Farmington’s Otis elevators has ‘growing concerns’ about long-term sustainability of Russian operations

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After announcing last month it wasn’t taking on any new business in Russia following the country’s invasion of Ukraine, Otis Worldwide Corp. has excluded the country from its financial results and is evaluating its future business there.

Farmington-based Otis on Monday reported first-quarter earnings of $311 million, or 73 cents per share, a slight increase over the year-ago period when the maker of elevators and escalators reported profits of $308 million, or 71 cents per share.

But absent from the earning’s report is any business the company does in Russia. Otis announced in March it would not be taking new elevator and escalator orders and will make no new investments in the country for the time being.

The company said its Russian operations accounted for approximately 2% of its 2021 revenue, which was based mostly on new equipment sales, but it adjusted last year’s numbers to exclude Russia “for the purpose of year-over-year comparisons.”

“We have growing concerns about the long-term sustainability of Otis’ operations in Russia, especially with mounting regulations and supply chain disruptions. As a result, we are motivated to find solutions and explore alternatives for our Russia business that are in the best interest of all of our stakeholders,” Otis President and CEO Judy Marks said on an earnings call Monday.

Without getting into specifics, Marks said “we are right now evaluating the best ownership structure for the business, whether that’s with us or somewhere else.”

Otis posted revenue of $3.41 billion in the first quarter, about flat from a year ago.

Marks said for the year, excluding Russia, the company expects organic sales growth of 3% to 4% with net sales between $14.1 billion to 14.3 billion.

As part of its cautionary statement in the earnings report, Otis cited the conflict between Ukraine and Russia several times.

A number of high-profile U.S. and European multinationals have exited Russia or suspended operations there in response to the invasion of Ukraine, which escalated into a new, more violent phase in late February. According to The New York Times, companies such as Adidas, BP, Citigroup, Deutsche Bank, McDonald’s, PepsiCo, Shell, Starbucks and Unilever, among dozens of others, have closed down locations, withdrawn investments and scrapped potential projects and joint ventures with Russian firms.

In March, Otis also said it is making contributions to Global Giving’s Ukraine Crisis Relief Fund and the United Nations Refugee Agency and, where available, matching employees’ financial contributions.