Schindler Holding AG (SCHP) cut a profit target for the second successive quarter, partly because of a restructuring charge the elevator maker expects in the last three months of the year. The stock fell as much as 7.2 percent.
Schindler forecasts net income of as much as 550 million Swiss francs ($605 million) this year including a 155 million-franc charge on its investment in Hyundai Elevator Co., the Ebikon, Switzerland based company said in a statement. It previously forecast as much as 600 million francs. The company will book restructuring costs of about 25 million francs in the fourth quarter, it said, without giving further details.
The profit forecast comes as Silvio Napoli is due to replace Juergen Tinggren as chief executive officer in January. Napoli needs to boost profitability and fine-tune Schindler’s expansion strategy as costly investments in China and India weigh on profitability.
Third-quarter operating profit dropped 18 percent to 212 million francs and was “below expectations,” Schindler said. Expenses relating to the strategic expansion of the business in growth markets, delays in the execution of cost cuts and pricing pressure contributed to lower operating profit, it said. Weak currencies in important markets such as the U.S, Brazil, India, and Australia also crimped operating profit.
The shares dropped as much as 9.5 francs to 123.4 francs, the biggest intraday fall since August 2011. The stock was down 6.6 percent to 124.1 francs at 9:09 a.m. in Zurich trading.
Schindler said last month that Tinggren will join Chairman Alfred Schindler as an executive director on the board while Napoli, who has led Schindler’s Asia-Pacific business since 2008, will be promoted to CEO partly because of his knowledge of key Asian markets.
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