ZURICH (Reuters) - Schindler (SCHP.S) said on Friday it will cut 2,000 jobs over two years as regions outside China reel from COVID-19 even as the Swiss elevator maker bulks up in the world’s biggest lift market, which has recovered quickly from lockdowns.
Schindler announced the cuts as it reported a 21% fall in second-quarter net profit to 188 million Swiss francs ($203.27 million).
Revenue dropped 11.8% to 2.5 billion francs, while orders fell 15.6% to 2.6 billion as new installations and modernization projects declined worldwide and Schindler said a recovery to last year’s levels will not come before 2022.
The company, whose results were also hurt by the strong Swiss franc, saw the biggest declines in the Americas and Europe.
The Chinese market locked down after the new coronavirus emerged there late last year, but rebounded swiftly and posted double-digit percentage second-quarter sales increases, Schindler Chief Executive Thomas Oetterli, previously Schindler’s China head, told analysts on a call on Friday.
Schindler is bulking up there, including lifting its minority holding in a Chinese lift company, Volkslift, to 51% as it seeks to grow faster where it believes the state will prop up building.
“The Chinese government always supported the market ..., and especially now in a downturn environment, real estate business infrastructure is something you can push as a government,” Oetterli said. “I think the Chinese government has shown a lot of agility also in the past to support and to act very fast.”
The world’s second-biggest lift-maker behind U.S.-based Otis Worldwide OTIS.N now expects a sales decline of up to 6% for 2020, less severe than the previous forecast of up to 10%.
Finnish rival Kone (KNEBV.HE) expects a 4% decline and said this month it also saw a Chinese recovery.
Schindler expects 2020 profit between 680 and 720 million francs, down from 929 million francs in 2019, on restructuring costs of up to 130 million.
Reporting by John Miller, editing by John Revill and Emelia Sithole-Matarise