Schneider Electric in downbeat forecast Schneider Electric, one of Europe's leading manufacturers, has warned of stalled sales this year as the impact of the eurozone crisis outweighs a nascent industrial recovery in the US and resilience in Asia. It announced plans to cut costs by up to €1.1bn ($1.45bn) by 2014. The downbeat forecast for 2012 from the French industrial bellwether, which makes electrical equipment, follows a similar assessment from Siemens , the German engineering conglomerate, which has predicted stagnant earnings this year. In an interview with the Financial Times, Jean-Pascal Tricoire, Schneider's chief executive, lent his voice to the chorus of European business leaders calling for more urgent action from their political counterparts to solve the eurozone crisis. "For Europe I think they can do better, I'm not great at politics, but we need more governance," he said. If you take the macroeconomic figures of Europe and the US, then probably Europe is better, the only difference is that in the US you have the governance and we don't have the same thing in Europe. Mr Tricoire was slightly less gloomy than some of his counterparts about growth in China - the company's second-biggest market by sales after the US - though he still expected it to slow. He said Schneider had a "strong end to 2011" in the country but said the start to 2012 was "difficult to read" because the Chinese New Year celebrations make it a traditionally slow part of the year. "China will probably cool down," he said. But it is still a very reasonable rate of growth. Schneider does not break out the percentage of sales that it makes in China but emerging markets as a whole now account for 40 per cent of group revenues. Its commitment to the region was underlined last year when Mr Tricoire sent four of his executive committee members to be based in Hong Kong - a move that caused some tension among senior staff. "Any change always generate opinions," Mr Tricoire said, adding that "if you say your company is global you have to lead by example." Schneider has become known for its aggressive acquisition policy, which has contributed about half of its growth in sales over the past 10 years, which has risen from €8bn to a record €22bn in 2011. However, the company's shares suffered last year as investors worried about the possibility of large bids for industrial groups in the US such as Cooper or Tyco International, and whether the company was doing enough to bring together its existing operations after a period of rapid expansion. Speaking in his headquarters in the outskirts of Paris, used as a showcase for the company's specialism the energy efficiency products, Mr Tricoire sought to calm investor fears about big deals, arguing that rising valuations made acquisitions less attractive. When I look at the last three years, we picked the assets at the right moment, when there was a deep crisis. Not many people were moving at the time," he said. Now they are moving again but at a time when valuations are very different. He said the focus now would be on small and medium-sized deals that were easy to bolt on and on integrating previous purchases. Analysts say, however, that the company could become interested again in larger targets such as Tyco - which recently was spilt into three to entice buyers. "One sentence I learnt last year is that "I don't comment on rumours" - in 26 languages," Mr Tricoire said, in response to questions about whether a future Tyco bid might be possible. Despite the relatively downbeat forecast for 2012, Schneider on Wednesday unveiled a three-year plan that promised an average increase in sales three percentage points higher than global GDP growth between now and 2014. It said margins on earnings before interest, tax and amortisation would be between 13 per cent and 17 per cent. Ebita margins declined slightly this year as the company struggled with soaring raw material costs and shifted to lower margin but more strongly cash-generating services. Schneider cut its margin outlook twice last year as Europe's sovereign debt crisis hurt sales growth and as the company faced rising raw material prices and higher wages in emerging markets. It reported record free cash flow in the second quarter of €1.6bn, as it responded to investor worries by reducing working capital costs. The three-year plan promises 100 per cent of net profit will be converted to free cash flow. Mr Tricoire said the company had also got to grips with raw materials prices, which added €463m to costs last year, by renegotiating terms with customers and suppliers. Sales in 2011 rose 14 per cent to €22.4bn, while ebita rose 7 per cent to €3.2bn. Net income increased 6 per cent to €1.82bn. News of the cost-cutting plan lifted its shares 5 per cent in early Paris trading.