Schindler Hldg Ag Akt

Ladies and gentlemen, welcome to the Schindler Conference Call on Half Year Results 2020. I'm Moira, the Chorus Call Operator. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Schindler. Please go ahead.

Good morning, ladies and gentlemen, and welcome to our first half 2020 results call. My name is Nicole Wesch. I'm the head of global communications here at Schindler, and I'm here today with our CEO, Thomas Attlee, and Urs Scheidegger, our CFO. Thomas will give a short introduction and guide you through our results. Urs will then take you through our financials. After this presentation, we are happy to take your questions. I would like to ask you to limit your questions to two questions per person only. With that, I hand over to Thomas. Please, Thomas, go ahead.

Thank you, Nicole. Good morning, ladies and gentlemen, also from my side. You will have seen our statement from this morning in which we announced the launch of a cost optimization program. As an industry leader with 146 years of heritage, our focus has always been the long term health of our companies. Our ambition is to grow faster than the market and shape our industry by customer excellence, quality and by driving technology, change and innovation. However, we find ourselves in a changing and challenging market environment. As a Swiss company with a global footprint, the accelerated appreciation of the Swiss franc continues to impact us damaging our cost competitiveness. Just consider the following. Over the last decade, the continuous appreciation of the Swiss franc has hit our revenue by a staggering 2.5 billion Swiss francs and our EBIT by 364 million Swiss francs. At the same time, we increased our global footprint Our workforce increased by twenty four thousand employees to now more than sixty five thousand employees worldwide. Despite these challenges, the foreign currency headwinds are here to stay. The Swiss franc is regarded a safe haven and symbol of economic resilience. Meanwhile, the COVID-19 crisis has accelerated a global recession and we see a high level of uncertainty regarding all economic developments. We expect markets to further contract and we expect pricing pressure to rise. Therefore, we need to act now. Firstly, we will align or realign our capacities and resources, which means launching a cost optimization program. We will also reduce some 2,000 jobs globally over the next two years. Although, where possible, we will use natural attrition, early retirements, and voluntary redundancies. Secondly, we will continue to pursue our long term strategy of driving digitization and innovation. We keep investing in strategic projects to shape the future of our industry and that of our cities with smart urban mobility. This means, on the one hand, transforming our business digitally. We believe digitization is a catalyst and key change agent for our industry, enhancing customer experience and the safety of our products, transforming our whole value chain, opening up new opportunities to create value for our customers, our users and our employees. All of this is happening faster than ever, changing the way we work. In addition, we will continue to accelerate innovation. As you know, we have launched our new modular elevator generation, which helps not only reduce the complexity and variety of components in our global product offering, but also gives customers a better user experience and more convenience during elevator journeys. And you will have seen that in recent months And you will have seen that in recent months we have launched clean mobility solutions, encompassing touchless and on hygiene and sanitization focused solutions for elevators, escalators and moving walks. A time of crisis, therefore, also means a time of change. The last few months have once again shown us what we are capable of. With incredible agility, Tim Schindler has brought about tremendous innovation in a very short time. I've said it before and I will say it again. I'm really proud to be at the helm of such a company. With that, I'd like to draw your attention now to our results presentation. And I would like to draw your attention to slide number two, which gives you a market overview. Many countries came out of lockdown and have gradually reopened in late Q2. However, every country displays a different recovery curve, with some countries even taking steps towards lockdowns again. We will provide details about the individual markets on the slides six to eight. But just to give you a short overview, China came back very strongly in new installations in Q2. EMEA displays very mixed pictures by country and by business line. The situation in the Americas remains very challenging, which translates into a continued difficult market situation. The service business remains resilient. and we still see uncertainties in the market and project delays. Moreover, pricing has intensified. In addition, some customers face liquidity issues, even though our teams continued doing a great job, especially in networking capital. On top of this, the appreciation of the Swiss franc has again accelerated in Q2, negatively impacting the translation of our results into Swiss franc. Let me now turn to slide number three. You see what the strong Swiss franc did to our revenue and our EBIT in the last 10 years. As I already mentioned, accumulated translation impacts amounted to more than 2.5 billion Swiss francs for the top line. which represents more than 22% of our full year 2019 revenue. The negative impact on EBIT is also staggering, amounting to over 360 million Swiss francs. Despite having implemented various measures in the recent years, the exposure from corporate functions in Switzerland still leads to a negative impact on EBIT and on EBIT margin when translating consolidated results into Swiss francs. I now move to slide number four. The safety and the 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. This absolutely remains unchanged. I am now, I'm very proud how Schindler as a global team has executed on measures during this crisis. The focus always was on our four priorities, our employees, our customers, the supply chain, and on protecting our financials. All plans are up and running again. while office staff is still working from home in many places with high levels of motivation. As a highlight in Q2, net liquidity and operating cash flow came in very, very strong, despite the difficulties we encountered. Moreover, we have quickly rolled out new clean mobility solutions, promoting touchless, sanitization and physical distancing innovations to boost hygiene and safety in elevators, on escalators and on moving walks. Let me turn to slide number five for some further details. Schindler already offers a growing range of future ready, highly scalable services for the digitally enabled world. However, Health and wellbeing now require a new service offering. Clean and touchless operation, as well as a passenger space solution, are now also part of our growing range of services. Touchless elevator calls are possible with our Schindler Clean Call with non-contact sensor solutions. With the Schindler Elevate Me app, And of course, with the already long-term, well-established MyPort solutions, now as a public app solution. Additionally, Schindler Clean Cover provides an antibacterial protective film to cover elevated surfaces. New offerings also cover sanitization solutions. And the Schindler Ultraviolet Clean Air air purification system and Schindler ultraviolet clean car system that cleans the cabin surfaces without using harmful chemicals and Schindler ultraviolet solutions for escalators and moving walk handrails providing reliable and automatic disinfection. Our new solutions have been very, very well received by our customers. Now let me move to the different markets and I will start on slide number six with Asia Pacific. China. China recovered in Q2, showing strong growth in new installations. The speed of recovery was supported by government spending for infrastructure projects. The strong Q2 order intake brought the year to date order intake of China back to 2019 levels. Markets in Southeast Asia contracted significantly, particularly in the commercial sector. We still see limited recovery in India. The market activity is still severely impacted by the lockdown. Order intake remains well below 2019 levels. We also note increased price pressure throughout the whole region. On a positive note, we have successfully launched our modular product range in a number of markets in Asia. And we still see modernization opportunities now with the new clean mobility solutions. Last but not least, All factories are up and running again. Let me now move to slide number seven, the Americas. In the Americas, the uncertainty remains high. The Americas were not only late in the pandemic cycle, but also many countries now show signs of a second pandemic wave. New installation activity in North America has slowed down tremendously, and we also see severe impacts on service and repairs and modernization in the non-residential segment. Latin America new installation markets experienced a severe decline. Also here we see increased price pressure, not only in new installations, but also in the service business. Nevertheless, I'm happy to state that everywhere, all our factories are up and running again. So I move to the last market in EIA. With the reopening of markets, particularly in the northern Europe, displayed a solid development with stable new installations and service businesses. Southern Europe markets returned slower than in Northern Europe, but with intensified price pressure. New installations order intake came in at 2019 levels. Maintenance markets remained resilient. Our modular product range has been successfully launched in several markets. Product introductions will continue in quarter three. Also here, I'm happy to say that all factories are up and running. Now, with this, I would like to hand over to Urs for an update on the financial results and the outlook for 2020.