Otis Worldwide Corporation (NYSE:OTIS) shares are trading lower premarket on Wednesday after the company after the company reported mixed fourth-quarter results and issued worse-than-expected FY25 outlook.

Otis reported sales growth of 1.5% Y/Y to $3.675 billion, beating the analysts estimate of $3.64 billion, aided by Service segment. Organic sales grew 1.9% in the quarter.

New Equipment segment net sales fell 7.4% Y/Y to $1.4 billion due to an over 20% decrease in China. Also, Service segment net sales rose 7.6% Y/Y to $2.3 billion. Organic maintenance and repair sales increased 5.6% and organic modernization sales upped 17.5%.

Adjusted operating profit rose to $583 million, with adjusted operating profit margin expanding 30 basis points to 15.9%, led by favorable Service segment performance and mix.

Adjusted EPS of 93 cents, up 6.9% year-over-year, missed the analysts’ estimates of 96 cents.

In the fourth quarter, operating cash flow stood at $690 million, and adjusted free cash flow came in at $682 million.

The company repurchased shares of $200 million in the quarter. Otis raised its expected run-rate savings target to $200 million by the second half of 2025.

Additionally, the company has launched a China transformation program to adjust its operating model in response to evolving market conditions, targeting run-rate savings of $30 million by the end of 2025.

2025 Outlook: The company expects net sales of $14.1 billion to $14.4 billion (vs. consensus of $14.6 billion), with organic sales growth of 2% to 4%.

The company sees an adjusted operating profit of $2.4 billion to $2.5 billion, adjusted EPS of $4.00 to $4.10 (vs. consensus of $4.14) and adjusted free cash flow of around $1.6 billion.

Chair, CEO & President Judy Marks said, “For the full year, we delivered organic sales growth and strong adjusted margin expansion for the fourth consecutive year. Our industry-leading maintenance portfolio grew 4.2% to approximately 2.4 million units, and our modernization backlog grew low teens.”

“The quarter and the year show that our strategic New Equipment, Service and modernization flywheel is working with more growth in the higher margin elements of the business. As in 2023 and 2024, we enter 2025 with continued strong momentum.”

Investors can gain exposure to the stock via AdvisorShares Focused Equity ETF (NYSE:CWS) and VanEck ETF Trust VanEck Morningstar Wide Moat Growth ETF (BATS:MGRO).

Price Action: OTIS shares are down 2.99% at $93.00 premarket at the last check Wednesday.

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This article Elevator Maker Otis Reports Mixed Q4 Results, China Weakness Weighs On Outlook originally appeared on Benzinga.com

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