Schindler (SCHN) Q2 2024 earnings summary

Executive summary

• Achieved six consecutive quarters of EBIT margin improvement, with net profit up 7% year-over-year in H1 2024 and robust Service and Modernization markets offsetting New Installations weakness, especially in China.

• Order intake and revenue grew 1.0% and 1.4% in local currencies for H1 2024, despite reported declines due to FX headwinds; portfolio units increased 5%.

• Modular platform rollout gained traction, with over 70% of new units in Europe based on the new product; new US mid-rise product launched.

• Service portfolio grew over 5%, with more than a third now cloud-connected, supporting digital revenue growth.

• Operating cash flow up 30% year-over-year for H1, driven by profit and working capital improvements.

Financial highlights

• H1 2024 revenue: CHF 5,593m (-2.3% reported, +1.4% in local currencies); order intake: CHF 5,768m (-2.9% reported, +1.0% in local currencies).

• EBIT margin: 11.0% (reported), 11.4% (adjusted) for H1; Q2 EBIT margin: 11.2% (reported), 11.6% (adjusted).

• Net profit: CHF 494m (+6.7% year-over-year); net profit margin 8.8% for H1, 9.0% for Q2; EPS CHF 4.32 (+8.3%).

• Operating cash flow: CHF 676m (+30% year-over-year); Q2 operating cash flow: CHF 169m (-30% year-over-year due to NWC deterioration).

• Order backlog: CHF 9,109m as of June 30, 2024, down 4.0% year-over-year.

Outlook and guidance

• 2024 guidance confirmed: low single-digit revenue growth in local currencies and 11% EBIT margin, including up to CHF 80m in restructuring costs.

• Service and Modernization markets expected to provide tailwinds; NI market remains challenging, especially in China.

• No major recovery expected in China NI market for at least 12-24 months; continued vigilance on market conditions.

• Restructuring costs anticipated to support momentum into 2025.

• Pricing, mix, and operational efficiency to drive margin tailwinds; wage inflation remains a key headwind.