Anurag Maheshwari
Executive Vice President and Chief Financial Officer at Otis Worldwide
Taking a more detailed look at our outlook, and starting with sales on slide nine. We expect total organic sales to remain consistent with our prior outlook. For new equipment organic sales, we still expect to be roughly flat with no change to our outlook at EMEA up low single digits. However, driven by a weaker market, we now expect China new equipment sales to be down approximately 10%, offset by better than expected backlog conversion in the Americas and Asia Pacific. While service is in line with our prior guide, overall organic sales are anticipated to grow 6% to 7% including maintenance and repair, within a range of 5.5% to 6.5%. For modernization, we anticipate organic sales growth of 8% to 9%, an increase versus the prior outlook of approximately 8% as we continue to execute on the expanding backlog.
Turning to slide 10. At constant currency, operating profit should grow $160 million to $190 million, an increase of $5 million at the midpoint versus prior expectations due to continued strong contributions from service. On service, we now expect operating profit margin at the high end of the prior guide, up approximately 50 basis points for the year due to solid first quarter performance. For new equipment, net of the previously noted puts and takes, we still anticipate adjusted operating profit margin to be flat to up 10 basis points. Better flow-through of pricing from the backlog is offsetting the added mix impact from the weaker China outlook. We expect overall adjusted operating profit margin expansion of 50 basis points as a result of service volume, productivity and pricing tailwinds alongside ramping the uplift benefits.
Turning to cash flow. There is no change to our outlook and we expect to achieve adjusted free cash flow of $1.6 billion, largely driven by net income growth. In addition, our continued efforts on cash repatriation gives us confidence to repurchase $1 billion in shares, up from $800 million previously. This combined with the recently announced increase in our dividend, allow us return approximately $1.6 billion of cash to shareholders, up from $1.35 billion in our prior outlook.
Moving to the 2024 EPS bridge on slide 11. We have raised the low end of our guidance for adjusted EPS by $0.03 to a range of $3.83 to $3.90, that is over $0.30 of EPS growth at the midpoint, driven almost entirely by growth in operating profit.
Before we turn to questions, let me provide some more color on the second quarter. Starting with orders, we expect new equipment to be down mid to high single digits, reflecting the more challenged market conditions, though, with backlog holdings steady sequentially. Within service, maintenance portfolio growth should remain above 4% and modernization orders growth should remain above 10%. For sales, we expect new equipment to be down roughly mid-single digits organically due to China headwinds and a tough compare with approximately 10% growth in the prior year. Service should continue at roughly the same organic growth rate as Q1, netting to low singledigit overall organic growth for the quarter. Based on the recent deterioration in FX rates, we anticipate a headwind when compared to the prior quarter netting to roughly flat sales versus the prior year.
Turning to profit. New equipment margins are anticipated to come in right around 7% while service margins are anticipated to be roughly the same as Q1 or slightly higher. Below the line due to the timing of certain tax benefits, the tax rate is expected to come in around 20%, and this benefit, in combination with a slower share count will more than offset the headwind from higher interest costs. Absent further forex volatility, this should lead to approximately $0.10 ten cents of EPS growth on another quarter, up 10% or greater. This implies first half EPS growth of roughly $0.20. And when adjusted for the tax rate impact, EPS growth should be fairly level loaded between the first and second halves of the year, largely driven by operating profit growth.
In closing, first quarter results further demonstrate our ability to execute our strategy, to create momentum, to perform for the remainder of the year. Growing our portfolio, leveraging a steady new equipment and expanding more backlog and ramping on the uplift program alongside continued operational performance set us up well to achieve our financial outlook and return $1.6 billion cash back to shareholders.
With that Sarah, please open the line for questions.
