enterprise and the Edge segments as well. That's kind of partly referenced, I think, to your comment on another slide where you're talking about well aligned to both or offers well aligned to both large and small customers. And then also one of your U.
S. Peers, I think they're now expecting higher data center growth outside of the U. S. Going forward. Just wondering kind of whether you kind of agree with that, if that's what you're seeing and just how well positioned you think you are relative to some of your major peers in areas like Europe and APAC, maybe particularly in China as well.
Thank you.
Sure. So first, overall data center growth. I'd mentioned from an external analyst something about hyperscale CapEx. I think we've talked about hyperscale ourselves over the last quarters where we really see double digit growth. But we also see growth across the entirety of the data center chain, so into edge, into enterprise, even distributed IT.
We really see good dynamics over the past quarters and certainly into Q1. So overall, I would say remains dynamic and really dynamic across the various pieces. In terms of the different geographies, I think I commented yes. In fact, we now start to see data center when I was talking about in terms of energy management, we start to see data center across geographies in terms of demand. So strong dynamics In Europe and in Asia.
And I think we're well positioned. We have the strong footprint of energy management everywhere. And I think that puts us plus we have the strong offer for data centers. So I think we feel quite comfortable with our positioning worldwide as we start to see some real dynamics for trends outside of the U. S.
There.
Okay. Thank you very much.
All right. Operator, next question please.
Certainly. And our next question comes from Jay with Deutsche Bank. Your line is open. And Jay, we do have your line open.
Hello?
Hello.
Hello. Can you hear me?
Yes, we hear you.
Okay. Sorry. It seems there is a time lag. Anyway, I'll deal with it. Look, I have a question regarding the software business because it seems that this quarter, the software and services growth kind of underperformed the rest of the group with AVEVA apparently down.
So look, I understand that comps Well, probably more difficult for them and that the quarterly performance can be distorted by the timing of renewals. But perhaps could you help me understand the underlying growth trajectory of the business and in particular, how you expect it to perform relative to the 8% to 11% organic growth you see for the group overall.
Thanks. So on the overall software business, I think I gave a little bit of the dynamic software and services, services with a quite solid Q1 at +7 percent. And that's an area where we have a lot of focus and we expect that we continue to see acceleration there. Quarter by quarter is a little bit different, particularly when we have the products business, which is a little bit more dynamic. But certainly, that's the plan is that We'll have continued acceleration in services.
In software, I would say pretty much the same. I can't speak too much to the AVEVA results. They put out their trading release this morning, I think, and they have their full year call in early May. But you can see that there From our release, you can probably see that then. I think they're around flat in the Q4.
Like you said, they have a much higher base a compare, so they don't have the coronavirus impact. And they did come in line with our expectations and also with strong growth in annual recurring revenues. So we follow them not only from a revenue standpoint, but from a recurring revenue standpoint as well. And I think software is an area that we're very much focused on. We think that medium and longer term, the growth trends there are very robust And we would expect that to continue.
Quarter by quarter, like you said, of course, there can be some impacts With timing and things like that. And again, with AVEVA, we also focus on and they report on their recurring revenues.
Could you perhaps elaborate on Peter's decision to join AVEVA as CEO?
Sure. So I think in the press release, we just the Board of AVEVA decided to nominate Peter. He brings extensive experience in industrial software. He was really the key leader from Schneider working with AVEVA from the planning and execution of the original transaction that we announced in 2017 all the way to his role as Vice Chairman of AVEVA today. So with Craig's departure, the Board thought that would be a great pick for the CEO.
All right. Thank you, Gail. Let's move to
And what does it mean for?
Sorry, Gil, go ahead. We can do you have a follow-up? I think we have a time lag. Go ahead.
Okay. Okay. Thanks very much. No, I was just wondering what it means now For the Industrial Automation division in terms of the management team.
Or we can take that.
Sure. So what I would say is we have strong succession plans in place at Schneider, Particularly at the ex con level. So here, Barbara Frey, who's our current Head of Europe Operations at Schneider will be replacing Peter as the Head of Industrial Automation. She brings around 15 years of experience In the Motion business across various roles, including she was Head of ABB's Global Drives and PLC Business. So I think we'll be in good hands.
