Oct. 15 (Bloomberg) -- Kone Oyj, the elevator supplier to world’s tallest clock tower in Mecca, fell the most in three months as competitor Schindler Holding AG cut its profit target for the second consecutive quarter.
Kone dropped as much as 2.9 percent, the steepest intraday decline since July 22, and was trading down 1.1 percent at 65.05 euros at 12:01 p.m. in Helsinki. That pared the gain this year to 17 percent, valuing the Espoo, Finland-based manufacturer at 17 billion euros ($23 billion). Volume was 46 percent of the three-month daily average.
Schindler lowered its full-year net income forecast today to as much as 550 million Swiss francs ($605 million) from a prediction of as much as 600 million francs. Expansion costs, delays in cost-reduction measures, “substantial” pricing pressure and negative currency exchange rate effects are holding back profit, the Ebikon, Switzerland-based company said in a statement.
“Even as this year is practically a sure thing for Kone, this does cast some doubts on the future of the elevator market,” Pekka Spolander, an analyst at Pohjola Bank Oyj, said by phone. “Many investors have been eager to believe that Europe could recover, but we may have to question that assumption yet.”
Kone has profited from infrastructure investments in Asia as national governments develop urban areas. The Asia-Pacific region accounted for 43 percent of the Finnish company’s second-quarter sales, an increase from 36 percent a year earlier, matching the combined contribution from Europe, the Middle East and Africa. In contrast, Schindler’s revenue in its Asia, Australia and Africa sales region amounted to 26 percent of the total in the first half of the year.
Last month, Kone raised its forecast for the third time this year, citing strong demand in China. Kone’s larger business in Asia should limit negative interpretations for the company from Schindler’s forecast cut, Spolander said.
“I would highlight the company-specific matters that Schindler stated: growth investments and delays in cost-cut measures,” he said. “Schindler isn’t nearly as big in Asia, and thus won’t get as much help from strong demand there.”
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