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October 26, 2022

Otis reduces 2022 outlook as China sales decline

Contributed Otis CEO, President and Chair Judy Marks.

Farmington elevator maker Otis Worldwide revised its 2022 outlook Wednesday during a third-quarter earnings call, reducing its estimated sales for the year, on the heels of declining orders from China.

Otis Worldwide reported second quarter net income of $324 million, or 77 cents per share, vs. $331 million, or 77 cents per share, in the year-ago period. Sales totaled $3.3 billion, down 7.6% from a year earlier.

Otis CEO, President and Chair Judy Marks said the company’s new equipment orders grew in the third quarter in all regions beside China, which saw sharp decline as the country revisits shutdown protocols amid another wave of COVID-19. She said Otis’ market growth in China was down about 15% in the third quarter.

“Some of this is driven by the lock down, some of it is driven by the property market confidence, and clearly the market won’t recover in ‘22,” Marks said. “Q1 was down 5%, Q2 the segment was down 20%, and Q3 we believe it was down 20% as well.”

Marks said the company has an existing order backlog in China, which will be realized in the future and she still feels positive about the country being a growing sector for Otis.

“Last quarter we assumed COVID would be relieved and there'd be somewhat of a return to normal, and while this might not be as visible to everyone outside China, lockdowns are absolutely continuing there … those constraints are really constraining us from doing final shipments in terms of delivering them on the trucks and installing them,” Marks said.

The company revised its full-year outlook. It’s now projecting adjusted net sales of $13.4 billion to $13.5 billion, down 4% to 4.5%. It also lowered its organic sales estimate to between 2% and 2.5%. 

The company increased its full-year share repurchase target to $850 million.

In July, Otis announced it was selling its Russian business amid the ongoing war in Ukraine.

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