US-China Construction Industry Slowing Down, Otis Elevator Company Lowers Sales Forecast

On Wednesday, July 24th, Otis Worldwide, the world’s largest elevator and escalator manufacturer, lowered its 2024 net sales forecast due to weak demand for its new equipment in North America and China.

According to Reuters, the company now expects full-year net sales to range between $14.3 billion and $14.5 billion, down from the previous forecast of $14.5 billion to $14.8 billion.

In the United States, the slowdown in the construction industry due to inflation has led to a decrease in Otis’ sales. In China, the continued decline in the real estate market has also harmed the company’s sales of new equipment for manufacturing and installing elevators and escalators.

Reports indicate that Otis’ quarterly net sales for new equipment fell by 11.4% compared to the same period last year, to $1.42 billion. However, the net sales of its core service division (maintenance, repair, and product upgrades) rose by 3% to $2.18 billion due to stable demand.

Data from the London Stock Exchange (LSEG) shows that Otis’ total net sales for the second quarter dropped by 3.2% to $3.6 billion, below the analysts’ average estimate of $3.73 billion.

Furthermore, Otis has raised the lower end of its annual adjusted earnings per share guidance to a range of $3.85 to $3.90, compared to the previous range of $3.83 to $3.90.

The quarterly report as of June 30th indicated that the company’s adjusted earnings per share were $1.06, slightly higher than the expected $1.03.

Otis Worldwide is an American company that is the world’s largest developer, manufacturer, and seller of elevators, escalators, moving walkways, and related equipment. Its headquarters is located in Farmington, Connecticut. In 1852, Elisha Otis invented the “safety elevator,” which uses a special mechanism to lock the elevator in place in case the hoisting ropes fail. The company was the first to manufacture this type of elevator.

In 1976, Otis Elevator Company was acquired by United Technologies. In April 2020, as an independent company, it was split off into Otis Worldwide.