All right. Operator, next question please.
Thanks very much.
Certainly. Our next question comes from Jonathan Munsey with Exane. Your line is open.
Hi, good morning. Thanks for letting me ask the question. I just thought, obviously, India is now one of your most important markets after the L&T acquisition. And clearly, it's been hit by a new considerable wave of COVID-nineteen right now. I'm just wondering both what you're seeing there, what you think the outlook is and also what its meaning and what it's doing to your integration plans for LMT, which I guess is still ongoing.
Sure. So we're definitely closely We talked about India being a new hub for us. So we're closely tied into following what's happening on the ground there. At the moment, all of our factories are operating and we remain in full operations with a few where there's various localized lockdowns that at least so far the Indian government has kept fairly short in terms of timing. Most importantly, of course, we're focused on the health of our own employees and staying close to our customers.
In terms of impact, at least as of today, our expectation would be similar to last year. We can continued to operate at least on the factory side and maybe with a few localized exceptions, but we would expect We would be able to continue operating there. In terms of the more sales side of the operations, potentially we could have disruptions, But a bit too early to say. That's definitely a key uncertainty like I suggested in the upgraded guidance that we thought a bit
Understood. Thank you.
All right. Thanks, John. Next question, please.
Thank you. And our next question comes from Ben Uglow with Morgan Stanley. Your line is open.
Good morning, Hilary. Good morning, Amit. I was hoping to just get a bit more local color on China in particular. Obviously, we can see the year on year growth rates in Energy Management and Industrial Automation. But what I was interested in is throughout the quarter, As we look at how things have kind of moved from January through April, how would you describe the run rate of activity in both Energy Management and Industrial Automation.
Is it continuing to stay very firm? Is it accelerating? Is it moderating? So between those two businesses, how is the sequential demand evolving in China, please?
Sure. So really quite similar, I would say, to the rest of the world. We saw some acceleration in sales in March in China. Now to be fair, that's not unusual. We see we do acceleration of business at the end of quarters, not infrequently, but we do see an acceleration there.
We didn't see any differing change in the underlying demand and into the 1st few weeks of April as well.
Understood. And if I could have just one first of all, can you just give me any sense of any differences, if they're significant, between Energy Management and Industrial Automation in China. And then did you see the same kind of sequential move in March, April in Europe and North America?
Sure. So between Energy Management and Industrial Automation, Industrial Automation for a quarter, is a little bit higher in growth than Energy Management between the 2 to give you a sense of the dynamic, Primarily in industrial automation with discrete and OEMs, some move up there in terms of hybrid. Across the rest of the world, we also saw acceleration in March Across the quarter. Again, not so unusual. That's not so unusual anyways in quarters for us, but we certainly saw that acceleration And demand, particularly in the U.
S. Where we had some weather issues in February, we saw a big acceleration of demand in March.
That's great.
Thank you very much. I'll pass it on.
Thanks, Ben. Next question?
Thank you. And our next question comes from Andre Kukhnan from Credit Suisse. Your line is open.
Good morning. Thanks very much for taking my question. Could you please quantify the price versus stocking, the impact that you mentioned at the beginning of 3 4 points altogether. And whether the stocking impact carried on into Q2 or was that just a Q1 phenomenon? And if I may just bolt on a follow-up on the data center questions.
Could you give us some idea of your exposure versus in to hyperscalers versus the rest?
Sure. So Just noting it down, so I don't forget. So first, in we did say that of in Q1 around 3 to 4 points From pricing and stocking, you can consider probably around fifty-fifty between those 2. And if it carried over. What I would say is, we do think that the Q1 finished with inventories at distributors around Sound normal in line with the underlying demand trend that we see and that we see into the 1st week or so of April.
In terms of data center, so we talk about data center and network as around 15% of so 15% sales of the group. Around 15% of that or 8% is Sure data center, the rest is distributed IT and around half of that. So 4% is hyperscale. Very helpful. Thank you very much.
