Schindler Hldg Ag Akt

Thank you, Vicky, and good morning, ladies and gentlemen. Welcome to our full year 2024 results conference call. My name is Lars Borson. I'm head of investor relations at Schindler. I'm here together with Silvio Napoli, our chairman, Paolo Campagna, our CEO, and Carla De Geisler, our CFO. Silvio will provide some introductory remarks before handing over to Paolo. who will discuss our full year 24 results, our market outlook, and our priorities for 2025. And Carla will then take you through the financials. After the presentation, Paolo and Carla are happy to take your questions. I should note that we will stop the Q&A session three minutes before the end of the call in order to share a short video with you about what's next in terms of product innovation at Schindler. We hope you enjoy that, and we plan to close the call promptly at 10.30. With that, I hand over to Silvio. Silvio, please go ahead.

Thank you, Lars, and good morning, everyone. As Lars explained before, Paolo and Carla walked you through our 24 results. I wanted to take this opportunity as outgoing CEO and now in my role as chairman to share some thoughts about the past three years and where the company is today. Two years ago, almost to the date you heard me talk about having to perform an emergency landing. We were faced then with some severe external headwinds as well as significant internal challenges. And we were on course for one of the worst years in the company's history. I was very open and honest with you about the challenges we faced and what was needed to restore confidence in our company and in its resilience. Our immediate priority was to make significant changes to our organization and to our management team, to build an organization fit for purpose, led by a team prepared to tackle our challenges head on. And so to gain speed, we combined the CEO and chairman roles. We have the size of the executive committee. We brought in management talent from outside Schindler and invested into strong leaders who were waiting in the ranks for new opportunities. And today, we have an exceptionally well-qualified team in place, led by Paolo and Carla. A team who not only delivered results in the most difficult of circumstances, but also one which I believe can further build on our progress and continue to deliver strong results going forward. As for the team's achievement over the last three years, I think you know them by now. Paolo and Carla will take you through the numbers. What perhaps is more important to you at this stage is whether the changes are enduring, whether they are structural, whether they can continue to drive operational improvement for Schindler. And I believe the answer is yes. Because we didn't just turn around our supply chain and fix legacy issues. We recovered a trajectory and, over the last three years, made fundamental changes. Changes for supply chain and manufacturing processes, changes for innovation capabilities and product platforms, and changes to our go-to-market approach and pricing strategy. And in some areas, we've seen great results from these measures, which have helped us to deliver eight consecutive quarters of margin improvement. In other areas, we are still in the early stages of reaping the benefits from the changes we made. That's the case of the rollout of a standardized modular platform, which will bring results over the coming quarters and years. And looking a little further out, you will see a lot of exciting innovation from Schindler. You'll get a little glimpse of that today at the very end of this conference call. So, more than performing an emergency landing, we have laid the foundations for Schindler's continued progress commercially and financially. And of course, today's results are only the output of the last three years. In terms of input, a key part was the new strategic framework we developed in 2022. One that was built around four key pillars that we call the four P's, people, product, performance, and planet. A framework Schindler will continue to build on under Paolo's leadership. And you will hear him talk more about it shortly. Let me just touch on one of these P's, one that is very close to me, that's people. Leadership through service. That's the vision Mr. Schindler defined decades ago. and this vision still holds through today. Fundamentally, we are a service company for people, by people. And for people to be delivering top service with top performance, they must feel proud of the team they belong to. And I believe that reestablishing this pride has been one of the greatest contributing factors to our progress over the last three years. That has been true for 150 years, and will continue to be true, perhaps even more so in an era of digital solutions and artificial intelligence. As you heard me say many times, culture eats strategy for breakfast every day of the week. To win in today's environment requires human values, honesty, integrity, a personable touch, human energy, resilience and frontline engagement. And as such, I can think of no one better suited to Lee Schindler than Paolo Compagna. As Chief Operating Officer and Deputy CEO over the last three years, he has been an integral part of formulating and executing the company strategy. There is no doubt in my mind that Paolo is the most qualified leader for the job. Now, before I close out, let me end with a thank you. First to our investors and shareholders. Many of you have been with us over the last three years, some of you longer, and I appreciate the trust you placed in me and in the team during this period. Let me also say thank you to all the analysts who have covered us for the past years. Your engagement and your challenging but always constructive questions on the last 12 quarterly conference calls have been an important guidepost for us and for me as well. And I still clearly remember our first roadshow in London on a stormy and rainy February day in 2022, meeting investor analysts who were admittedly and understandably not very happy and concerned. The tough questions you asked then and the robust discussion we had left a lasting impression, to say the least, and became then an important part of our reflections as a company. Finally, let me say a word about not standing for re-election as Chairman of the Board of Directors at the upcoming General Meeting of shareholders in March. After 30 extraordinary years with Schindler, I've decided this was the right time for me to move on to the next chapter in my professional life. I take this important step confident that Schindler has the right team in place today. It has been an honour and a privilege to serve the company and its employees. I'm grateful to the board of directors for the trust and would like to thank the Schindler teams. I've had the pleasure to work with side by side all over the world. With that, I thank you again and wish you all the best of luck. Paolo, over to you.

