(Reuters) - Swiss elevator and escalator manufacturer Schindler (SCHP.S) reported a 22.4% drop in its second-quarter net profit on Wednesday, blaming wage inflation, higher material costs, foreign exchange effects, and higher spending on new projects.
Schindler shares were down 6.3% by 1310 GMT after it reported a net profit of 239 million Swiss francs ($246 million). Excluding the one-time 55 million franc tax refund that was recognized in the second quarter of 2018, Schindler’s net profit dropped by 5.5%.
“Schindler delivered growth numbers at the low end of expectations,” Baader Helvea analyst Christian Obst said, adding that market conditions were getting tougher.
The company said it had to grapple with a shortage of qualified labor in key markets such as the United States and Europe and growing personnel costs.
“Personnel costs are substantially growing a bit more than 3%, and this is really driven by wage inflation for our own people, but also for our subcontractors,” chief executive Thomas Oetterli told analysts.
Oetterli added that the trade war between Washington and Beijing had also brought about cost pressures, with U.S. tariffs on goods from China weighing on the group’s results.
Sales in April-June rose about 2.4% to 2.85 billion francs from a year earlier and Schindler said it expected net profit of 900 million francs to 940 million francs for the financial year 2019, down from last year’s 1.01 billion francs.
The company reiterated its 2019 forecast of revenue growth of between 4% and 6% in local currencies.
Reporting by Bartosz Dabrowski, Editing by Sherry Jacob-Phillips and Tomasz Janowski