By Dhirendra Tripathi

Investing.com – Otis stock (NYSE:) slipped 5.6% in Monday’s premarket trading after  the company gave disappointing guidance for the coming year, overshadowed by weakness in the key Chinese real estate market.

An elevator manufacturer stated that organic sales would only grow 2.5%-4.5% in 2014 due to slowdowns in the world’s second largest economy. The ongoing debt crisis, which is preventing new investments by high-rise developers of office and residential spaces, has also hindered investment. 

China accounted for a fifth (2021) of Otis’ net sales. Otis claimed it’s taking precautions to avoid any downtime from the exposure to developers in trouble, such as requiring that they make pre-payments for cash. It said around 10 customers had breached “2 or 3 red lines” which would amount to less than 0.5% of its total sales.

At the midpoint in its guidance range net sales were $14.55. This is a 2% increase. The year ended December saw a 12% increase in net sales. Expect a slightly higher profit per share at $3.25, the center of the guidance range. This is compared with $3.01 for 2021.

Otis reported that fourth quarter sales fell by 2% to $1.6billion, while organic sales grew only 1.2%. Company attributed the slowdown to difficult comparisons between the Americas and Europe, Middle East, and Africa, where business had recovered from the effects of Covid-19 last year.

The fourth-quarter saw an increase in new equipment orders by 7.3%, and an increase of 1% in order backlogs.