Schindler, a leading elevator manufacturer, is undergoing a major leadership change as CEO Silvio Napoli steps down after three decades. His early departure comes amidst a backdrop of strong financial performance, including a record net profit. Paolo Compagna, previously COO, will take over as CEO, emphasizing continuity in strategy. Despite challenges in global markets, particularly in China, Schindler is focusing on modernizing services, which now represent a significant portion of revenue.
Riding an elevator often means catching only a glimpse of its motor—typically just the cable. Similarly, many people remain unaware of the inner workings of Schindler, a leading global manufacturer of elevators. However, recent events have brought this typically private company into the spotlight: Schindler is experiencing its most significant leadership transition since Alfred Niklaus Schindler stepped back from day-to-day operations.
A New Era Begins at Schindler
Silvio Napoli, who has served as the Chairman of the Board and CEO since 2017, is stepping down. Having dedicated three decades to Schindler, Napoli had initially planned to resign from both positions at the end of March. However, he surprised many by relinquishing the CEO role early in February.
Napoli shared his thoughts during the annual financial statement for 2024, stating, “I have decided that the right time has come for me to open a new chapter in my professional life.” While he remains tight-lipped about his future plans, his departure marks a significant shift for the company.
Napoli leaves behind a remarkable legacy, including a record net profit of 1.01 billion Swiss francs—an 8 percent increase from the previous year. Although revenue dipped slightly to 11.2 billion Swiss francs, the operating result (Ebit) saw significant growth, and shareholders can expect a dividend increase.
This transition signals that Schindler is poised for renewed success, even in a challenging construction industry. Three years ago, when Napoli assumed both the president and CEO roles, the company faced critical challenges. He described this period as an “emergency landing,” with one of the worst years in the company’s history on the horizon.
Under Napoli’s leadership, Schindler streamlined its production processes and introduced a modular product platform to reduce costs. Instead of catering to extravagant customer requests, this innovative approach offers versatility through standard components. The platform has already been introduced in Europe, with a global rollout planned, and unprofitable contracts are being phased out.
Continuity with New Leadership
Paolo Compagna steps into the CEO role, having spent 15 years at Schindler, most recently as Chief Operating Officer (COO). His transition to CEO was expedited, taking effect on February 1, rather than the previously announced date of April 1. Compagna emphasizes continuity, stating that the company has clarified fundamental questions and does not require a new strategy.
Compagna has likely been in discussions with Alfred N. Schindler, the honorary chairman and key figure in the Schindler family, which holds nearly 70 percent of the voting rights. While Compagna remains discreet about the frequency of their meetings, he acknowledges Schindler’s keen interest in the company’s direction and leadership.
As the last representative of his generation on the board, Alfred N. Schindler, who turns 75, will continue in his role, although his cousin, Luc Bonnard, will not seek re-election. Meanwhile, Josef Ming, currently a consultant at Bain & Company, will temporarily take over Napoli’s board responsibilities for up to two years.
Challenges in Global Markets
Compagna faces a challenging global market for new elevator sales, particularly in China, the industry’s largest market. He noted, “The market for new installations in China is likely to continue shrinking for the time being before it settles into a new reality. We probably won’t see the growth rates of the past anytime soon.”
In Germany, Compagna does not anticipate any improvement until at least 2025, but he remains optimistic about the medium-term outlook. “The question is not if, but when demand will pick up,” he remarked, underscoring the high need for housing. Schindler is strategically focusing on modernizing elevators and enhancing services, which now account for over 60 percent of revenue and are seen as highly profitable.
Despite some challenges, there is potential for improved profitability. Schindler’s competitor, Otis, boasts higher margins, around 16 percent for Ebit, while Schindler achieved 11.3 percent last year. The goal is to reach 12 percent by 2025.
Although there are concerns regarding possible tariffs under the current administration, Compagna remains confident, noting that Schindler has a robust global presence with production facilities around the world. He believes the company can effectively manage foreseeable risks. Confidence appears to be returning to Schindler as it navigates through these transitions.