A good start – substantial negative foreign exchange impacts
Schindler grew its net profit by 21.7% to CHF 185 million in the first quarter of 2011. Adjusted for a one-off gain of CHF 31 million resulting from the revaluation of ALSO-Actebis, the increase in net profit totaled 6.2%. Orders received rose by 6.7% in local currencies but declined by 2.8% in Swiss francs as a result of significantly lower exchange rates. The EBIT margin in the elevators and escalators business was 11.5%.
Schindler reported a 6.7% increase in orders received in local currencies compared to the first quarter of 2010 and achieved growth in the new installations business across all market regions – especially in Asia / Pacific. Following their conversion into Swiss francs, orders received totaled CHF 2 081 million, representing a decline of 2.8% compared to the first quarter of the previous year.
The order backlog at the end of the first quarter of 2011 was CHF 6 439 million, an increase of 6.0% compared to December 31, 2010.
Operating revenue and operating profit
Operating revenue in local currencies grew by 4.3%. Operating revenue in Swiss francs amounted to CHF 1 846 million, which corresponds to a decrease of 5.2%. Lower exchange rates had a negative impact in the amount of CHF 184 million.
The Group reported an operating profit (EBIT) of CHF 201 million. The elevators and escalators business generated an EBIT of CHF 212 million and an EBIT margin of 11.5%. This was slightly below the margin of 11.8% reported in the first quarter of 2010. Lower exchange rates reduced the operating profit (EBIT) by CHF -25 million compared to the first quarter of the previous year. In addition, there was evidence of pricing pressure in countries affected by the real estate crisis in particular. No restructuring costs were incurred in the reporting period.
Net income from financing and investing activities
Net income from financing and investing activities totaled CHF 15 million (first quarter of 2010: CHF -18 million). This positive result was driven primarily by net income from currency hedging, as well as a slight improvement in net interest income compared to the first quarter of the previous year.
The revaluation of ALSO-Actebis as an associated company resulted in a one-off accounting gain of CHF 31 million. In future, Schindler's 30% participation in the net profit of ALSO-Actebis will be reported as net income from investing activities. Since Schindler will now take account of the figures provided in the external reporting of ALSO-Actebis, the relevant net income will be shown in Schindler's financial statements one quarter after it is incurred. Consequently, Schindler has not recorded any share of the net profit in the first quarter of 2011.
Net profit and cash flow from operating activities
Net profit increased by 21.7% to CHF 185 million (first quarter of 2010: CHF 152 million). Excluding the one-off accounting gain of CHF 31 million resulting from the revaluation of ALSO-Actebis, Schindler reported a net profit of CHF 154 million, corresponding to an increase of 6.2%.
Cash flow from operating activities totaled CHF 367 million in the reporting period (first quarter of 2010: CHF 429 million).
Outlook for 2011
Schindler's operating performance in the first quarter of 2011 was in line with expectations for the full year 2011. Schindler anticipates that the strong Swiss franc will continue to negatively impact its financial results in the coming quarters. It therefore expects that excluding any unforeseeable events, its net profit for 2011 will be slightly lower than in the previous year.