KONE Q JULY 19, 2017 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO

Transcription

1 KONE Q JULY 19, 2017 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO

2 Q highlights Good overall execution Profitability burdened by several headwinds Stabilization in China Good improvement in customer loyalty in all businesses

3 Q key figures POSITIVE SALES AND ORDERS DEVELOPMENT 4-6/ /2016 Historical change Comparable change Orders received MEUR 2, , % 1.1% Order book MEUR 8, , % 4.9% Sales MEUR 2, , % 1.7% Operating income (EBIT) MEUR % Operating income margin (EBIT %) % Cash flow from operations (before financing items and taxes) MEUR Basic earnings per share EUR

4 January-June 2017 key figures CONTINUED SALES GROWTH IN A MIXED OPERATING ENVIRONMENT 1-6/ /2016 Historical change Comparable change Orders received MEUR 3, , % 0.0% Order book MEUR 8, , % 4.9% Sales MEUR 4, , % 2.4% Operating income (EBIT) MEUR % Operating income margin (EBIT %) % Cash flow from operations (before financing items and taxes) MEUR Basic earnings per share EUR

5 1-6/2017 sales split SHARE OF SERVICES AND THE AMERICAS OUT OF TOTAL SALES CONTINUE TO GROW BY BUSINESS BY AREA 13% (13%) 20% (18%) 35% (34%) 52% (53%) 41% (44%) 40% (39%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 5 1 6/2016 figures in brackets. Figures in charts are rounded and at historical exchange rates.

6 Q2 business overview POSITIVES Continued sales growth and solid orders received development in many markets Stabilization in the new equipment business in China Good improvement in customer loyalty in all businesses Good progress in execution of our new strategy HEADWINDS Profitability burdened by the combination of price pressure witnessed in the new equipment business in China and higher material costs Continued intense competition in many large markets 6

7 The implementation of our new strategy continues with good momentum Roll-out of the new KONE Care as well as 24/7 Connected Services continued; available in over 10 countries this year Renewed KONE Online platform for maintenance customers launched in a number of countries with very positive customer feedback New extensions to product offerings launched in all regions to further improve competitiveness New mobile tools for service supervisors to enable more customer time and better efficiency

8 Market development

9 New equipment market development in Q2 GLOBAL MARKET VOLUMES DECLINED SLIGHTLY EMEA market North American market Asia-Pacific market Q2 development (in units) Share of global market (in units) ~20% <5% >2/3 Slight growth in South Europe Stable market in Central and North Europe Growth in the Middle East despite market uncertainty Continued growth in the United States with broad-based positive development Pricing environment continued to develop positively Market in China declined slightly in units. Pricing stabilized compared to the previous quarter In the rest of Asia-Pacific, the new equipment markets continued to decline, driven by India in particular + = slight growth (<5%), ++ = clear growth (5-10%), +++ = significant growth (>10%) - = slight decline (<5%), -- = clear decline (5-10%), --- = significant decline (>10%) 9

10 Chinese property market GOOD DEMAND HAS RESULTED IN IMPROVING INVENTORY LEVELS Inventories Housing sales and prices E&E market Inventories low in higher-tier cities; situation continued to improve in lowertiers Authorities introduced further restriction measures to cool down the housing market As a result, housing sales area declined in higher-tier cities, growth in lower-tiers robust Real estate investment relatively stable E&E demand declined slightly /2017: /2017: Q2 2017: Q Q Q Q Q Q Q % % /14 07/14 01/15 07/15 01/16 07/16 01/ Q Q Q Q Q Q Q % Declined slightly Newly built area for sale / monthly sales 3-m MVA Tier-1 Tier-2 sample of lower-tier cities Housing prices, Y-o-Y M-o-M REI Y-o-Y E&E market Y-o-Y in units 10 Sources: China NBS, CREIS, E-house, KONE estimates

11 Service market development in Q2 GROWTH CONTINUED ACROSS REGIONS Maintenance Q2 development EMEA market North American market Asia-Pacific market Share of global market (in units) >40% <10% ~40% Pricing environment remained tough especially in South Europe Positive development except for retail segment Continued good growth across the region Modernization Q2 development Share of global market (in monetary value) Stable ~1/3 ~25% >15% Mixed development Slight growth with continued favorable development in the pricing environment + = slight growth (<5%), ++ = clear growth (5-10%), +++ = significant growth (>10%) - = slight decline (<5%), -- = clear decline (5-10%), --- = significant decline (>10%) 11 Significant market growth

