Visit Le Creusot in Bourgogne and you’ll be sure to see the giant steam hammer. This 2,500-kilogramme monument was built by Schneider Electric, the company founded there in 1836. The French electrical group aims both to improve energy efficiency and automate industry. Results earlier this month beat analysts’ expectations as ebita rose to €4.2bn, up 9 per cent on last year. The shares spiked upwards until the broad market sell-off triggered by coronavirus took its toll.

Schneider, a group born out of the industrial revolution, is undergoing a 15-year transformation to a sustainable, digital age. Energy management is important for Schneider, accounting for almost all of its operating profits. Free cash flow jumped to €3.5bn in 2019 and has grown at 6 per cent per annum over five years, faster than earnings.

There is more room for growth. Schneider foresaw the trend of ESG investing. Most companies have committed to reducing their carbon footprint but do not know how. Electricity’s share of global energy consumption will double by 2040, the International Energy Agency forecasts. Improving energy efficiency is a key, neglected piece in the puzzle to reduce emissions. Electricals should profit.

Schneider has made acquisitions to focus on improving energy efficiency through digital tools. In mid-February it paid €1.5bn to acquire Rib Software, which offers a software platform to the construction industry. It paid a hefty 37 per cent premium on its three-month price. Schneider can now expand its efficiency-inducing software business from engineering — successfully scaled up through Aveva — to buildings and data centres.

Software, much less capital intensive than manufacturing, has become key to Schneider’s future. It makes up a quarter of group revenue. Schneider, though, is pricey on a forward price-to-earnings ratio of 17 — near a decade high, and rated above rivals Siemens and ABB.

There is a reason why Schneider’s valuation has been strong. Industrial-cum-tech companies, especially those offering up answers to the sustainability demands of their clients, have drawn investor attention. It has the best medium-term prospects for growth among peers.

Its original steam hammer found a better life as a tourist attraction. So too has the heavy industry group as a slick sustainability provider for the digital age. Better to buy Schneider when markets stabilise, before investors feverish for tech and sustainability make it soar too high again.

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