Q4 2024 - Otis Worldwide - Analysis
Record "Service" margin, record quarterly free cash flow, and proactive management of China headwinds
Today, Otis Worldwide reported its Q4/FY 2024 earnings. At the time of writing, Otis shares are down 0.2%. Let’s review the results in more detail. As a reminder, we shared our deep dive late-June last year.
We’d summarize the quarter and full-year performance as pretty much in line with our assumptions, but the wildcard for modeling US multinational companies in FY25 is likely going to be FX (70% of Otis’ sales are generated through foreign currency).
This, of course, is a short-term assessment of valuation and YoY growth rates in reported non-FX adjusted results, and for the type of companies we own, the impact of changes in FX isn’t that sizable (like 10-30 bps in the projected 10-year CAGR). It also depends on the view you’re taking: from a US or non-US investor angle…
Otis managed to grow underlying EPS by 8.2% last year, including a 1.7% FX headwind. That’s the low-end of the algo we’d expect from a steady Tortoise, and we do see Otis grow much more strongly in FY26 and beyond, underpinned by Service, margin expansion, and a realigned China business.
Let’s get on with this full earnings review.