HomeBusinessChina property developers' cash squeeze drags down elevator-maker Kone

China property developers’ cash squeeze drags down elevator-maker Kone

HELSINKI :Reduced liquidity within the Chinese property sector and rising provide chain prices are anticipated to weigh on 2022 income, elevator maker Kone mentioned on Wednesday, because it reported a year-on-year fall in fourth-quarter core earnings.

The Finnish firm’s share value fell by as a lot as 3per cent earlier than recovering to commerce 0.9per cent decrease in afternoon commerce, underperforming the broader index, which was barely larger.

Kone, which depends on China for roughly 35per cent of its gross sales, gave a primary estimate for its 2022 income, anticipating its adjusted working revenue to be 1.18-1.33 billion euros ($1.33-$1.50 billion), barely down from 1.31 billion in full-year 2021.

“We expect the (new equipment) markets in China this year to remain on a solid level, although to decline somewhat compared to 2021. And that’s of course because of the liquidity situation in the property markets,” Chief Executive Henrik Ehrnrooth informed reporters.

“We can see that land sales, new construction starts are both down,” he mentioned.

Ehrnrooth mentioned Kone anticipated the Chinese new tools market would return to its 2019 stage in 2022 and the enterprise sector would develop outdoors China.

It additionally predicted its companies enterprise would proceed to carry out nicely.

“The adjusted EBIT margin, on the other hand, is expected to decline due to lower margins on orders received in 2021 and continued challenges in the cost environment,” Ehrnrooth mentioned in a press release.

Global provide chain challenges had been additionally displaying no signal of going away, Ehrnrooth mentioned, including sea freight expenses had been 5 to 6 instances larger than earlier than the pandemic.

Already, October-December working revenue was decreased by world provide chain distruptions and fell to 351.9 million euros from 367 million a yr earlier, lacking the 356-million estimate of 9 analysts polled by Refinitiv.

Kone’s board of administrators proposed a dividend of 1.75 euros per class B share plus a unprecedented dividend of 0.35 euros per class B share.

($1 = 0.8849 euros)

(Reporting by Anne Kauranen; Editing by Louise Heavens and Barbara Lewis)

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