HELSINKI (Reuters) -Elevator-maker Kone said its overall order intake was up after it posted weaker-than-expected first-quarter core earnings on Wednesday and trimmed its full-year outlook on the back of supply chain constraints and a decline in its China business.
The Finnish company, with a global market share of close to 20%, has made “good progress” this year in pushing through price increases for elevators and escalators, and is slashing costs to compensate for rising raw material prices, its chief executive said.
The ongoing COVID-19 lockdowns in Shanghai and elsewhere in China have, however, added to problems of an ongoing liquidity squeeze among local property developers, CEO Henrik Ehrnrooth told reporters.
Kone’s January-March operating profit fell to 171.1 million euros ($181.6 million) from 249.8 million euros a year earlier, missing the 225.8 million euro average estimate of ten analysts polled by Refinitiv.
Kone’s order intake rose to 2.42 billion euros in the first quarter from 2.08 billion a year ago.
The company’s share price rose by 2.4% at 1248 GMT, outperforming a 1.5% rise in Finland’s benchmark stock index.
“The share price move perhaps suggests we are reaching the bottom in terms of sentiment,” JPMorgan wrote in a note to clients.
Boosting earnings margins remains Kone’s top priority, the company said.
“In most years, good companies can fundamentally cut (operating costs) by 3-4%, but this year we’re doing much more,” Ehrnrooth said.
“Based on the progress we have made, I am confident that we can overcome these headwinds,” he added.
Kone now expects revenue to grow by between 2% and 5% this year, down from an earlier projection of 2-7%, while adjusted operating income is seen in the range of 1.18 billion-1.28 billion euros against 1.18 billion-1.33 billion seen earlier.
The company cautioned that the new outlook depends on COVID-19 restrictions in China being lifted during the second quarter, and with “a rapid recovery thereafter”.
($1 = 0.9423 euros)
(Reporting by Anne Kauranen and Terje Solsvik, editing by Gwladys Fouche and Elaine Hardcastle)
