january-march 2015 april 22, 2015...kone’s interim report for january-march 2015 april 22, 2015...

KONE’s Interim Report for

January-March 2015

April 22, 2015

Henrik Ehrnrooth, President & CEO

In retail, experience is

everything.

Keeping visitors and shop owners

happy is about delivering the best

possible shopping experience.

When people can move effortlessly,

they are more likely to stay and

shop for longer. KONE’s people flow

expertise, combined with preventive

maintenance solutions, helps

business run smoothly year after

year.

Q1 2015: A good start to the year

Q1/2015 Q1/2014 Historical

change Comparable

change

Orders received MEUR 2,053.8 1,729.7 18.7% 5.5%

Order book MEUR 8,529.6 6,175.4 38.1% 15.6%

Sales MEUR 1,690.9 1,441.8 17.3% 7.1%

Operating income (EBIT) MEUR 211.9 179.6 18.0%

Operating income (EBIT) % 12.5 12.5

Cash flow from operations

(before financing

items and taxes)

MEUR 212.2 325.4

Basic earnings per share EUR 0.29 0.28

April 22, 2015 Interim report January-March 2015 | © KONE Corporation 2

Q1 2015 Orders received: Good growth driven

by strong development in North America

MEUR

1,800

1,600

2,000

1,400

2,200

400

1,200

1,000

800

600

200

0

Q4

2,054

Q3 Q2 Q1

18.7%

2009 2015

April 22, 2015 Interim report January-March 2015 | © KONE Corporation 3 Growth in historical exchange rates.

Q1 2015 Sales: Growth in all geographic

regions

MEUR

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

Q1

1,691

Q4

17.3%

Q3 Q2 2009 2015

April 22, 2015 Interim report January-March 2015 | © KONE Corporation 4 Growth in historical exchange rates.

Q1 2015 Operating income: Growth driven by good

development across businesses and favorable

translation exchange rates

Operating income excluding one-time items.

MEUR

212

0

50

100

150

200

250

300

350

Q3 Q4 Q2 Q1

18.0%

2009 2015


Growth in historical exchange rates.

1-3/2015: The share of new equipment as well as Asia-

Pacific out of total sales continued to grow

Modernization

Maintenance

New equipment

11%

(13%)

38%

(39%)

51%

(48%)

41%

(38%)

17%

(15%)

42%

(47%)

Asia-Pacific

Americas

EMEA (Europe, Middle East and Africa)


Sales by business Sales by market

(1-3/2014 figures in brackets)

Figures in charts are rounded and in historical exchange rates.

The global new equipment market was rather stable;

KONE’s development was solid in key markets


Orders received grew strongly in North America and

slightly in Asia-Pacific.

In China, KONE continued faster than market

growth.

Markets declined slightly in Central and North

Europe, remained weak in South Europe and stable

at a good level in the Middle East.

In North America, the market continued to grow.

In Asia-Pacific, the new equipment market was

rather stable, with market volumes in China

approximately at the previous year’s level.

KONE’s Q1 in new equipment

Development of the new equipment market

New equipment

Maintenance sales developed positively in all

geographic regions.

Sales growth was the fastest in Asia-Pacific.

The global maintenance market continued to

grow


KONE’s Q1 in maintenance

In Europe and North America, the maintenance

markets grew, but the pricing environment remained

competitive in many markets.

The market in Asia-Pacific continued to develop

positively.

Development of the maintenance market

Maintenance

The modernization market grew in North

America, more stable development in Europe


Orders received grew clearly, with strong growth in

North America and some growth in the EMEA

region.

Modernization sales grew clearly in North America,

but declined clearly in the EMEA region.

Clear market growth continued in North America.

In Central and North Europe the market grew, but in

South Europe it remained weak.