All right. Let's move to the next question, please.
And our next question comes from James Moore with Redburn. Your line is open.
Good morning, everyone. Hi, Henry, Amit. Maybe I could follow on with Ben's question on China earlier and the momentum which you talked about being good in March and continuing into the 1st few weeks of April. I guess as a follow-up to that, can you talk a little bit about distributor and customer inventory levels in China? I think basically, do you think the channel has been rebuilt Or does it remain understocked?
So in terms of so our estimates for China would be that they like rest of world generally finished the quarter with around normal a Distributor level. So I don't think that the channel remains understocked there. Also no major signs that it's overstocked. I think we expect fairly normal there.
And in terms of any forward looking indicators you have In terms of Chinese order activity or customer conversation, do you think that we're getting to a sort of sequential peak with the March April levels. So do you have visibility of any further sequential improvement in the coming 3 to 6 months?
Sure. So I mean, what we do see, we've talked about a broad based recovery there. I gave you the numbers double digit growth since versus 2019. So we really see that pretty broad based across different segments. Chinese government has spoken a little bit about their GDP.
And then of course, China plays a role in the upgraded guidance that we gave.
Thank you very much.
Thank you, James. Next question please, operator.
Certainly. And our next question comes from Daniela Costa with GS. Your line is open.
Good morning. Thank you very much for taking my question. I wanted to follow-up on the path for cash sort of throughout the year given your comments regarding the strong demand in one side and I guess you just talked about inventories in your distributors, maybe also amongst yourself, as you prepare for these challenges in the supply chain? And also On that point, following up on the buyback and the reasons why with your upgraded guidance, why haven't you started a buyback? Thank you.
Sure. So in fact, exactly right that those 2 are tied together and we talked to it a little bit at the end of the full year. So You've seen that even starting in Q2 of last year, we really took an approach, For example, with inventories to make sure that we're consistently preparing for demand, and that's something that we expected to continue into this year, really to prepare for demand. And as you said, It's also a benefit if there's any tightness in the supply chain. So I last Last year, we hit the free cash flow record of €3,700,000,000 We would and that was buoyed by Trade working capital and non trade working capital.
We would expect in trade working capital just a normal reversal based on demand, as well as we continue in inventory to make sure that we have the right level of inventory To support demand. Actually for us, it's easier for us to ramp down then to accelerate. So we can accelerate and then still have flexibility to ramp down as we need to If there's some more alarming signs. So cash throughout the year, we do expect that ramp up in trade working capital. We would expect on We still would be in the $3,000,000,000 of cash flow over the cycle.
Tied therefore to the share buyback, we've said in the full year, Particularly in the first half of this year, we expect some needs for working capital and we want to be prepared for that. So cautiously, we keep the buyback on hold and that will give you some updates over the next quarters.
All right. Thank you, Daniela. Do we have another question, operator?
Okay. And our next question comes from Leo Pena from UBS. Your line is open.
Goodness. Guillermo Pena from UBS. My question is regarding the recent announcement some of the OEMs, truck OEMs or even auto OEMs in some of the discrete industries. And whether you're seeing any impact on this production cuts or production stoppage that these companies are announcing from a EFA source cycle industrial perspective. Thank you.
Sure. So unlike some of our competitors, we don't have exposure to the Automotive Industry in Industrial Automation. So I would say that we don't really see any impact Today from a customer standpoint, on their side with any stoppages or anything like that.
Thank you.
All right. I think let's take another couple of questions in case we have them. Operator?
Thank you. Our next question comes from Alexander Virgo with Bank of America. Your line is open.
Good morning to both of you. I trust you're well. Thanks for taking the question. I was just wondering if you could expand a little bit on the prognosis for the non resi side of things in North America. And I guess if you could talk about it outside or exclusive of data centers, which clearly are very strong indeed.
I just wondered if you could expand a little bit on the prognosis, what you see over the next, I guess, rest of 2021, but also thinking about the longer term prospects, particularly given infrastructure stimulus at some point in the future. Thank you.
