Zurich (awp) – With its business running out of steam, particularly in China, Schindler saw its profitability decline after six months. Suffering from a decline in sales, the Lucerne manufacturer of elevators and escalators posted a net profit of 296 million Swiss francs, almost a third less than the 455 million posted twelve months earlier. A further slowdown is expected for the rest of the year.
Sales reached 5.34 billion Swiss francs, down 2.4%, Schindler announced on Friday. Expressed in local currencies, the decline was 1.5%. Sales momentum deteriorated markedly in the second quarter, with revenues contracting between April and the end of June by 5.3% in Swiss francs and by 4.6% at constant exchange rates to 2.71 billion, after having presented growth of 1.9% during the first three months of the year.
The contraction in sales illustrates in particular the decline suffered in China, which reflects the containment measures ordered in certain cities of the Middle Kingdom as part of Beijing’s so-called zero-Covid policy. Business also suffered from the difficulties encountered in terms of supply and the increase in prices.
The increase in sales in the Americas and Emea (Europe, Middle East and Africa) regions was not able to offset the decrease recorded in the Asia-Pacific zone. As a result of the decline in revenues, but also of higher prices, supply difficulties and low availability of semiconductors, as well as restructuring charges, operating income before interest and taxes (Ebit) contracted to 403 million, compared to 607 million in the first half of 2021. The corresponding margin collapsed, falling from 11.1 to 7.5%.
Orders up
On the other hand, the evolution was more favorable on the front of orders, their entries expanding by 3% after six months to 6.23 billion Swiss francs. But from a regional point of view, the situation remains contrasted, the orders recorded having increased in the Americas and Emea regions, while a decline occurred in the Asia-Pacific zone. Schindler suffered a decline in new installations, which may have been reduced by growth in maintenance, repair and modernization services.
Schindler’s performance was below the expectations of analysts surveyed by the AWP agency, at least in terms of operating profitability and turnover. But the net profit was a fraction of the consensus forecast.
Schindler’s assessment of the outlook is hardly optimistic as the slowdown in growth momentum is expected to continue. The Ebikon multinational is thus revising its expectations downwards, with annual turnover expected to fall by 2%, whereas growth of 1% was targeted until then. Net profit should be between 620 and 660 million.
Along with the release of its results, Schindler announced a change in its senior management. From next September, Carla De Geyseleer will assume the role of group finance director, succeeding Urs Scheidegger, who has been appointed risk manager and will leave the firm’s management committee.
Even expected, the performance disappointed investors, the Schindler participation note tumbling around 11:50 a.m. on the Swiss Stock Exchange from 5.74% to 171.70. The SLI dropped 0.2%.
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