HELSINKI (Reuters) - Finnish elevator maker Kone (KNEBV.HE) reported on Thursday that its quarterly profits fell more than expected due to intense price competition in China as well as higher labour and material costs.
The highly competitive industry, including Switzerland’s Schindler (SCHP.S), Germany’s ThyssenKrupp (TKAG.DE) and U.S. Otis (UTX.N), has struggled in the past years with falling installations in China, which is by far the world’s biggest elevator market.
Third-quarter adjusted operating profit fell 15 percent from a year ago to 274 million euros ($313 million), missing analysts’ average expectation of 308 million euros in a Reuters poll.
“The development of our adjusted EBIT margin was clearly unsatisfactory,” Kone’s chief executive Henrik Ehrnrooth said in a statement.
“Profitability continued to be burdened by several factors, such as the intense price competition over the past years and increased costs. Recent geopolitical tensions also had a negative impact on our result,” he added.
Kone lowered its full-year profit forecast to a range of 1.10-1.15 billion euros from a previous outlook of 1.10-1.20 billion euros, partly due to a larger impact from unfavourable foreign exchange rates.
The company added that it expects pressure on profits to ease towards the end of the year as a result of pricing and productivity actions that have already been taken.
The company is cutting jobs around the world with an aim to save about 100 million euros annually by 2020.
Shares in the company fell 3.2 percent by 1024 GMT.
($1 = 0.8763 euros)
Reporting by Anne Kauranen, editing by Jussi Rosendahl