Schindler Holding (XSWX:SCHN, Financial) (Switzerland) is the second-largest manufacturer and installers of elevators, escalators and moving walks globally. In our assessment, Schindler is a high-quality business that is being negatively impacted by short-term operational issues within its new instillation business, which in turn has put downward pressure on group margins. In our opinion, the difficulties in new instillation reflect management being too slow to adjust selling prices when input costs started to increase last year and a modularization program that hasn’t simplified the product offering as much as originally hoped. We believe both of these challenges are internal and can be resolved over the next one to two years. Current Chairman Silvo Napoli assumed the CEO role in January and has already replaced one-third of the executive committee to improve operational performance. Napoli was CEO from 2014 to the middle of 2016, when we last invested in the company, and in that time he successfully resolved operational issues. We believe the current share price projects little to no improvement in the company’s margin profile, which we believe is an unlikely scenario.
From David Herro (Trades, Portfolio)'s Oakmark International Fund third-quarter 2022 commentary.
