Schindler Holding Ltd. · SIX:SCHN
Schindler — Schindler Hldg Ag Akt — Q3 2022 Earnings Presentation
37 slides from Schindler's earnings presentation, Oct 20, 2022
Slide 1: Results as of September 30, 2022
Results as of September 30, 2022 October 20, 2022 © Schindler 2022 I © Schindler 2022 I We Elevate I October 20, 2022 I
Slide 2: Agenda
Agenda 1. Market update Silvio Napoli 2. Update on challenges Silvio Napoli 3. Update on Top Speed 23 program Silvio Napoli 4. Operational priorities Silvio Napoli 5. Financial results as of September 30, 2022 Carla De Geyseleer 6. Outlook for 2022 Carla De Geyseleer 7. Q&A Silvio Napoli/Carla De Ge
Slide 3: Market outlook 2022
Market outlook 2022 NI: China contracting, RoW slowing down after solid H1, Maintenance and Modernization growing across all regions Market growth China APAC Americas EMEA Global (units) w/o China New Installations (NI) ▪ Lockdown ▪ India: ▪ North America: ▪ Europe: Contracting as a impact growing s
Slide 4: Update on challenges
Update on challenges 4 I © Schindler 2022 I We Elevate I October 20, 2022 I Investor Relations
Slide 5: Stabilized margin drop
Stabilized margin drop Progress, working through backlog and legacy issues Challenges Progress #1: Dealing with foreign exchange burden #2: Regaining competitive New Installations margins #3: Resolving supply chain disruptions #4: Streamlining product portfolio complexity #5: Adjusting for China mar
Slide 6: Challenge #1: dealing with foreign exchange burden
Challenge #1: dealing with foreign exchange burden Swiss franc strength offsets USD and BRL recoveries Impact on revenue and EBIT (YTD) Focus on efficiency: Swiss based headquarters costs –111m –16m Revenue, CHF million EBIT, CHF million BRL/CHF 500 4.0% 3.0% +12% % of revenue USD/CHF +8% 250 2.0% C
Slide 7: Challenge #2: regaining competitive NI margins
Challenge #2: regaining competitive NI margins Positive order intake margin development, backlog still affecting results Realized price increases New Installations (YTD) New Installations order intake/backlog margin development (%) China APAC Americas EMEA w/o China -- Low single-digit Mid single-di
Slide 8: Challenge #3 and #4: supply chain/product complexity
Challenge #3 and #4: supply chain/product complexity Production ramping up, legacy product impact phasing out, microchips shortage affecting deliveries YoY monthly deliveries Reducing impact from legacy products Key actions Order intake Order backlog 100% 100% 50% 0% Jan Feb March Apr May Jun July A
Slide 9: Challenge #5: adjusting for China market contraction
Challenge #5: adjusting for China market contraction Inventory at 2014 peak levels Floor space sold further declined across all city tiers1) Housing inventory2) Months of consumption 120% 30 100% 25 80% 60% 20 40% 15 20% 0% 10 -20% 5 -40% -60% 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2014 2015
Slide 10: China remains the largest New Installations market
China remains the largest New Installations market China still accounts for 63% of the global NI market in 2022 (units/%) 1’000’000 100% 100% 900’000 81% 83% 90% 76% 78% 800’000 72% 80% 66% 82% 100% 700’000 79% 70% 77% 74% 600’000 70% 60% 63% 500’000 50% 400’000 40% 300’000 30% 200’000 20% 100’000 1
Slide 11: China outlook: continued urbanization driving market
China outlook: continued urbanization driving market Strategic focus on profitable growth with density potential Mainland cities with highest growth potential by tier Elevator density 2021 (# of installed units per 1 000 people) South Korea 14.9 Germany 8.7 Japan 7.2 China 6.3 USA 3.4 India 0.5 0 2
Slide 12: China outlook: unique Service and Modernization opportunities
