The third quarter of 2010 saw the continuation of the Schindler Group’s good performance in the first half of the year. Net profit rose by 5.0% to CHF 530 million in the reporting period from January 1 to September 30, 2010. In the elevators and escalators business, Schindler recorded a 7.1% increase in orders received to CHF6 642 million (+9.5% in local currencies) and generated an EBIT margin of 12.2%.
Orders received rose by 7.1% to CHF 6 642 million compared with the first nine months of 2009 (+9.5% in local currencies). This increase was driven by all business areas and regions, particularly Asia/Pacific and Latin America. In the third quarter of 2010, orders received grew by 3.1% (+9.7% in local currencies) compared with the same period of the previous year.
In the new installations business, Schindler won several major orders in the third quarter of 2010, as it had in the first half of the year.
They include the East Side Access project in New York City – which involves the construction of a direct rail link from Long Island to the Grand Central terminal in Manhattan – as well as an order to supply a total of 353 escalators for a project to extend China’s rail network from Changchun in the far north of the country to Guangzhou on the south coast. In addition, the large number of passengers who pass through Victoria station on London’s underground system will soon be transported by Schindler elevators and escalators.
In the modernization business, Asia/Pacific and Latin America achieved the highest growth rates. In the maintenance business, positive developments were reported in all regions.
The order backlog rose by 4.7% to CHF 6 493 million compared to the end of 2009 (+11.3% in local currencies).
Operating revenue and operating profit reflect negative foreign exchange impacts
Operating revenue declined by 1.0% to CHF 6 038 million in the first nine months of 2010. This decrease was solely attributable to lower exchange rates, which had a negative impact in the amount of CHF 150 million. Adjusted for foreign currencies, a 1.5% increase in operating revenue was achieved.
Operating profit (EBIT) rose by 0.8% to CHF 738 million. Lower exchange rates had a negative impact in the amount of CHF 17 million. An EBIT margin of 12.2% was generated inthe first nine months of 2010, compared with 12.0% in the same period of the previous year.
Excluding the non-recurring book gain of CHF 39 million realized on the sale of real estate, the EBIT margin for the first nine months of 2009 would have been 11.4%. An EBIT margin of 12.5% was recorded in the third quarter of 2010 (third quarter of 2009: 12.0%). Efficiency measures and continued systematic cost discipline contributed to the improvement in the result.
No restructuring costs were incurred in the first nine months of 2010 (first nine months of 2009: CHF 25 million).
Business remains on course
Consolidated operating revenue totaled CHF 2 966 million in the first nine months of 2010, in line with the same period of the previous year. In local currencies, ALSO grew its operating revenue by 6.0%. Net profit rose by 6.7% to CHF 16 million.
Consolidated operating revenue decreased by 0.6% to CHF 9 004 million compared with the first nine months of 2009 (+3.0% in local currencies). A foreign exchange impact due to the strong Swiss Franc led to a decline of CHF 327 million.
Further strengthening of financial position
Consolidated operating profit (EBIT) totaled CHF 750 million, an increase of 0.5% (+2.9% in local currencies) compared with the first nine months of the previous year.
Net profit increased by 5.0% to CHF 530 million (+11.8% excluding the non-recurring book gain of CHF 31 million in the first nine months of 2009), partly reflecting the significant improvement in net income from financing and investing. Cash flow from operating activities rose by 4.8% to CHF 887 million.
The good result had a positive impact on Schindler’s balance sheet figures: as of September 30, 2010, cash and cash equivalents totaled CHF 2 214 million (December 31, 2009: CHF 1 919 million). The equity ratio as of the closing date was 35.3% (December 31, 2009: 35.6%).
Outlook for 2010
Elevators & Escalators
There is still a great deal of uncertainty regarding the future development of the economy. Schindler expects the markets in China, India and Latin America to remain favorable in the fourth quarter of 2010. In Europe and the US, the economic environment is unlikely to alter significantly. Schindler anticipates that pricing pressure will persist in several markets.
In the fourth quarter of 2010, restructuring costs of approximately CHF 20 million for the adjustment of capacity and cost levels are expected to be incurred in markets where conditions remain weak.
Work on the planned merger between ALSO and Actebis is progressing on schedule. The aim is to conclude the transaction before the end of 2010. The completion of the merger depends on the finalization and positive outcome of the due diligence process, the conclusion of the merger agreement, the granting of approval by the responsible competition authorities and the approval of the merger by ALSO shareholders as well as the relevant management bodies of the Droege Group AG.
Including non-recurring costs related to the planned merger with Actebis and excluding anyunforeseeable events, ALSO expects to generate a net profit of CHF 22 million to CHF25 million for 2010 (2009: CHF 15 million).
The anticipated restructuring costs of around CHF 20 million, as well as lower exchange rates, will impact the financial results in the fourth quarter of 2010. Excluding any unforeseeable events, Schindler expects net profit for 2010 to slightly exceed the previous year’s good result.