Elevator maker Otis Worldwide said on Wednesday its new equipment sales were impacted in the first quarter by tariff pressures and project delays as shipments were disrupted by the Middle East conflict.
“We experienced modernization project delays in Europe, the Middle East and Africa (EMEA) due to the conflict in the Middle East,” an Otis executive said during its earnings call.
The Farmington, Connecticut-based company also forecast annual adjusted profit below Wall Street estimates, anticipating weak demand for new elevators and escalators.
Otis shares were down 2.1 per cent.
Tariff uncertainty and geopolitical instability have prompted companies to scale back capital investments, including new equipment purchases, impacting manufacturers like Otis.
Otis forecast 2026 adjusted profit per share of $4.20 to $4.24, the midpoint of which is slightly below analysts’ average estimate of $4.26, according to data compiled by LSEG.
Near-term pressures from cost headwinds and investments in the first quarter impacted margins in the service segment, according to the company.
Morningstar analyst Joachim Kotze said the service segment generates the bulk of Otis’ profits and the 160-basis-point margin contraction, which was below the management’s own guidance, introduced uncertainty about the pace of margin expansion.
Otis, meanwhile, expects annual organic new equipment sales to be down low-single-digits to flat, but projects a rise in service sales in the mid- to high-single-digits.
First-quarter new equipment sales fell to $1.15 billion from $1.16 billion a year earlier, mostly due to a greater than 20 per cent decline in China.
Otis’ adjusted profit fell to 89 cents per share in the quarter ended March 31, down from 92 cents a year ago. Analysts on average were expecting quarterly profit of 89 cents per share.
The company’s first-quarter revenue rose to $3.57 billion from $3.35 billion a year earlier, compared with estimates of $3.5 billion.
(Reporting by Parth Chandna; Editing by Shreya Biswas and Jonathan Ananda)
