Schindler Holding Q1 Net Profit Rises to CHF 257M, Driven by Margin Expansion and Order Growth

Schindler Holding, a global leader in elevator and escalator manufacturing, reported a solid first-quarter performance, with net profit climbing to CHF 257 million—a 10.8% increase from CHF 232 million in the same period last year. The results highlight the company’s ability to navigate macroeconomic headwinds while maintaining operational discipline.

Revenue Growth Held Steady Amid FX Challenges

Revenue for Q1 2024 (the base year for comparison) reached CHF 2.67 billion, marking a 1.1% rise in reported terms. However, this figure masks a stronger 2.5% growth in local currencies, as foreign exchange headwinds—particularly in emerging markets—weighed on the top line. Schindler’s order intake remained robust at CHF 2.79 billion, up 2.5% in local currencies, signaling sustained demand despite softness in New Installation markets.

Margin Expansion Fuels Profitability

The star of the quarter was Schindler’s net profit margin, which expanded to 8.6% in Q1 2024, up from 7.6% in Q1 2023. This improvement was driven by:
- Operational efficiencies: Cost-cutting measures and pricing power helped offset inflationary pressures.
- Business mix optimization: Higher-margin service and maintenance contracts now account for a larger share of revenue.
- Adjusted EBIT margins: The company reported an 11.1% EBIT margin after excluding CHF 6 million in expenses tied to its “BuildingMinds” transformation program.

Regional Resilience and Strategic Focus

While China’s revenue declined in local currencies, all other regions—including Europe, the Americas, and Asia-Pacific—showed growth. Schindler’s order backlog stood at CHF 8.75 billion as of March 2024, up from CHF 8.4 billion a year earlier, providing visibility for future revenue. The company emphasized its focus on innovation, such as the Schindler X8 elevator, which promises faster speeds and energy efficiency, positioning it for long-term growth in urbanization-driven markets.

Risks and Challenges

• Foreign exchange: Currency fluctuations continue to pressure reported revenue, especially in emerging markets.
• Slowing New Installation markets: Declines in this segment reflect broader construction sector softness, though service contracts remain stable.
• Competition: Rivals like Kone and ThyssenKrupp are also investing in digital solutions, raising the stakes for R&D spending.

Financial Health and Valuation

Schindler’s ROE (Return on Equity) is projected to hit 21.6% by 2025, reflecting strong capital allocation. While its free cash flow margin (historically above 10%) remains robust, investors should note that trailing revenue growth of 3.6% lags behind the Swiss Machinery sector’s 5.2% forecast.

The stock trades at a P/E ratio of 16x based on trailing earnings, slightly below its 5-year average of 18x. However, its dividend yield of 2.8%—supported by a CHF 6.91 dividend per share—offers steady income.

Conclusion: A Reliable Player in a Stable Market

Schindler’s Q1 results underscore its transition from a cyclical construction firm to a predictable, service-driven business. With margins expanding and a strong order backlog, the company is well-positioned to capitalize on secular trends like urbanization and aging infrastructure.

While near-term growth may be tempered by FX headwinds and sector softness, Schindler’s 8.6% net margin and CHF 257 million profit in Q1 2025 (up from CHF 232 million in 2024) signal financial resilience. The stock’s valuation appears reasonable, and its dividend policy offers a safety net for investors.

In a sector where 70% of industry revenue comes from recurring service contracts—a figure Schindler exceeds—its focus on innovation and operational efficiency positions it as a standout player. For income-oriented investors, Schindler remains a compelling choice in a low-growth, high-dividend environment.