The third quarter profit of Swiss elevator manufacturer Schindler (SCHP.S) increased by 23% due to growth in maintenance and other services, prompting a small upward revision to 2023 guidance.
Although growth in China stalled due to a slowing economy, Schindler’s Chief Executive Silvio Napoli was still optimistic about the Chinese market. The strongest regions were Europe and the United States.
According to a survey conducted by the company, Schindler reported a net profit of 228 million Swiss francs ($254.10 million) from July through September, beating analyst expectations of 214 million francs. As of 1030 GMT, the company’s shares were up 4.4%. According to Schindler, the global housing shortage will fuel future new construction and increase residential demand, countering China’s current housing surplus.
CEO Napoli told Reuters, “I don’t see China implosion happening,” adding that competing there is essential. Schindler is in a good position compared to its rivals because it has less exposure to China than its peers and because most of its earnings come from its services division, which focuses more on maintaining existing elevators, escalators, and moving walkways than making new ones.
China, the second-largest economy in the world, has struggled with a worsening property sector crisis this year, accounting for a quarter of the country’s economy. According to Bank of America’s September fund manager poll, the highest credit event risk in the country is in the real estate sector.
“The growth reduced and the risk profile changed in China, but we need to be prepared to tackle that to be a global company, a leader in the sector there,” Napoli stated.
Around 15% of Schindler’s sales come from the Chinese market, whereas Kone (KNEBV.HE), a rival company from Finland, gets about a third of its business there.
According to Schindler, it now anticipates that full-year net profit will amount to 880 to 910 million Swiss francs and that revenue will increase by 6 to 8% in local currencies. It had previously targeted a profit of between 860 million and 900 million francs and revenue growth of between 5% and 8%. Since the year’s beginning, shares of Schindler have increased by more than 6%.
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