Schindler cuts 2022 revenue guidance on China slowdown

Schindler cuts 2022 revenue guidance on China slowdown

Schindler (SCHP.S) on Friday cut its revenue guidance for the year, citing a slowdown in its key China market, which the Swiss elevator and escalator manufacturer expects to continue.

Schindler’s shares were down 6.5% as of 0955 GMT after the company said it expects between a 2% decline and 2% growth in its 2022 revenue. It had previously guided for growth of 1% to 6%.

CEO Silvio Napoli said on a conference call that China’s market could contract by 15% to 30% this year. China accounted for around 18% of Schindler’s sales last year.

The world’s second-biggest lift maker has been hit by falling demand for new equipment in China as well as rising interest rates in the United States and Europe, which slow down the construction market.

China’s real estate sector, which is responsible for broadly one-third of its gross domestic product (GDP), is in crisis as a string of developers default on their debts and a growing number of homebuyers refuse to pay mortgages on stalled projects.

Schindler’s second-quarter net profit came in at 152 million Swiss francs ($157 million), down 37% from a year earlier but in line with a consensus figure cited by J.P. Morgan analysts.

Schindler expects 2022 net profit to reach 620-660 million francs, below its 2021 result of 881 million francs.

Last week, Finnish rival Kone (KNEBV.HE) lowered its sales and profit outlook for the year due to lower-than-expected second-quarter sales and a weakened new equipment market outlook in China.

Schindler also said chief financial officer Urs Scheidegger would leave his position to become chief risk officer effective Sept. 1. He will be succeeded by Carla De Geyseleer.

($1 = 0.9684 Swiss francs)