Schindler Holding ((CH:SCHP)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Schindler Holding’s recent earnings call reflected a balanced sentiment, showcasing robust growth in orders and revenue, particularly within the modernization segment, while also acknowledging challenges in the Chinese market and the impact of tariffs on U.S. operations. The company emphasized its strategic initiatives and innovation launches positively, despite facing significant challenges from external economic factors and regional market declines.
Strong Order Growth
Order growth for Schindler accelerated to 6%, marking the highest increase since Q2 2023. This growth was primarily driven by the Service and Modernization segments, with Modernization alone experiencing close to 20% growth and achieving double-digit increases in all regions outside of China.
Revenue Growth and EBIT Margin
Schindler reported a 2.5% increase in revenue, with the EBIT margin reaching 12%, an improvement of 110 basis points year-on-year. The absence of restructuring charges this quarter contributed to the enhanced margin.
Healthy Cash Flow
The company generated an operating cash flow of CHF 540 million, attributed to positive developments in operating earnings and stable net working capital.
Innovation Launch
Schindler launched its innovative X8 product at the Milan Design Week, which leverages cutting-edge digital technologies. The product received positive initial feedback from customers, highlighting Schindler’s commitment to innovation.
Successful Leadership Transition
The transition to a new CEO was executed smoothly, with no operational disruptions, ensuring the company remains on its strategic path.
Weak Performance in China
While revenue growth was positive in most regions, China presented challenges with a decrease in new installation orders due to unfavorable market conditions.
New Installation Market Decline in Americas
The new installation market in the Americas had a slower start than anticipated, prompting a downgrade in the market outlook.
Impact of Tariffs
Tariffs are expected to have a gross impact of CHF 23 million in 2025. Schindler is actively working on mitigation strategies, although there is a risk that these may not fully offset the effects within the year.
Currency Exchange Impact
The strengthening Swiss franc is projected to negatively impact top-line growth by up to 5 percentage points in the remaining quarters of the year.
Forward-Looking Guidance
Schindler’s guidance for 2025 remains cautiously optimistic, with expectations for low single-digit revenue growth and a 12% EBIT margin. The company anticipates continued growth in modernization, despite challenges such as tariff impacts and a weaker-than-expected U.S. market for new installations.
In summary, Schindler Holding’s earnings call painted a picture of resilience and strategic focus, with strong order and revenue growth counterbalanced by regional challenges and external economic pressures. The company’s commitment to innovation and strategic leadership transitions were highlighted as key strengths moving forward.