Otis Worldwide (OTIS) reported a strong third quarter, showcasing a 2% organic sales growth driven primarily by a 6% increase in Service and a remarkable 14% boost in Modernization sales. The company also expanded its adjusted operating profit margin by 20 basis points to 17.1%, with adjusted earnings per share rising 9% to $0.09, supported by operational improvements and a favorable foreign exchange environment. Notably, Modernization orders surged 27%, marking the highest quarterly volume since the company’s spin-off.
Despite challenges in the New Equipment segment, which saw a 5% decline in organic sales, Otis’s overall performance reflects a resilient service-driven business model. The company completed $250 million in share repurchases, fulfilling its annual target, and raised its full-year adjusted operating profit guidance to $2.4 billion-$2.5 billion. The backlog also showed positive momentum, increasing 3% overall and 22% in Modernization.
For market professionals, the key takeaway is Otis’s ability to leverage its service portfolio for sustained growth, despite headwinds in new equipment sales. This positions the company well for future profitability, especially as modernization demand continues to rise.
Source: fool.com