By Ozan Ergenay and Bartosz Dabrowski
(Reuters) -Swiss elevator maker Schindler’s shares jumped 6.3% on Friday after the company reported a 65.1% increase in net profit, aided by efficiency gains, stabilising supply chains and price increases, and slightly lifted its 2023 revenue forecast.
Full-year net profit is expected to reach 860-900 million Swiss francs ($992.84-$1.04 billion) and revenue to grow 5-8% in local currencies, it said. The company previously forecast low single-digit revenue growth from last year’s 11.34 billion francs. Net profit in 2022 was 659 million francs.
Net profit in the April-June period came in at 251 million francs, beating analyst estimates of 197.7 million francs, according to a company-provided poll.
The company’s revenue also reached 2.93 billion Swiss francs, up 7.9% after last year’s results had been severely affected by COVID-19 lockdowns in China.
“Last year in China we were very much hurt, more than others, by the lockdown in Shanghai… we have three factories within the city limits of Shanghai,” Chief Executive Silvo Napoli told Reuters in an interview.
In reaction to the ripple effects from China’s troubled real estate market, Schindler already last year streamlined product offerings and increased prices and is now benefiting from its stabilising measures.
However, Chief Executive Silvo Napoli struck a cautious tone with regard to be the Chinese economy, warning the headwinds in China would take some time to be resolved and it will ease in years, but not decades.
“We do see in the short term a continued decline in the China market,” Napoli said in the interview, adding Schindler’s market share is not at the level in China, as the company has worldwide and its performance in the country for the last couple of years is not satisfying.
The world’s second-biggest lift maker’s warning comes as the real estate sector in China, a major market for Schindler and responsible for broadly one-third of China’s gross domestic product (GDP), has become a significant drag on the sputtering economy.
China’s economy saw a meagre 0.8% growth in the second quarter, which prompted authorities to reverse some restrictive policies on private businesses and the tech and property sectors to bolster a flagging post-pandemic recovery.
Finnish rival Kone on Thursday missed forecasts for second-quarter orders due to weaker than expected demand in its key Chinese market, sending its shares down 4%.
The Chinese market makes up around 17% of Schindler sales, while Kone generates around a third of its sales in the country.
($1 = 0.8662 Swiss francs)
(Reporting by Ozan Ergenay and Bartosz Dąbrowski, editing by Kirsti Knolle, Kim Coghill and Louise Heavens)
