Otis Worldwide Corporation Reports 3% Decline in Q1 2025 Net Sales

Otis Worldwide Corporation reported a decline in financial performance for the first quarter of 2025, with total net sales of $3.35 billion, down 3% from $3.44 billion in the same period last year. The decrease was primarily attributed to a 9% drop in the New Equipment segment, which generated $1.16 billion in sales, while the Service segment saw a modest increase of 1%, reaching $2.19 billion. The company's operating profit also fell to $411 million from $544 million year-over-year, reflecting a decrease in profitability across its segments.

The company's net income attributable to Otis Worldwide Corporation was $243 million, a significant decline from $353 million in the prior year. This drop was influenced by higher restructuring costs associated with the ongoing UpLift transformation initiative, which aims to streamline operations and improve efficiency. The UpLift program incurred $43 million in costs during the quarter, including $20 million in restructuring expenses and $23 million in transformation costs. Additionally, the effective tax rate increased to 30.1% from 25.2%, primarily due to adjustments related to indemnity obligations stemming from a favorable ruling in a German tax litigation case.

In terms of operational metrics, Otis reported a slight increase in service sales, which benefited from a 4% organic growth in maintenance and repair services. However, the New Equipment segment faced challenges, particularly in China, where sales declined by over 20%. The company continues to focus on expanding its service portfolio, converting new installations into service contracts to enhance long-term revenue stability. As of March 31, 2025, Otis had cash and cash equivalents of approximately $1.92 billion, down from $2.30 billion at the end of 2024, reflecting cash outflows related to share repurchases and dividends.

Looking ahead, Otis anticipates that macroeconomic conditions, including inflationary pressures and global trade policies, will continue to impact its operations. The company expects to navigate these challenges while pursuing its strategic initiatives, including the UpLift program, which is projected to yield approximately $200 million in annual savings by the second half of 2025. Otis remains committed to maintaining its market position as a leading provider of elevator and escalator solutions while adapting to evolving market dynamics.