KONE’s Q1 in modernization

Development of the modernization market

Modernization

10

Elevator and escalator market in 2014 (2013 FIGURES IN BRACKETS)

New equipment market:

815,000 (750,000) units Maintenance base: >12.5M units (~12M)

April 22, 2015 Interim report January-March 2015 | © KONE Corporation

KONE’s estimated market share

globally (in new equipment units) 19%

EMEA = Europe, Middle East and Africa.

APAC = Asia-Pacific

Based on KONE’s estimate. All estimates are rounded figures.

45%

(47%)

7%

(6%)

4%

(4%)

26%

(23%)

9%

(10%)

9%

(10%)

69%

(67%)

8%

(8%)

3%

(4%)

2%

(3%)

3%

(3%)

15%

(15%)

Rest of APAC

China

Japan & Korea

South America

North America

EMEA

Our Development Programs are delivering

results

Interim report January-March 2015 | © 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

April 22, 2015

KONE’s annual

employee survey was

conducted in Q1 2015

Record-high response

rate of 93%

Survey results showed

a broad-based

improvement in

employee engagement

globally

The modernization market is expected to remain rather stable in Europe, but

to continue to grow in North America and Asia-Pacific. This is expected to

result in a rather stable or slightly growing market globally.

Modernization markets

Market outlook 2015

Asia-Pacific: the market is expected to grow slightly in 2015, with the

expectation that the market in China will remain at the good level of 2014 or

grow slightly.

Europe, Middle East and Africa: the market is expected to be rather stable.

In Central and North Europe, a stable market or slight growth is expected,

while South Europe is expected to remain weaker. In the Middle East, the

market is expected to be stable at the previous year’s level.

North America: the market is expected to continue to grow.

The maintenance markets are expected to develop rather well in most

countries.

Maintenance markets

New equipment markets


Business outlook 2015 (specified)

KONE’s net sales is estimated to grow by 6–9%

at comparable exchange rates as compared to

2014.

The operating income (EBIT) is expected to be in

the range of EUR 1,140–1,230 million, assuming

that translation exchange rates would remain at

approximately the average level of January–

March 2015.

