Schindler Gives Confident Outlook After Delays Hurt Sales

Schindler Holding AG, the Swiss maker of elevators and escalators, said it’s confident about meeting a sales target even as first-quarter sales growth was held back by European builders delaying projects.

Revenue rose 4 percent to 1.98 billion Swiss francs ($2.13 billion), the company said today. Analysts predicted 2.01 billion francs. Operating profit rose 1.4 percent to 217 million francs. The shares climbed 2.6 percent to 133.80 francs at 11:56 a.m. in Zurich.

“We talk to our customers, and this gives us confidence we can meet the revenue growth forecast,” Chief Financial Officer Erich Ammann said on a conference call, referring to a target of 6 percent sales growth this year. “You should already see in the second quarter a pick up in the growth rate.”

Chief Executive Officer Juergen Tinggren is expanding in China and India as declining government spending on building projects erodes demand for elevators in Europe. Schindler abandoned a profitability margin target Feb. 19 to spend more on research and to add factories in faster growing markets.

Projects Delayed

Several new installation and modernization projects were delayed or postponed in various European markets, Schindler said in a statement, adding that revenue growth “leveled off” in the region. Increasing sales mainly came from new installations of lifts in growth markets, Schindler said.

“We’re impressed about the strong order growth,” which was 7.5 percent, Serge Rotzer, an analyst at Bank Vontobel AG, said in a note to clients. “If order growth will keep the high pace it might trigger positive earnings revisions as higher volumes will easily overcompensate the lower profitability.”

Schindler confirmed targets of net income of 740 million francs to 790 million francs this year and a stable margin for earnings before interest and taxes over the next years.