China outlook: unique Service and Modernization opportunities Focus on organic growth and Modernization China E&E installed base approaching 50% of the world’s total Approach million units 9.8 Service opportunity Market: CAGR ~+12% ▪ Support authorities in enhancing passenger safety via remote 8.5 8
Slide 13: Update on Top Speed 23 program
Update on Top Speed 23 program 13 I © Schindler 2022 I We Elevate I October 20, 2022 I Investor Relations
Slide 14: Top Speed 23 program
Top Speed 23 program Re-aligning with operational priorities Core initiatives Status Progress vs. target EBIT impact (from year) New Installations growth in Re-focus on profitable New Installations completed selected strategic markets growth 2022 Portfolio growth/investments 25% of portfolio cloud c
Slide 15: Top Speed 23: portfolio growth/investments in mass connectivity
Top Speed 23: portfolio growth/investments in mass connectivity Business model proven and ramping up Digital revenue Loss rate reduction >50% 50% monetization rate Cloud connected units: Efficiency and Sustainability 25% of portfolio preventive care up to –30% –99.5% callbacks CO2 emissions (vs. non
Slide 16: New "Green Maintenance": up to 99.5% CO2 reduction
Top Speed 23: mass connectivity investments paying off New “Green Maintenance”: up to 99.5% CO2 reduction External certification by TÜV Rheinland Supporting customers to reduce CO2 emissions Smart services Remote e-fleet maintenance up to Less physical visits –99.5% Higher uptime CO2 Others 16 I © S
Slide 17: Operational priorities
Operational priorities 17 I © Schindler 2022 I We Elevate I October 20, 2022 I Investor Relations
Slide 18: Our priorities
Our priorities PEOPLE PERFORMANCE Frontline is Pricing+efficiency Build champion teams the bottom line > Inflation Unique customer Culture: experience Inclusion & diversity Strategic markets back to basics 4P’s PRODUCTS PLANET Service growth, efficiency, NI profitability ESG roadmap and digital solu
Slide 19: Financial results as of September 30, 2022
Financial results as of September 30, 2022 19 I © Schindler 2022 I We Elevate I October 20, 2022 I Investor Relations
Slide 20: Results in a nutshell
Results in a nutshell ▪ Measures implemented starting to pay off ▪ Order intake: focus shift from volume to value and margin ▪ Revenue recovery in third quarter ▪ Profitability starting to recover ▪ Complex mix of challenges continues to be addressed ▪ Outlook confirmed 20 I © Schindler 2022 I We El
Slide 21: Key figures as of September 30, 2022 (July to September)
Key figures as of September 30, 2022 (July to September) Solid revenue and margin recovery In CHF million Q3 2022 Q3 2021 r% r% in LC Order intake 2 740 2 995 –8.5 –5.9 Revenue 2 965 2 807 5.6 7.9 Operating profit (EBIT) 252 306 –17.6 –15.0 in % 8.5 10.9 Operating profit (EBIT), adjusted 272 1) 308
Slide 22: Key figures as of September 30, 2022 (January to September)
Key figures as of September 30, 2022 (January to September) Growth and performance impacted by situation in China In CHF million 9M 2022 9M 2021 r% r% in LC Order intake 8 967 9 038 –0.8 0.7 Revenue 8 310 8 282 0.3 1.7 Operating profit (EBIT) 655 913 –28.3 –26.5 in % 7.9 11.0 Operating profit (EBIT)
Slide 23: Order intake development
Order intake development Under pressure against continued margin improvement Third quarter 9M 2022 +0.71) in CHF million in CHF million –0.82) –5.91) 2 995 2 740 –8.52) Q3 2021 Q3 2022 1) Growth in local currencies vs. previous year, in % 2) Growth vs. previous year, in % 23 I © Schindler 2022 I We
Slide 24: Order intake: focus shift from volume to value and margin
Order intake: focus shift from volume to value and margin Modernization and Maintenance offsetting drop in New Installations Growth 9M 2022 vs. China APAC w/o China Americas EMEA Global 9M 2021 By business (units) New Installations (NI) Maintenance By business (value in LC) New Installations (NI) Mo