Thank you, Silvio. Much appreciated. Thank you very much. Good morning, everyone, also from my side. And over to the next few slides, let me walk you through the highlights of our full year 24 results, and then give you also some color on our markets globally. And at the end, I will be also happy to share with you my view where Schindler is today and what are our new terms priorities before I will hand over to Carla. Turning to slide number four, let me provide a brief overview of our performance in 24. And here I think there's a lot to be proud of. First, I'm pleased to report that we achieved our 2024 outlook, which we set at the beginning of the year. Yes, it's there. We had hoped for a little more growth, but we faced severe market headwinds in China. And even more important, we continue to adhere to our strict pricing discipline. Overall, I think our top line performance is well explainable given the circumstances. And when it comes to our EBIT margin reported, I'm very pleased that we improved in 2024 up 100 basis points compared to 2023. And we believe we can make even further progress in 2025. Carla will elaborate on the details. Secondly, we are a service company and the numbers show it. Overall, we grew orders by a low single digit in local currencies, but it's clear where this growth came from, modernization and service. Here, we grew high single digit overall, and this growth was broad-based across all our regions and supports our outlook for 24. Our maintenance portfolio grew 6% in local currencies, similar to the growth we saw in 23. Firstly, I'm pleased to report that the rollout of our standardized model platform is running absolutely according to plan. It has now been released in all key European markets and right now, currently, we are progressing in India and Brazil and continue to focus on other key markets as it follows this year, including North America. Third, we report a net profit of just over 1 billion Swiss francs in 2024. That's a record for Schindler. And the conversion of this profit into cash is very high. We delivered an operating cash flow of 1.6 billion Swiss francs for the year. Carla will be happy to elaborate on these two. This allows us to continue to increase our distribution to shareholders whilst maintaining a strong balance sheet. I'm pleased to announce that the board has proposed a dividend of six Swiss francs for 2024. Finally, and I'll talk about this a bit later, about people and planet, but I'd like to highlight some of the awards in 24 at the bottom right of the slide, which I think our teams can be proud of because they are recognizing our efforts to be an employer of choice and maybe more important, partner trust for our customers. And in terms of sustainability, we were awarded a platinum rating by Ecovades, which we see as a testament of our strong sustainability credentials. Now, let me move to a brief update on how the elevator and escalator markets developed globally. And let's move to slide number five. In new installations, we saw a strong finish to the year in Brazil, as well as a positive second half of the year in the U.S., So overall growth in Americas came in at low single digit for the year, slightly higher than what we have expected in October. Similarly, in modernization, Americas performed better as the US market gained momentum throughout the year, especially in the hydraulic segment. There are well over 300,000 hydro units installed. And as you can imagine, many are more than 20 years old. they need all an upgrade. In China, the modernization market saw a boost from the equipment renewal program in the final months of the year. And China accounts now for a substantial installed base, which is roughly the half of the worldwide more than 22 million installed units. And increasingly, this equipment becomes ripe for modernization. Europe also did better, so overall a strong modernization market in 24 than we expected. Finally, for service, it is worth noting when we look at the marketing units, China remains a key growth driver, accounting for more than 70% of the global installed base growth in the year. Moving to slide number six, I like to highlight the Schindler orders intake in 24. Let me start first. I'd like to emphasize that our transition in becoming increasingly a service company did well continue in 24, with over 60% of our revenue accounted for by service and modernization. At the same time, the share of China and our global revenue further decreased below 12%. Coming to our performance compared to the market, which I showed on the previous slide, In mod, we grew in line with the market, whilst we grew slightly below the market in service in units terms and slightly above in new installations. The main explanation for this is the weight of China, which for us is of a smaller exposure. For services specifically, our portfolio growth in value was at healthy 6% in local currencies, as I mentioned earlier. In terms of what drove our growth across the business in 24, Let me start with service. We saw a good contribution from ANI conversions, particularly in Asia-Pacific, and in MOT, we saw strong growth in China as well as North and South America. In new installations, our global order intake decreased slightly less than 5% in units, which was at a lower rate of decline than the overall market. So we had a strong performance in South America and saw also good growth in Europe South. Let me move to slide number C7, our market outlook for 2025. Service markets globally keep growing at a healthy pace as the NI volumes sold previously and now installed will need maintenance. Asia still accounts for well over three quarters of the global NI market and naturally the incremental growth of the service base is the strongest there. In modernization, we broadly expect a continuation of the solid market growth observed across the regions in 2024, with China poised to see the most robust demand supported by the government large-scale equipment upgrade program. In new installation, the Chinese market is in for another decline of more than 10%. with all key lead indicators such as floor space started, floor space under construction and real estate investment seeing double-digit declines in 2024. In Asia-Pacific, excluding China, elevated demand will continue to grow with a continued solid growth in India and, well, another decline in South Korea. In America, we expect slightly growth with a continuation of the market pick-up that we saw in North America in the second half of 24 already. But at the same time, we don't expect Brazil to experience growth rates as we've seen in 24. In EMEA, we expect the market to be stable overall. Key European and high markets remain under pressure. In Germany, multifamily building permits declined for the third consecutive year, with both 23 and 24 seeing declines of more than 20% year-on-year. Of course, interest rates in Europe are a welcome development, but this is really yet to translate into the new supply of