Otis Worldwide Corporation

Otis has turned its service business into a real growth engine — repair, modernization and maintenance all accelerating — but the cost of building it is landing before the profit, and management has cut its 2026 outlook twice in two quarters. How much of the 2026 profit cut was investment versus real cost inflation?

• Service is now the growth engine, not the steady half.

  Service organic sales grew 9% in Q2 FY2026, with modernization up 24% — its fastest since the spin-off. With the modernization backlog up 26%, that growth is largely already sold rather than hoped for. How much of the modernization backlog converts to revenue within a year?

• The cost of that growth arrives before the money it earns.

  Otis is spending $50 million on service quality and hiring roughly 1,000 mechanics a year, and new hires take longer than expected to become productive. Add inflation on labour and parts, and 2026 operating profit now goes backwards.

• New equipment has stopped shrinking.

  Orders returned to growth and the Americas grew new equipment sales 10% in Q2 FY2026, turning positive after nine quarters of decline. Management now expects the segment to grow this year, removing a long-running drag on profit. How much of the Americas recovery is data centre and infrastructure work?