Schindler again more profitable in the first half of the year
Published: Friday, Jul 19th 2024, 12:40
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Schindler wants to become more profitable. The elevator group proved this promise once again in the first quarter. Although sales declined, the Ebikon-based group achieved higher profits and a higher margin.
On a quarterly basis, Schindler was able to increase its profitability for the sixth time in a row. Looking at the first half of 2024 as a whole, Schindler achieved 2.3% lower revenue of CHF 5.59 billion. However, both adjusted EBIT (+5.1% to 637 million) and net profit (+6.7% to 494 million) increased.
The adjusted EBIT margin thus improved to 11.4% (+80 bp), according to a press release issued on Friday. Even though some analysts had hoped for a little more, the company continued on its path of continuous internal improvement. "We have kept our promise to become more profitable," said Schindler CEO Silvio Napoli.
You need to know this: The strong Swiss franc weighed on sales and incoming orders; in local currencies, both figures showed a slight increase. Schindler also suffered in particular from weak business in China.
However, this also applies to the competition. Finnish elevator manufacturer Kone, which presented its figures for the second quarter on the same day, put it this way: "The real estate market in China remains a major challenge".
No recovery in China
In turn, the management of the Swiss Group does not expect a significant recovery in new installations in the local market over the next 12 to 24 months. The ongoing market weakness is currently leading to historically high price pressure in China, which is further intensifying the already tough competition.
In this environment, Schindler must focus on improvements in the supply chain and efficiency in order to remain competitive. Despite the challenges in China, CFO de Geyseleer does not believe that achieving the medium-term targets is at risk. The company is also sticking to its forecast for the year.
Forecast confirmed
Accordingly, the Group continues to expect sales growth in local currencies in the low single-digit percentage range and an EBIT margin of 11%. In line with the communicated goal of increasing organizational efficiency, this includes restructuring costs of CHF 80 million. Schindler has refrained from issuing a profit forecast for the year as a whole.
Overall, the business will continue to be driven by service orders and the modernization of existing systems. According to CFO Carla de Geyseleer, the company's own pricing, a better mix and efficiency improvements will provide additional tailwind, while wage inflation, market conditions and restructuring costs will tend to weigh on earnings in the current year.
Following the publication of the results, pessimism quickly spread on the stock market after a positive opening. While the participation certificate was still trading significantly higher in early trading, it was still trading at CHF 224 (-2.1%) at midday. At the beginning of the year, the shares had still risen significantly, but since the spring they had been moving sideways.
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