12 Q2 financials

13 Orders received CLEAR GROWTH IN EMEA AND THE AMERICAS MEUR The relative margin of orders received declined slightly but remained at a good level 2, % -0.6% 1.1% 2,000 1,913 2,056 2, ,500 2,056 1, Continued growth in EMEA and Americas - Orders declined in Asia-Pacific Q1 Q2 Q3 Q4 At historical exchange rates Q Growth at comp. FX FX Q

14 Sales SALES GROWTH DRIVEN BY MAINTENANCE At comparable exchange rates: +1.7% MEUR 3,000 2,500 2, % 1, % 2,284 2, % +5.2% +1.9% 27 2,284 1,500 1,000 EMEA: +5.0% Americas: +3.7% 500 Asia-Pacific: -1.8% Q1 Q2 Q3 Q4 At historical exchange rates Q New equipment Maintenance Modernization FX Q2 2017

15 Operating income MARGIN DECLINED TO 14.3% DUE TO SEVERAL HEADWINDS MEUR % % Q1 Q2 Q3 Q4 At historical exchange rates Q Services growth, productivity improvements - Raw materials, margin pressure in China - R&D and IT Growth Profitability FX Q

16 Market and business outlook for 2017

17 Market outlook for 2017 NEW EQUIPMENT MARKETS Asia-Pacific: The market in China is expected to decline by 0 5% in units ordered, intense competition to continue. In the rest of Asia-Pacific, the market is expected to grow slightly. Europe, Middle East and Africa: the market is expected to grow slightly. North America: the market is expected to grow slightly. MAINTENANCE MARKETS The maintenance markets are expected to see the strongest growth rate in Asia-Pacific and to grow slightly also in other regions. MODERNIZATION MARKETS The modernization market is expected to grow slightly in Europe and in North America and to develop strongly in Asia-Pacific. 17 Half-year Financial Report January-June 2017 KONE Corporation

18 Business outlook for 2017 (specified) SALES KONE s net sales is estimated to grow by 1 3% at comparable exchange rates as compared to 2016 (previously 0 3%). OPERATING INCOME The operating income (EBIT) is expected to be in the range of EUR 1,200-1,280 million, assuming that translation exchange rates* would remain at approximately the average level of January June 2017 (previously 1,200-1,290). * The operating income outlook includes around EUR 10 million negative impact from translation exchange rates compared to (The previous operating income outlook included around EUR 10 million positive impact.) 18 Half-year Financial Report January-June 2017 KONE Corporation

19 Q2 summary Stabilization in China Firm actions to offset the impact of several headwinds Positive development in customer loyalty Good traction with our recently launched service offering 19

20 KONE s Capital Markets Day SEPTEMBER 29, 2017 IN LONDON

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22 APPENDIX 22

23 KONE in China NEW EQUIPMENT MARKET New equipment orders received in units vs. market development CHINA S SHARE OF KONE S ORDERS AND SALES In monetary value >35% KONE Market ~35% <30% >35% >30% <20% <5% The China market was stable in units. KONE s orders were stable in units. The China market declined slightly in units. KONE s orders declined slightly in units. 0-5 ~-5% ~-5%~-5% Share of orders received Share of sales Share of orders received Share of sales CAGR Q1/2017 Q2/2017 H1/2017 H1/

24 Currencies SALES BY CURRENCY 1 12/2016 CURRENCY IMPACT MAIN CURRENCIES USD Others (MEUR) Q2/2017 H1/2017 H1/2017 average 2016 average Jul 17, 2017 spot Sales EUR / RMB EBIT -6-7 EUR / USD RMB EUR / GBP Orders received EUR / AUD EUR 24

25 Q Balance sheet assets employed MEUR Jun 30, 2017 June 30, 2016 Dec 31, 2016 Assets employed Goodwill 1, , ,371.8 Other intangible assets Tangible assets Investments Net working capital -1, , ,054.8 Assets employed total 1, , ,108.0 Financed by Equity 2, , ,795.6 Net debt -1, , ,687.6 Equity and net debt total 1, , ,

26 Q Net working capital MEUR Jun 30, 2017 Jun 30, 2016 Dec 31, 2016 Net working capital Inventories 1, , ,373.5 Advance payments received -2, , ,976.9 Accounts receivable 1, , ,573.7 Other non-interest-bearing assets Other non-interest-bearing liabilities -1, , ,692.5 Provisions Accounts payable Net deferred tax assets / liabilities Net working capital total -1, , ,

27 Q Consolidated cash flow MEUR 4-6/ / / / /2016 Operating income ,293.3 Change in working capital before financing items and taxes Depreciation and amortization Cash flow from operations before financing items and taxes ,509.5 Financing items and taxes Cash flow from operating activities ,178.4 Investing activities Purchase of own shares Increase in equity (option rights) Profit distribution Changes in non-controlling interest Free cash flow