Logo of Swiss manufacturer Schindler is seen at an elevator in Zurich, Switzerland February 17, 2021. REUTERS/Arnd Wiegmann/File Photo Acquire Licensing Rights
Oct 19 (Reuters) – Swiss elevator maker Schindler (SCHP.S) on Thursday raised its 2023 guidance slightly after reporting a 23% increase in third quarter profit driven by growth in maintenance and other services.
Europe and the United States were the strongest regions while growth in China stalled, reflecting a slowing economy, although Schindler's Chief Executive Silvio Napoli was still confident about the Chinese market.
Schindler's shares were up 4.4% as of 1030 GMT after the company reported a net profit of 228 million Swiss francs ($254.10 million) for July-September, beating analyst estimates of 214 million francs, according to a company-provided poll.
Schindler said the global housing deficit would drive residential demand and fuel future new installations, offsetting China's current housing oversupply.
"I don't see China implosion happening," CEO Napoli told Reuters, adding that being able to compete in the country is a must.
Schindler is well-placed among competitors as its China exposure is lower than that of peers and most of its earnings come from the services business, which maintains elevators, escalators and moving walks, rather than new installations.
China has struggled this year with a deepening crisis in the property sector, which makes up a quarter of the world's second-largest economy. Its real estate sector is the biggest credit event risk, according to Bank of America's September fund manager survey.
"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 said.
The Chinese market makes up around 15% of Schindler's sales, while Finnish rival Kone (KNEBV.HE) generates about a third of its sales in the country.
Schindler said it now expects full-year net profit to reach 880 million to 910 million Swiss francs and revenue to grow 6% to 8% in local currencies. It previously aimed for revenue growth of 5% to 8% and net profit of 860 million to 900 million francs.
Schindler shares are up more than 6% since the start of this year.
($1 = 0.8973 Swiss francs)
Reporting by Ozan Ergenay and Bartosz Dabrowski; Editing Clarence Fernandez, Sonali Paul and Susan Fenton
Our Standards: The Thomson Reuters Trust Principles.
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