housing, hence into new installation business. And now I would like to step back for a moment over the next two slides and talk about where we stand as a company and what I see as our key priorities going forward. Well, firstly, you might ask, does Schindler need now a new strategy? And let me be clear about that. No. In fact, I believe that the strategic framework we developed in 22 and deployed in 23 is even more relevant today as we go now from what, as mentioned by Silvio before, we called an emergency landing in 22 to a period of driving continuous improvement at Schindler. And of further developing our services model for our customers. So what are my overall reflections on our journey ahead? We have done a lot of hard work over the last three years, fixing fundamentals of our operations. And I believe with that, we laid a strong foundation for a profitable growth going forward. What do we do? What do we need to do? Well, our first focus should and will be our customers. We have over 700,000, and I'm personally convinced we need to get closer to them, listen better, and continue to drive better services. Our digital capabilities and artificial intelligence applications will help us in that and will also support our efforts in getting more efficient, not just in our service operations, but across our entire organization, frontline as well as back office. Now, looking at our global operations, where do I see the key opportunities and challenges for the companies going forward? Starting with one of our biggest markets, the US. Here, we have made some really good progress over the last couple of years, and you were following us. And now our momentum is building. Our team is doing a great job and our product portfolio is improving. With the NI market continuing to develop positively, I believe we have a great opportunity to drive outside growth there. Here, not just in NI, but also modernization and in service. And you will hear me talking more about that over the coming months and quarters. In Europe, we are clearly regaining competitiveness in NI with the rollout of our standardized model platform as well in modernization. And we have a high connectivity rate in many of our core European markets, which again will enable us to deliver better service to our customers and help in portfolio retention. Now China. Let me say that our team there has done an outstanding job in 24 in managing what has been a really difficult market environment. What did we do? First, we adjusted our organization, new installation and back offices and delivered savings in our installation methods. Second, we made a good progress on our cost base in escalators, more than offsetting the price volume headwinds we faced in the market. And third, we were able to capture opportunities in export markets, which we could supply from our operations in China, in part offsetting the declining domestic market. Well, you might ask, is the job done in China? Clearly no. We will continue to align our organization to the market reality. And I believe we made a good progress in the last couple of years as the anti-market declined. But don't let forget there are also growth opportunities, especially modernization and service, where we are making good progress in terms of targeting our product portfolio and organizations. Now, before I hand over to Carla, let me briefly discuss our key operational priority for 25, moving to slide number nine. Let me start by saying I'm a firm believer that a successful transformation doesn't happen in one big prominent program, in one single defining action, or in a magic moment. It happens by each of our 69,000 employees waking up every morning aiming to do a little bit better than we did the day before and how we do that by continuously analyzing our performance identifying opportunities for improvement and implementing changes to our operational operations and processes based on continuous improvement so i'm convinced that our four pillars our framework remains the best way for us to structure and communicate our operational priorities. You have seen this slide before. The four P's, the four pillars, people, performance, products, and planet, are the same. But of course, the underlying drivers have changed as we look ahead to 2025. So how I see these priorities. Let me start with what is our goal. Among all our financial and non-financial targets is about delivering on 12% EBIT reported, our margin guidance. and kind of North Star, if you will. But how do we like to do that? People first. Over two-thirds of our workforce are technicians, customer-facing colleagues. That's where we make a difference in this industry, by enabling our field force to be the best they can be. We can be proud of our 150 years of history, and our external recognition in 24, as I highlighted in my first slide, showed that we continue to be an aspirational and attractive employer. But we can get better. We can keep pushing the bar higher to attract and retain the right talents and to enable these talents to perform better. This leads me to second, performance. If there's one word you have heard us use a lot in the last two years is efficiency. But too often in companies' history, this was associated with a big disruptive restructuring program. As I look forward, for me, it's about maintaining a culture of continuous improvement, driving efficiency across our organization in procurement, supply chain, field operations, and back office. And it's about processes, standardizing and globalizing processes, leveraging artificial intelligence, and much more. We will talk about this in the course of the year. One critical driver within performance where we cannot take our eyes off the ball is pricing. Without pricing discipline, we don't achieve the level of profitable growth we are aiming for. So an important operational priority for me this year is to build on the work done in the last years and to leverage technology and data analytics to continue to drive our pricing capabilities going forward. That leads me to products, because without the right products, it's difficult to be competitive and to command premium pricing. Let me say that I'm very pleased with our progress on our standardized modular platform. This is really the bread and butter of our business. Our volume product in new installation and must win. The lead times, of course, mean the impact on our P&L this year will be limited and only start to become more material invisible in 26 and 27. As for modernization, we are taking the right steps to do better and build on standardized solutions. I expect our progress will become already more visible during 25. Finally on planet, we launched our 2030 sustainability roadmap last year, which we are now busy executing. And we have a great pipeline of innovative products focused on sustainability. And today we will show you an example of what can be expected this year. With that, I'm happy to hand over to Carla to take us to the financials.