Slide 25: Revenue development
Revenue development Recovery in the third quarter with growth across all regions and product lines Quarterly development 2022 9M 2022 in CHF million +1.71) in CHF million +0.32) +1.91) –5.61) +7.91) EMEA (–) EUR +1.22) –4.62) 5.62) Americas (–) TRY China (+) USD Rest AP (+) RMB 2 632 2 713 2 965 (+)
Slide 26: EBIT adjusted and EBIT development
EBIT adjusted and EBIT development Measures initiated throughout the year starting to pay off Quarterly development 2022 9M 2022 in CHF million EBIT adjusted/margin EBIT/margin 600 12.0% 600 12.0% 9.2% 9.0% 8.5% 10.0% 8.5% 10.0% 8.0% 400 8.0% 400 7.1% 8.0% 272 6.0% 252 6.0% 236 230 211 192 200 4.0%
Slide 27: Operating cash flow development
Operating cash flow development Reduced as a result of lower operating profit and increased net working capital requirements Third quarter YTD2022 9M Q3 in CHF million in CHF million –60.81) + Growth in Maintenance & Repairs – Cost inflation – China lockdowns – Supply chain disruptions –67.51) + Low
Slide 28: Four CFO focus areas
Four CFO focus areas Concentration on performance improvement Pricing Efficiency Supply chain incl. Net working procurement capital 28 I © Schindler 2022 I We Elevate I October 20, 2022 I Investor Relations
Slide 29: Outlook for 2022
Outlook for 2022 29 I © Schindler 2022 I We Elevate I October 20, 2022 I Investor Relations
Slide 30: Outlook for 2022
Outlook for 2022 As of October 20, 2022 Business environment Key actions ▪ China market contracting, RoW slowing ▪ Price increases across all regions and growth product lines ▪ Labor and component shortages, ▪ Accelerated measures to streamline construction site delays product offering ▪ Material in
Slide 31: Results as of September 30, 2022
Results as of September 30, 2022 October 20, 2022 © Schindler 2022 I © Schindler 2022 I We Elevate I October 20, 2022 I
Slide 32: Additional charts
Additional charts 32 I © Schindler 2022 I We Elevate I October 20, 2022 I Investor Relations
Slide 33: Quarterly overview
Quarterly overview Key figures In CHF million 2022 2021 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Order intake 2 740 3 063 3 164 3 128 2 995 3 106 2 937 Revenue 2 965 2 713 2 632 2 954 2 807 2 873 2 602 Operating profit (EBIT) 252 192 211 253 306 319 288 in % 8.5 7.1 8.0 8.6 10.9 11.1 11.1 Operating profit (EBIT), adjus
Slide 34: Balance sheet
Balance sheet In CHF million 30.09.2022 in % 31.12.2021 in % 30.09.2021 in % Cash and cash equivalents 2 095 17.9 2 841 23.7 2 674 22.9 Other current assets 5 948 50.8 5 436 45.4 5 226 44.8 Total current assets 8 043 68.7 8 277 69.1 7 900 67.7 Non-current assets 3 663 31.3 3 697 30.9 3 767 32.3 Tota
Slide 35: Order intake growth by region and product line (3rd quarter)
Order intake growth by region and product line (3rd quarter) Growth in Existing Installations couldn’t offset sharp New Installations decline Growth Q3 2022 vs. China APAC w/o China Americas EMEA Global Q3 2021 By business (units) New Installations (NI) Maintenance By business (value in LC) New Inst
Slide 36: Challenge #5: adjusting for China market contraction
Challenge #5: adjusting for China market contraction Top 100 developers: land purchases and sales significantly down Sales value (bn RMB) Land purchase (10 000 m2) 9’000 30’000 –46% –46% 6’000 20’000 –67% –72% –42% 3’000 10’000 –75% 0 0 Top 10 Top 50 Top 100 Top10 Top50 Top100 Source: CREIS, August
Slide 37: Financial calendar 2023
Financial calendar 2023 Full year results media conference February 22 Ordinary General Meeting Schindler Holding Ltd. March 28 Publication of key figures as of March 31 April Publication of Interim Report as of June 30 July Publication of key figures as of September 30 October . Contact: Marco Knuc
Schindler Hldg Ag Akt — Q3 2022 Earnings Presentation on 6ix