Schindler: "Intensifying challenges"

In the first six months of 2022, Schindler's business continued to be under pressure. The operating profit decreased from 607 to 403 million Swiss francs compared to the first half of 2021. There are also changes in the group management.

According to the Group, this was mainly because of the "particularly slowdown of the Chinese economy, due to Covid-related lockdowns". Furthermore because of persistent supply chain disruptions, and steep inflation slowdown in the Chinese economy. 

The operating profit dropped in the first half of the year to 403 million Swiss francs (CHF). In the previous year it was still CHF 607 million). The EBIT margin reached only 7.5 percent (previous year: 11.1 percent). EBIT adjusted reached CHF 466 million with a margin of 8.7 per cent – last year it was CHF 638 million; 11.7 per cent). In the second quarter of 2022, the operating profit decreased to CHF 192 million (previous year: CHF 319 million). The EBIT margin was 7.1 per cent (previous year: 11.1 per cent). The adjusted EBIT margin reached 8.5 per cent (previous year: 11.7 per cent).

Unique mix of challenges

More information: Schindler’s Interim Report as of June 30, 2022 The group cites declining top-line growth, cost inflation, semiconductor shortages, supply chain issues and restructuring costs as the reasons.

Order intake rose by 3.0% to CHF 6 227 million and revenue decreased by 2.4% to CHF 5 345 million, while operating profit dropped to CHF 403 million, corresponding to an EBIT margin of 7.5% (EBIT adjusted 8.7%). Net profit amounted to CHF 296 million, and cash flow from operating activities reached CHF 299 million.

"We continue to face a unique mix of challenges, unprecedented in their magnitude and complexity. The supply chain issues combined with the aggravated situation in China and sharply rising inflation have been weighing on our results in the first six months of the year," says Silvio Napoli, Schindler’s Chairman and CEO. "The performance and profitability enhancing measures we have been accelerating since February are starting to yield benefits. Their full impact, however, will take time to flow through the execution of our growing order backlog."

Changes in the Group Executive Committee

Urs Scheidegger, CFO, will leave the Group Executive Committee and become Chief Risk Officer as of 1 September 2022. Photo: © Schindler

Schindler announced that Urs Scheidegger, CFO, will leave the Group Executive Committee and become Chief Risk Officer as of 1 September 2022. In his new position, he will report to the Supervisory and Strategy Committee. Sabine Siméon-Aissaoui, responsible for Supply Chain, will also step down from the Executive Board and leave the company as of 31 July 2022.

Scheidegger will be succeeded by Carla De Geyseleer, who will join the Group Executive Committee as CFO, effective September 1, 2022. She was most recently Group CFO at Volvo Cars. Before that, Carla de Geyseleer was CFO at Société Générale de Surveillance (SGS) and held various management positions in finance and controlling at Vodafone and DHL. Carla De Geyseleer is a member of the Board of Directors of Hilti and Polestar and a member of the Advisory Board of the University of Geneva.

As of September 1, 2022, the Group Executive Committee will be composed of the following members: Silvio Napoli (Chairman and CEO), Paolo Compagna (COO and Deputy CEO), Julio Arce (Europe South), Matteo Attrovio (CIO), Karl-Heinz Bauer (CTO), Carla De Geyseleer (CFO), Meinolf Pohle (Europe North), Robert Seakins (Asia-Pacific), Tobias B. Staehelin (Human Resources), and Daryoush Ziai (China and Escalators).

The figures in detail

Order intake and order backlog

Order intake rose by 3.0% to CHF 6 227 million in the first half of 2022 (previous year: CHF 6 043 million), corresponding to an increase of 4.0% in local currencies. The Americas and EMEA regions recorded positive growth, while Asia-Pacific suffered from the significant contraction of the Chinese new installations market. As a result, New Installations overall recorded a decline, which was offset by growth in Maintenance and by an uptake in Modernization and Repairs orders.

In the second quarter of 2022, the growth momentum receded, with order intake reaching CHF 3 063 million (second quarter of 2021: CHF 3 106 million), corresponding to a decline of 1.4%, or 0.6% in local currencies.

As of June 30, 2022, order backlog increased by 6.6% to CHF 10 257 million (previous year: CHF 9 623 million). In local currencies, the order backlog rose by 8.3%.

Revenue

In the first half of 2022, revenue reached CHF 5 345 million (previous year: CHF 5 475 million), for a drop of 2.4% (–1.5% in local currencies). The increase in the EMEA and Americas regions was offset by a decline in the Asia-Pacific region, where COVID-related lockdowns in China heavily affected the economy and supply chains.

In the second quarter of 2022, revenue decreased by 5.6% to CHF 2 713 million (previous year: CHF 2 873 million), corresponding to a drop of 4.6% in local currencies.

Operating profit (EBIT)

As a result of declining top-line growth, cost inflation, semiconductor shortage, supply chain issues, and restructuring costs, operating profit dropped in the first half to CHF 403 million (previous year: CHF 607 million). The EBIT margin reached 7.5% (previous year: 11.1%).

EBIT adjusted reached CHF 466 million with a margin of 8.7% (previous year: CHF 638 million; 11.7%). In the second quarter of 2022, operating profit amounted to CHF 192 million (previous year: CHF 319 million). The EBIT margin was 7.1% (previous year: 11.1%). The adjusted EBIT margin reached 8.5% (previous year: 11.7%).

Net profit and cash flow from operating activities

Net profit totaled CHF 296 million (previous year: CHF 455 million) for the first half of 2022. Cash flow from operating activities reached CHF 299 million (previous year: CHF 721 million), due to lower operating profit and increased net working capital requirements.

Outlook for 2022

Schindler anticipates the slowing growth momentum to continue. In addition, cost inflation, persistent foreign exchange pressure, construction site delays, and supply chain issues are expected to impact our business negatively. Assuming no further lockdowns and no other unexpected events, Schindler foresees revenue growth of –2% to +2% in local currencies and net profit between CHF 620 million and CHF 660 million for full year 2022.

More information: Schindler’s Interim Report as of June 30, 2022

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