By Georgina Prodhan and Tom Käckenhoff
HANOVER, Germany (Reuters) - Thyssenkrupp (DE:TKAG) sees the connecting up of its elevators to the internet lifting its profits by millions of euros, the head of its elevator business said this week.
The German industrial conglomerate is preparing to start selling connected elevators in six more countries this year after piloting the system in the United States, Germany and Spain, and aims to hook up at least 100,000 units by mid-2017.
Connecting elevators to the internet allows the companies that service them to see remotely when faults appear or are about to develop, enabling them to save money and time on repairs, to the benefit of suppliers and customers.
"In January alone we repaired 1,000 lifts in the United States before the customer told us they were broken," Andreas Schierenbeck, chief executive of Thyssenkrupp Elevator, told Reuters at the Hannover Messe industrial fair.
"It's a chance to increase our operating profit by a double-digit million-euro amount," he said, declining to be more specific. Thyssenkrupp Elevator made an operating profit of 860 million euros ($936 million) in the last financial year which ended in September.
Schierenbeck said business at Thyssenkrupp Elevator, which competes with Otis, Mitsubishi Electric, Kone and Schindler, was "very good and solid".
The United States was very strong, he said, Europe flat, China solid and better than expected, and South America tough.
He said Thyssenkrupp was observing but not yet feeling the effects of Britain's move to leave the European Union as elevator orders had a lead time of three to four years in major construction projects.
In London, projects that had been started were being followed through but he could see that people were no longer looking so far ahead as before. "London stands under the shadow of Brexit," Schierenbeck said.
Thyssenkrupp Elevator, the group's most profitable business, increased revenue by 4 percent to 7.47 billion euros ($8.10 billion) and its operating profit margin by 0.5 percent points to 11.5 percent last year. Orders slipped by 1 percent.
Schierenbeck reaffirmed the business would meet its target of increasing its operating margin by at least 0.5 percentage points again this year.
Sales growth would continue to be driven by both organic and inorganic factors, he said, with total investments in the hundreds of millions of euros again this year. But acquisitions were likely to be small and in the area of services, not manufacturing.
The global elevator market was already highly concentrated, with little scope for further consolidation, he said, adding that he was confident that Thyssenkrupp would not sell its elevator business, regardless of any pressure from 15 percent shareholder Cevian, a European activist investor.
"At the moment this is the agreed strategy of Thyssenkrupp - Elevator is a core business and an integral part of the group."