Schindler warns on profit, China, after Q4 earnings fall

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The logo of Swiss elevator maker Schindler is seen during the annual news conference in Zurich, Switzerland February 14, 2020. REUTERS/Arnd Wiegmann

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Feb 16 (Reuters) - Schindler (SCHP.S)warned of lower profit in 2022 and contraction in its China business due to construction delays and other issues after the maker of elevators and escalators posted lower quarterly earnings.

The Swiss firm expects a "significant" profitability drop of around 20% for the first half of the year, Chief Financial Officer Urs Scheidegger said on a conference call.

"If the overall profitability of the group is dropping now in the first half year, you can see this is also the case for our China profitability," Scheidegger added.

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Regulatory curbs on borrowing have driven China's property sector into a liquidity crisis, highlighted by China Evergrande Group (3333.HK), the world's most indebted property firm.

The Chinese market makes up 14% of Schindler's sales.

Schindler shares were down 5% as of 1130 GMT and Credit Suisse analysts in a note described the margin indication for the first half as "concerning".

However, they noted there is a degree of conservativeness in the company's messaging as well as a reassuringly explicit focus on margin improvement.

Scheidegger said the company was working on a strategic plan to close the margin gap with peers, which should be announced "in the summer by the latest".

This month, Finnish rival Kone (KNEBV.HE) reported slightly weaker-than-expected fourth-quarter core earnings, warning that reduced liquidity in the Chinese property sector and rising supply chain costs could weigh on its 2022 profits. read more

Schindler's fourth-quarter net profit fell 15% to 192 million Swiss francs ($208 million) but beat the 184 million francs expected by analysts.

The company said it would propose an unchanged dividend of 4.00 Swiss francs per share.

($1 = 0.9253 Swiss francs)

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Reporting by Bartosz Dabrowski in Gdansk; Additional reporting by Alexander Kloss; Editing by Tom Hogue and Subhranshu Sahu

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