Sales

Operating income


KONE’s Capital Markets Day 2015


KONE’s Capital Markets Day will

be held on September 25, 2015

The event will be held in

Shanghai and Kunshan, China

More information to follow soon

E&E market and KONE’s performance

in China in Q1/2015


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

New equipment orders received in units

Share

of sales

Share of

orders

received

FY2014

Share

of sales

<35%

Share of

orders

received

<45%

Q1/2015

In monetary value

Q1/2015

>5%

2014

~10%

>15%

2013

15+%

~23%

CAGR

2006-2012

~20%

~44%

Market

KONE

Based on KONE estimate

>30% ~40%

16

Market in

China was

rather stable

in Q1 /2015

Q1 2015: Balance Sheet - Assets Employed


MEUR Mar 31, 2015 Mar 31, 2014 Dec 31, 2014

Assets employed

Goodwill 1,306.8 1,099.9 1,208.9

Other intangible assets 274.7 222.7 261.8

Tangible assets 339.2 271.4 317.1

Investments 126.2 114.2 112.5

Net working capital -880.2 -756.0 -749.7

Assets employed total 1,166.8 952.3 1,150.5

Financed by

Equity 1,751.2 1,323.6 2,062.4

Net debt -584.4 -371.3 -911.8

Equity and net debt total 1,166.8 952.3 1,150.5

17

Q1 2015: Net working capital


MEUR Mar 31, 2015 Mar 31, 2014 Dec 31, 2014

Net working capital

Inventories 1,438.7 1,203.8 1,211.8

Advance payments received -1,955.5 -1,578.1 -1,628.7

Accounts receivable 1,472.1 1,195.5 1,368.3

Other non IB assets 469.5 323.3 331.9

Net deferred tax assets / liabilities 165.1 117.0 152.2

Provisions -141.3 -135.7 -137.4

Accounts payable -610.3 -507.5 -597.1

Other non IB liabilities -1,718.6 -1,374.3 -1,450.6

Net working capital total -880.2 -756.0 -749.7

18

Q1 2015: Cash flow


MEUR 1-3/2015 1-3/2014 1-12/2014

Operating income 211.9 179.6 1,035.7

Change in working capital before financing items and taxes -24.2 125.3 225.5

Depreciation and amortization 24.4 20.4 84.2

Cash flow from operations before financial items and taxes 212.2 325.4 1 345.4

Cash flow from financing items and taxes 35.2 -31.0 -221.1

Cash flow from operating activities 247.4 294.4 1 124.3

Cash flow from investing activities -31.8 -24.6 -145.9

Purchase of own shares - - -32.8

Increase in equity (option rights) - - 21.8

Profit distribution -563.7 -495.7 -537.5

Changes in non-controlling interests - -0.4 -12.3

Free cash flow -348.1 -226.2 417.6

19

As approximately 70% of KONE’s revenues are in

other currencies than the euro, currency fluctuations

have a translation impact


EUR

RMB

USD/CAD

Others

Sales by currency 1–12/2014

A substantial part of KONE operations are

denominated in local functional currencies

and do not therefore give rise to

transaction risk. In addition, KONE’s policy

is to hedge the foreign exchange exposure

of the order book.

As approximately 70% of KONE’s

revenues occur in functional currencies

other than the euro, the translation risk is

significant for KONE. In 2014, KONE’s

biggest geographical market areas outside

the eurozone in terms of net sales included

China, United States, Great Britain,

Australia, and Sweden.

Translation risk

Transaction risk

Sales by market 2005–2014 (MEUR)

49%

2011

5,225

27%

18%

55%

2010

4,987

21%

21%

58%

2009

4,744

17%

21%

62%

2008

4,603

16%

19%

65%

2007

4,079

14%

21%

65%

2006

3,601

13%

22%

65%

2005*

3,242

12%

22%

66%

2013

6,933

38%

16%

46%

2012

6,277

35%

16%

2014

15%

7,334

44%

41%

Asia-Pacific Americas EMEA

CAGR,%

9.5%

4.5%

5.2%

25.4%

April 22, 2015 21

13.8% 14.1% 13.2% 13.9% 14.0% 12.7% 12.1% 11.6% 10.0% 8.4% EBIT margin

(%)¹

*) 2005 figures are pro forma

¹ excluding one-time items Interim report January-March 2015 | © KONE Corporation

Sales by business 2005–2014 (MEUR)

6,933

32%

14%

54%

2012

6,277

34%

16%

50%

2011

5,225

37%

17%

33%

19%

48%

2007

4,079

36%

19%

45%

2006

3,601

40%

19%

41%

2013

46%

2010

4,987

37%

17%

46%

2009

4,744

34%

19%

47%

2008

4,603

2005*

3,242

41%

19%

40%

2014

7,334

55%

13%

32%

New equipment Modernization Maintenance

CAGR,%

9.5%

5.7%

6.4%

13.3%

*) 2005 figures are pro forma


13.8% 14.1% 13.2% 13.9% 14.0% 12.7% 12.1% 11.6% 10.0% 8.4% EBIT margin

(%)¹

¹ excluding one-time items

Our absolute EBIT has continued to

grow faster than sales

Note: Excluding one-time items.

12 months quarterly rolling absolute EBIT & margin progression, Q2/2009-Q1/2015

MEUR

1,100

1,000

900

800

700

600

500

400

300

200

100

0

14%

16%

12%

10%

0%

Q2/2011 Q2/2010 Q2/2009

12.1

Q1/2015

14.1

Q2/2014 Q2/2013 Q2/2012

EBIT EBIT-%

Improvement in both absolute EBIT and EBIT margin

23 Interim report January-March 2015 | © KONE Corporation April 22, 2015

january-march 2015 april 22, 2015...kone’s interim report for january-march 2015 april 22, 2015...

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