KONE’s Interim Report for...KONE’s Interim Report for January–September 2014 October 21, 2014...

KONE’s Interim Report for

January–September 2014

October 21, 2014

Henrik Ehrnrooth, President & CEO

HANNOVER, GERMANY

Continuously

improving customer

experience

To ensure excellent service, we

gather constant customer feedback

and carry out end-user research. This

insight helps us to continuously

improve our customer service.

Q3 2014: Strong orders received and positive

development overall

Q3/2014 Q3/2013 Historical

change Comparable

change

Orders received MEUR 1,577.2 1,327.2 18.8% 17.4%

Order book MEUR 6,995.8 5,642.1 24.0% 18.6%

Sales MEUR 1,877.9 1,739.2 8.0% 7.9%

Operating income (EBIT) MEUR 277.5 257.5 7.8%

Operating income (EBIT) % 14.8 14.8

Cash flow from operations

(before financing

items and taxes)

MEUR 372.1 349.0

Basic earnings per share EUR 0.41 0.40

October 21, 2014 Interim Report for January–September 2014 | © KONE Corporation 2

January–September 2014:

Continued profitable growth

1–9/2014 1–9/2013 Historical

change Comparable

change

Orders received MEUR 5,108.8 4,677.8 9.2% 12.3%

Order book MEUR 6,995.8 5,642.1 24.0% 18.6%

Sales MEUR 5,168.6 4,899.6 5.5% 7.9%

Operating income (EBIT) MEUR 720.4 660.7 9.0%

Operating income (EBIT) % 13.9 13.5

Cash flow from operations

(before financing

items and taxes)

MEUR 977.6 972.2

Basic earnings per share EUR 1.07 1.01


Q3 2014 Orders received: Significant growth driven by

positive development in the new equipment business

in particular MEUR

1,600

2,000

1,400

1,800

1,200

1,000

800

400

0

200

600

2,200

+18.8%

+10.0% +1.0%

Q3 Q4

1,577

1,802 1,730

Q1 Q2 2005 2014


Q3 2014 Sales: Good growth in new

equipment and maintenance

MEUR

1,000

1,600

800

2,200

1,200

2,000

1,400

1,800

600

400

200

0

Q4 Q3 Q2

1,849

Q1

1,442

1,878

+8.0% +5.0%

+3.1%

2005 2014


Q3 2014 Operating income: Solid development in Asia-

Pacific, North America and maintenance business

globally drove growth of operating income

Operating income excluding one-time items.

MEUR

277263

180

0

50

100

150

200

250

300 +8.4%

+12.0%

Q4 Q3 Q2 Q1

+7.8%

2005 2014


1‒9/2014: The weight of new equipment and

the Asia-Pacific region continued to grow

(1–9/2013 figures in brackets)

Figures in charts are rounded.

Modernization

Maintenance

New equipment

12%

(13%)

34%

(34%)

54%

(53%)

42%

(39%)

14%

(16%)

44%

(45%)

Asia-Pacific

Americas

EMEA (Europe, Middle East and Africa)

Sales by business Sales by market


Q3 2014 EMEA: The market environment

remained mixed, uncertainty increased slightly

Maintenance markets

New equipment markets

Modernization markets

The market grew, although with significant variation

between countries. The pricing environment remained

characterized by intense competition, particularly in

South Europe.

The market declined slightly in Central and North

Europe, and remained depressed in South Europe.

In Central and North Europe, the market was rather

stable.

In South Europe, demand remained weak across

segments.

In the Middle East and Turkey, demand grew.


Q3 2014 North America: Positive

development continued

Maintenance markets



The market continued to grow, but price

competition remained intense.

The market growth continued.

In the United States, the market saw

continued solid growth driven by positive

development across segments.

Demand in Canada was rather stable.


Q3 2014 Asia-Pacific: Continued demand

growth in China

In China, the market grew clearly compared

to the previous year.

In India, the market declined, with uncertainty

still impacting decision-making.

In Australia, demand grew.

In Southeast Asia, markets grew somewhat.

The market continued to grow well.

Maintenance markets



The modernization market in Australia saw

some growth.


Our development programs are central in

driving differentiation – we have had good

progress in customer loyalty

Interim Report for January–September 2014 | © KONE Corporation 11

First in Customer Loyalty

A Winning Team of True

Professionals

The Most Competitive

People Flow® Solutions

Preferred Maintenance Partner

Top Modernization Provider

October 21, 2014

Our customer loyalty

continued to improve

More systematic

feedback collection

from customers on an

ongoing basis

Improved use of field

communications tools

Market outlook 2014

The market in Asia-Pacific is expected to grow clearly in

2014. The market in China is expected to grow by

approximately 10%.

The market in the EMEA region is expected to grow slightly.

In Central and North Europe, the market is expected to

remain stable or grow slightly, to further slightly decline in

South Europe and to grow in the Middle East.

The market in North America is expected to continue to

grow.

The maintenance markets are expected to develop rather

well in most countries.

Maintenance markets



The modernization market is expected to be rather stable or

grow slightly.


Business outlook 2014 (specified)

KONE’s net sales is estimated to grow by

6–8 % at comparable exchange rates as

compared to 2013.

The operating income (EBIT) is expected to

be in the range of EUR 1,015–1,045 million.

Sales

Operating income


E&E market and KONE’s performance

in China in Q3/2014


New equipment growth China’s share of total OR and sales

New equipment orders received in units

Share

of sales

Share of

orders

received

FY2013

Share

of sales

<40%

Share of

orders

received

<35%

Q3/2014

In monetary value

~10%

<15%

Q1/2014

~10%

~15%

2013

15+%

~23%

CAGR

2006-2012

~20%

~44%

Q2/2014 Q3/2014

10+%

<20%

KONE

Market

Based on KONE estimate

<40% ~ 30%

Share of China of group sales for

FY2013 corrected Nov 4, 2014.

KONE’s Interim Report for...KONE’s Interim Report for January–September 2014 October 21, 2014...

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