Schindler Earnings: China and Global Uncertainty Still Weigh, but Late 2023 Looks Better

China’s weak property market and global macroeconomic uncertainty are still weighing on Schindler’s SCHN results. New installations in China are down by more than 10% year over year, with Europe and the Americas down by 0%-5% and Asia, excluding China, being the only region to grow, at 5%-10%. Although the Chinese market seems to have bottomed already in terms of floor space sold and housing inventory, it is still unclear how long the recovery will take. The generalized increase in interest rates across the world has also put many new real estate developments on hold, slowing demand for new installations of elevators. The order intake was down 5% organically in the first quarter, mainly driven by China. We maintain our CHF 210 fair value estimate, with shares trading at CHF 196 on April 20.

Despite the slowdown in new installations, demand for modernization and services is holding up well. New orders are also coming in at higher prices and margins year over year, which should start to convert into higher EBIT margins by the second half of 2023. Revenue grew 10% in local currencies, while adjusted EBIT margin was 9.7%, up 70 basis points year over year and growing by 15.3%.