Sure. So just to give a breakdown now, so we have exposure from a revenues breakdown standpoint, 35 Percent is building and then 15% is data center and network. And then it's within building that we have non residential building. So of that 35%, around a third of that sort of 12% to 15% is going to be residential building With the rest is non residential building. And for us, it's mixed with technical.
I've mentioned life science, hospitals, health care, etcetera. And then retail, Health Care, etcetera. And then retail, hotel and offices, the last two being less than 10% of our overall sales. And so we continue to see strong demand dynamics in the technical building side of things. We talked over the past quarters about seeing some uncertainty with customers and new CapEx starts, particularly In hotel and in offices, as people make decisions about what the well, in hotel, I guess, it's when people will go back to traveling.
In office, it's going to be about the new normal and trends that we see there. So I gave a couple of I At least one point, I think we're at least very preliminary. We see some data about return to interest In some of non residential building with architectural billings. I would say it's still a bit early, at least from my perspective, hotels, I guess, when this whole thing is over, perhaps people will be excited about traveling again. In terms of offices, I think companies are making decisions about hybrid work and that type of thing.
For our own business, particularly for 2021 and into 2022, I think we see and already start to This year dynamics in the renovation market. And I think with stimulus in the U. S. And Europe, there's a big, big focus On building in renovation and then sort of build back better that we expect will be a good dynamic For us in going forward.
Great. Thank you very much.
Thank you, Guillermo. Operator, next question.
Thank you. Our next question comes from William Mackey with Kepler Cheuvreux. Your line is open.
Right, we can't hear Will. So is there another question, operator?
There is another question. Our next question comes from Martin Wilkie with Citibank. Your line is open.
Thank you. This is Martin from Citi. Just one question. In your opening remarks, you commented at the end, Hillary, that If growth continues, you could start reinvesting. I assume that means support function costs coming back, but perhaps just to clarify that.
And as part of that, obviously, there were a lot of costs last year that sort of fell away travel and these kind of things. And so just to understand, is the comment that some of these costs come back. It's just a reversal of those or should we expect incremental investments to drive future growth but to temper the margin expectation beyond what you've already talked about today. Thank you.
Sure. Some of the key pillars of the plan that we put out today are things like around $1,000,000,000 in industrial We think those make sense in all scenarios and important piece of driving towards our around 17% a journey by 2022. So here what I was talking about is we start to see some signs that perhaps There's going to be longer term demand trends that could we've talked about medium term growth of 3% to 6%. Maybe there's some longer term demand trends that can certainly put us towards the top of that over a multiple year period. And So we want to make sure that we correctly target reinvestment to the business for longer term demand trends there.
I'd That would be more around things like R and D and sales and not just coming back. I think the $1,000,000,000 in structural savings, for example, that we've targeted really is efficiency that we want for effectiveness. So the idea would just be Making sure that we're really prepared for longer term demand cycle, assuming that we start to see some dynamics that solidify in that direction.
I guess, part of the reason for the question is, your guidance now on the upper end has Above the 17%. Should we read into this if you are getting to at the 17%, do you then absolutely prioritize additional growth as opposed to margin expansion or am I reading too much into your remark?
So what I would say is a bit early days. There's definitely uncertainty in a range in the guidance. We would never look For no drop down probably of growth into margin, but something that we also want to make sure that we're carefully reinvesting in the business to make Sure that we're that we have the right growth levels from a going forward basis. So not to be too read into. Okay.
Thanks very much.
All right, Martin. I think, look, we're coming to the close. And I just want to check with the operator if we can have William back again because I think he had a question. Can you just check if William still has a question? All right.
Maybe one other question in case we still have and then we'll get into the hour. Any other questions, operator? All right. I'll probably take that as a no. But I suppose thank you everybody for the time this morning.
You'll see on the screen that we're going to be participating in several conference, etcetera, but we engaged with each of you as well as the larger investor community, of course. Apologies for some of the technical glitches and on this call, and we will certainly take stock of that as well. But wish you all to stay safe and have a good rest of the day.