Judy Marks
Chair, Chief Executive Officer and President at Otis Worldwide
Yeah. Without guiding, I think you're very accurate in terms of what you're seeing for '25 new equipment margins, again, driven by the impact of mix as China contribution is less and the rest of the world is now, as Cristina said, over 75% of the revenue for new equipment. Just so you get a sense, China is going to finish this year all-in at a little over 13% of our revenue. So it's really changed the dynamic. But our uplift program is on track. Last quarter, you saw we updated the outlook and the run rate and that is holding well and that will continue to deliver in 2025, and we've planned on that. Before I turn this over to Cristina on maybe a little more color, why don't I just give you a, how does sales and the to -line look for 2025. So in new equipment, again, excluding China, our new equipment backlog is up low single digits. Right now, our new equipment backlog is down three total and we'll see where the fourth quarter ends up in terms of orders. Our new equipment top line, we'd expect low single digit growth next year for everywhere outside of China. And China, we would expect along the lines that we saw this year. But we have to wait and see. We haven't pre-programmed any stimulus. I think we're all waiting to see what happens in next week at the end of the week with the National People's Congress. And we are prepared for the stimulus, whether it comes in new equipment or mod, we have the capacity, we have the capabilities both on our factory and in our field. So new equipment, you know, all in, the growth we think will be down low to mid single digits, kind of plus or minus where the backlog comes in at the end o -the year. On service top line, really, really strong service portfolio growth. And if I could just take a minute, we talk about this 4.2% a lot. And we've had eight straight quarters or two years of that. What I think it's important for everyone to understand is with the largest service portfolio in the globe at 2.3 million units, growing to almost 2.4 million by year end, we're adding 25,000 units every quarter to our service portfolio. And as we shared at Investor Day, our average service customer has four units. So we're adding 25,000 customers, which is why we have such faith in our service-driven business model. That drives maintenance. That drives repair. And it drives additional density for us that gives us productivity, all of which support, again, this high margin service business. And with our retention rate at almost 94%, it also then drives that continuous relationship for 15, 20, 30 years that gives us the modernization business. So service next year, as we look at it, maintenance and repair is going to be driven by that strong portfolio growth and very solid repair volumes. We've been getting price on service this year, as Cristina said. Like for like, pricing increased four points. We're watching inflation, but we will get price next year. Will it be at the same level? Depends where we are in the world with inflation. But we will get price on the maintenance side and the portfolio growth. It'll be a tailwind in '25. Repair volume, very strong, as I said, north of 10% growth. We still see solid repair backlog going into next year. Expect that to normalize, but you've heard me say that every year. But we do expect it to normalize. And mod, as we exit right now, the third quarter backlog's up 12%, and we did 9%... we're looking at 9%, high single digit plus. That's what you should expect next year, too, if not better, because the mod backlog's growing. So I just wanted to give you some color on the portfolio itself and on the top line, which is why, as we look out in '25 and even '26, you know, beyond, as we look at the medium term, this near-term new equipment in China doesn't get me concerned because we're still growing mid teen plus, if not high teen portfolio in China, and the rest of the world is growing our portfolio low single digit. So we don't see there being a knock-on effect a few years out because we have time to work it. We have time to do recaptures, and we are focused on improving our retention rates. Our conversion rates are doing much better in China and the like. Let me turn it over, Cristina, for you on any other comments on profit.