(31/07/2003) SCHNEIDER ELECTRIC : 2003 Interim Results: Very Resilient Operating Margin Despite a Major Currenc

- Increase in gross margin by +1 point despite a decline in sales fully due to the rise of the euro - High operating margin and cash flow in difficult economic conditions - Strong development in Asia, new growth and productivity initiatives in Europe and North America (Rueil Malmaison - July 31, 2003) - The Board of Directors, chaired by Henri Lachmann, met on July 30, 2003, to examine the first half financial statements ended June 30, 2003.

In E Million and	1st Half	1st Half	% change
on a current basis	2003	2002
Sales	4,236	4,576	-7%
Gross margin (as a % of sales)	41.9%	40.9%	+1.0 pt
Operating income	440	493	-11%
Operating margin (as a % of sales)	10.4%	10.8%	-0.4 pt
Operating cash flow	458	441	4%
Net income
before goodwill amortization	269	261	3%
Net income
after goodwill amortization	190	176	8%
Net earnings per share	0.85	0.76	11%

Henri Lachmann, Chairman and Chief Executive Officer of Schneider Electric, commented on the results: 'Schneider Electric recorded a remarkable growth in Asia which, excluding currency effect, enabled the Group to maintain stable sales overall in an unfavorable environment. At constant currencies, operating margin increased +1.2 points. These good performances demonstrate our reactivity and the relevance of our ‘Growth & Efficiency' strategy'. I. SUSTAINED GROWTH IN ASIA AND IN EASTERN EUROPE - SALES STABILIZATION IN THE DEVELOPED COUNTRIES Schneider Electric sales amounted to E4,236 million for the first half 2003: at constant structure and currencies, sales were stable overall compared to the first half 2002, at -0.3%. In the second quarter 2003, sales amounted to E2,157 million: at constant structure and currencies, they slightly increased +0.3% compared to the same quarter last year. Seasonally adjusted, trend in sales was stable over the last three quarters in Europe and North America, but increased in the International. Change in sales breakdown by Operating Division:

	Sales	% change	Sales	% change
In E Million	1st Half	1st Half 03/02 constant	2nd Q	2nd Q 03/02 constant
	2003		2003
Europe	2,261	-2.1%	1,134	-1.3%
North America	1,086	-4.6%	553	-4.7%
International	889	+11.0%	470	+11.8%
Total	4,236	-0.3%	2,157	+0.3%

