Schindler Hldg Ag Akt

Ladies and gentlemen, welcome to the Q&A session. On Q1 results 2020, I am Moira, the caucus call operator. I would like to remind you that all participants will be listening on remote and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Utterly, Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and welcome to our first quarter 2020 results conference call. My name is Thomas Utterly. I'm the CEO of the Schindler Group, and I'm here together with Urs Scheidenker, our CFO, who will update you on the financial situation. and provide an outlook for 2020. I don't need to tell you that we have experienced some extraordinary times over the last few weeks as a company, but also as individuals. Hence, I couldn't be prouder of all the Schindler colleagues globally as they do the best they can on the given circumstances to serve our customers and continue to ensure the elevators and escalators we install and service are kept in good working order. Our services are systemically important and it is vital that we can continue to deliver on our promise to customers and passengers. During these times, solidarity is imperative. We all must work together, first to defeat and then to rebuild. Colleagues across the globe are fully engaged to do just that as they go above and beyond to help their communities fight back and stay resilient. News reached me the other day of our colleagues in Indonesia. They have helped turn the athletes village of the 2018 Asian Games into an emergency hospital that will be able to treat as many as 22,000 COVID-19 patients. Meanwhile, our call center staff in Spain has opened its phone lines to anyone in need also for topics that go beyond elevator business. Additionally, there are initiatives throughout the world to collect cash donations and to donate personal protection equipment to the public. These are just a few examples of many more from across the Schindler family. The world has changed dramatically in recent months. but high engagement and solidarity continue to make up the Schindler culture. This was also evident in the results of our recent employee engagement survey. We have launched a relief fund for employees to support individual hardship cases related to the COVID-19 pandemic. As an initial contribution, the Executive Committee and Supervisory and Strategy Committee will waive 10% of their fixed salaries for six months starting in May 2020. Other senior leaders around the world can also participate. Each contribution will be matched by the company. After these introductionary remarks, let me turn to slide number two now and focus on the first quarter results. Like many companies across the world, Also, Schindler has felt the impact of COVID-19 as this pandemic has become a truly global challenge. As countries implemented necessary quarantines and social distancing practices to contain the pandemic, the world has gone into a great lockdown. This has severely reduced overall economic and construction activities globally significantly impacting the elevator and escalator industry. Subsequently, we have seen delays and postponements, particularly in new installations and modernization, as the absence of physical meetings has prevented the signing of contracts. Moreover, there has been a temporary shutdown of construction sites in many companies. Asia-Pacific, particularly China, suffered first and the most. Since early March, other regions and countries have been following similar patterns. That said, however, our service business has shown resilience, particularly since elevator and escalator service was declared as system-critical service by most governments. This is a crisis like no other and there is substantial uncertainty about its impact. What can we do? We will continue to focus on what we can influence. Our key priorities are summarized on slide number three. The safety and well-being of our employees, their family members, of our customers and the passengers who use Schindler elevators and escalators throughout the world every day continues to have our highest priority. And our crisis management efforts continue. We have established crisis management teams on corporate, regional, and country level who are orchestrating actions to overcome the crisis with priorities set to our employees and customers, the supply chain, and, of course, the liquidity. And I can say that these teams have done an impressive job. Meanwhile, the preparation of the company for the post-COVID-19 pandemic era has started, as some countries have plans to or already started to loosen restrictions. I would like to move to slide number four, which provides an overview on the regional order intake development in the first quarter 2020. It reflects the situation I described at the beginning of my speech. Order intake in the new installations business and in modernizations declined in both Asia-Pacific, particularly driven by China and the Americas. EMEA still showed positive development. While Asia-Pacific was early in the cycle of the pandemic development and already started to show first signs of a recovery towards the end of the quarter, markets in the Americas and in EMEA only start to feel the impact from the COVID-19 pandemic from early mid-March. All countries followed similar patterns, depending on severity and degrees of government measures to contain COVID-19 spread, resulting in complete lockdowns, closure of factories, delays in project awards or postponements, and shutdown of construction sites. Schindler production sites in China were temporarily closed in February, while factories in India have been closed since end of March and so far have not been reopened. At the same time, the service business remained resilient and continued to grow across all the regions. Let me pause here and hand over to Urs Heidegger. He will talk to you how these developments have impacted our financial performance in the first quarter of 2020.

Urs, over to you. Thank you, Thomas. Good morning, ladies and gentlemen. I would like to draw your attention on slide number six with the key figures as of March 31st, 2020. In the first quarter of 2020, the order intake decreased by 8.4% to 2.7 billion Swiss francs, corresponding to a decline of 3.2% in local currencies. Our intake includes all product lines, new installation, modernization, service, and repairs. The EMEA region reports pleasing growth, thanks to strong results in the new installation, the modernization, and the service business. And this is partly compensating the COVID-19 impact on the region, or the intake in Asia-Pacific, particularly in China and in the Americas region declined, since service business growth could not compensate for slow performance in the new installation business. Revenue amounted to 2.5 billion Swiss francs, which is equivalent to a decline of 5.2%. Negative foreign exchange translation effects amounted to 130 million Swiss francs, particularly due to the strong system against the euro, the US dollar, Brazilian reais, Chinese RMB, and the Australian dollar. Supported by the resilient service business, revenue in local currency was stable. In the Asia-Pacific region, revenue was below prior year levels, but developed positively in the Americas and EMEA regions. Operating profit was significantly impacted by special effects and decreased by 39.4% to 166 million Swiss francs, previous year 274 million. Restructuring costs of 51 million, previous year 4 million, were recognized for the closure of a production plant in Spain and efficiency initiatives in selected countries. Foreign currency headwinds as well as additional costs for protective measures related to COVID-19 pandemic had further negative impacts on EBIT. The decrease in local currency was 34.3%. The EBIT margin reached 6.8%, VVC at 10.6%. Before restructuring costs and expenses for building mines, operating profit reached 221 million Swiss francs versus 282 million and EBIT margin was 9.0% versus 10.9% in previous years. The decline versus prior year is primarily due to less revenue and margin resulting from the temporary shutdown of production plants in several countries, as well as the closure of new installation construction sites. Results from financing and investing activities improved in losses on financial hedges in the first quarter of 2020 were much lower than in the previous year. Net profit totalled to 125 million Swiss francs and cash flow from operating activities reached 323 million Swiss. With this, I move to the outlook for the year 2020. COVID-19 pandemic has created a high level of uncertainty regarding economic developments and their operational and financial consequences on the Schindler Group. The company has initiated measures to counteract the negative impacts as effectively as possible. Depending on the severity and duration of government measures worldwide to contain the COVID-19 pandemic spread, revenue growth is expected to be contained within 0% and minus 10% in local currencies. Guidance for the 2020 net profit will be provided with the publication of hobby results. Considering COVID-19 pandemic impacts, foreign currency headwinds and higher restructuring costs, net profit for the year should be expected to come in below 2019 in the order of a magnitude of 20%. With this, I'm handing back to Thomas. Thank you very much.