At current structure and currencies, sales declined -7.4% in the first half 2003 compared to the first half 2002. Sales were impacted by a negative currency effect of E -406 million stemming from the euro's sharp appreciation against the US dollar and most other currencies. The improved trend in Europe primarily reflects strong growth in Eastern Europe in the second quarter whereas in the rest of Europe, sales change was on a par with the previous quarter. Spain continued to turn in a good performance and the United Kingdom also recorded an increase in the second quarter. Trend in sales was stable in North America, confirming the stabilization observed in the previous quarter. In the International, sales continued to grow at a sustained pace. Asia, and notably China, continue to be buoyant. In this part of the world, which represents the main driver for world growth, Schneider Electric posted excellent performances thanks to the quality of its teams and the strength of its local manufacturing and sales operations. II. INCREASE IN OPERATING MARGIN IN LINE WITH TARGET, EXCLUDING THE CURRENCY EFFECT Thanks to the sustained effect of productivity plans launched as part of the NEW2004 program, the Company remains in line with its target of gross margin improvement: the gross margin increased +1 point to 41.9% in the first half 2003, compared to 40.9% for the same period in 2002. The action plans deployed across the Company generated productivity gains of E85 million in first half 2003. Purchasing productivity remained high. Manufacturing Excellence plan was deployed in 25 additional production sites. These gains were offset by a very significant adverse currency effect caused by the euro's sharp appreciation. This impact reduced first half operating income by E -118 million. Thus, the operating income amounted to E440 million, or an operating margin of 10.4%, slightly lower than the 10.8% recorded in first half 2002. The currency effect shaved -1.6 points off the operating margin. At constant currencies, operating margin for the first half 2003 would have risen +1.2 points from the year-earlier period to 12%. III. LAUNCH OF ADJUSTMENT PLANS IN WESTERN EUROPE AND THE UNITED STATES To respond to the change in its markets, Schneider Electric has launched specific action plans to support growth and optimize costs. Europe - Develop sales in the Residential market by launching dedicated ranges and broadening the distribution network in each country - Strengthen the Company's presence in the Industry market with the support of the Application Centers - Launch adjustment plans in several large countries - France, the United Kingdom and Italy - to resize manufacturing base and adapt costs - Optimize R&D functions, as well as IT and marketing North America - Reinforce Industry market access and strengthen application skills - Deploy the Purchasing and Manufacturing Excellence productivity plans and rationalize manufacturing capacity International - Deploy the Company's operations in Asia to support growth and increase productivity - Continue to shift manufacturing resources to China with the start-up of two new plants - Suzhou Drives and Shilhin Suzhou Transformers - Enhance the presence in Japan, the world's second largest OEM market, thanks to the integration of Digital Electronics IV. SUBSTANTIAL INCREASE IN NET INCOME AND CASH FLOW Cash flow Operating cash flow amounted to E458 million in the first half 2003, an increase of +4% compared to the first half 2002, despite the decline in sales. This evolution reflects the strength of the Company's operating performances. Thanks to the monitoring of capital expenditure, free cash flow (operating cash flow - net capital expenditure - change in working capital) amounted to E231 million, or 5.5% of sales. Net income Net income after amortization of goodwill rose +8% from the year-earlier period to E190 million, reflecting the reduction in interest expense stemming from the Company's strengthened financial situation. Net earnings per share increased +6% to E1.20 before goodwill amortization and +11% to E0.85 after goodwill amortization. The Company bought back 9 million shares during the last 12 months, with an accretive effect of +3% on net earnings per share. V. OUTLOOK FOR 2003 Schneider Electric is pursuing an active growth strategy designed to target promising segments more effectively, invest in high potential geographical areas - China, Eastern Europe, India and Brazil - and develop new growth paths through selective acquisitions. As a consequence, the Company has identified specific growth priorities for each of its markets: - Industry: strengthen the Company's presence with OEMs, develop application skills and enlarge the product offer - Buildings and Energy & Infrastructure: capitalize on new factors of differentiation and increase market coverage through micro-segmentation - Residential : expand geographically and develop the product offer. In the absence of recovery signs in the non-residential Buildings and Industry market at this stage, the Company confirms anticipating stable sales overall on a constant basis for the full year 2003. Thanks to the acceleration of adjustment plans, notably in Europe, and continued measures to enhance manufacturing productivity, the Company anticipates an increase in operating margin in the second half. ******************* Third quarter sales will be released on October 21, 2003. Schneider Electric Giving the best of the New Electric World To everyone, everywhere, at any time Schneider Electric, the world's Power & Control specialist with leading worldwide brands such as Merlin Gerin, Square D and Telemecanique, offers a comprehensive range of products and services for the following markets: residential, buildings, industry and energy and infrastructure. Schneider Electric's 74 814 employees generated sales of EUR 9.1 billion in 2002 through 13,000 sales outlets in 130 countries. Investor Relations: Schneider Electric - Alexandre Brunet Tel. +33 (0)1 41 29 70 71 / Fax +33 (0)1 41 29 71 42 www.schneider-electric.com ISIN : FR000012197-SU Press Contact: Schneider Electric - Véronique Moine Tel. +33 (0)1 41 29 70 76 / Fax +33 (0)1 41 29 71 95 Press Contact: DGM - Michel Calzaroni / Olivier Labesse Tel. +33 (0)1 40 70 11 89 / Fax +33 (0)1 40 70 90 46 (C) Companynews