KONE s interim report for January June 2016 JULY 19, 2016 HENRIK EHRNROOTH, PRESIDENT & CEO

Transcription

1 KONE s interim report for January June 2016 JULY 19, 2016 HENRIK EHRNROOTH, PRESIDENT & CEO

2 Figures Key figures for for January June 2016

3 Q Key figures STRONG EXECUTION AND PROFITABLE SALES GROWTH Q2/2016 Q2/2015 Historical change Comparable change Orders received MEUR 2, , % -1.9% Order book MEUR 8, , % 5.5% Sales MEUR 2, , % 6.0% Operating income (EBIT) MEUR % Operating income (EBIT) % Cash flow from operations (before financing items and taxes) MEUR Basic earnings per share EUR

4 January June 2016 Key figures SOLID OPERATING PERFORMANCE 1 6/ /2015 Historical change Comparable change Orders received MEUR 4, , % -3.1% Order book MEUR 8, , % 5.5% Sales MEUR 4, , % 5.2% Operating income (EBIT) MEUR % Operating income (EBIT) % Cash flow from operations (before financing items and taxes) MEUR Basic earnings per share EUR

5 Q Orders received ORDERS RECEIVED DECLINED BUT REMAINED AT A HIGH LEVEL MEUR 2,500 2, % 1, % 2,068 Significant growth in modernization orders; some decline in new equipment orders 1,500 1, Some growth in the EMEA region and clear growth in the Americas; orders in Asia-Pacific declined due to China 0 Q1 Q2 Q3 Q4 At historical exchange rates. At comparable exchange rates. 5

6 Q Sales GOOD GROWTH IN SERVICE BUSINESSES MEUR 3,000 2,500 2, % 1, % 2,273 Slight growth in new equipment, some growth in maintenance and strong growth in modernization sales 1,500 1, Sales in EMEA was stable, some growth in Asia-Pacific and significant growth in the Americas 0 Q1 Q2 Q3 Q4 At historical exchange rates. At comparable exchange rates. 6

7 Q Operating income GROWTH DRIVEN BY POSITIVE DEVELOPMENT IN ALL REGIONS AND BUSINESSES MEUR % +7.2% 349 Development particularly positive in North America and Asia-Pacific Progress in product and cost competitiveness helped in offsetting the intense price pressure 50 0 Q1 Q2 Q3 Q4 At historical exchange rates. At comparable exchange rates. 7

8 1 6/2016 Sales split SHARE OF MODERNIZATION AND THE AMERICAS OUT OF TOTAL SALES CONTINUED TO GROW BY BUSINESS BY AREA 13% (11%) 18% (16%) 34% (33%) 53% (56%) 39% (40%) 43% (44%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 8 1 6/2015 figures in brackets. Figures in charts are rounded and at historical exchange rates.

9 Figures Business for and market January June development 2016

10 Q Business development highlights OUR DEVELOPMENT PROGRAMS First in Customer Loyalty A Winning Team of True Professionals The Most Competitive People Flow Solutions In June, we opened our new R&D and manufacturing facility in Allen, Texas to support the growth of the North American business The facility enables us to further improve our competitiveness and customer service in the North American market in new equipment and modernization Preferred Maintenance Partner Top Modernization Provider Our strengthened modernization offering and processes and continued focus on sales management contributed to the good development in orders received and sales 10

11 Q New equipment markets GLOBAL NEW EQUIPMENT MARKET VOLUMES WEAKENED DUE TO A DECLINE IN CHINA NEW EQUIPMENT Market weakened slightly as the market in China declined ASIA-PACIFIC Markets in India and Australia grew, while other markets in the region remained slow In China, price competition intensified during the quarter EMEA REGION Market continued to grow in Central and North Europe, while the markets in South Europe were rather stable Market in the Middle East continued to show growth opportunities despite uncertainty in the region NORTH AMERICA Market grew slightly driven by the United States in particular Pricing of new equipment continued to develop positively 11

12 Q Service markets SERVICE MARKETS CONTINUED TO GROW GLOBALLY MAINTENANCE MODERNIZATION EMEA REGION Maintenance market grew in the region, but with significant variation between countries; price competition remained intense Modernization market grew strongly in Central and North Europe; South Europe saw further signs of stabilization in demand NORTH AMERICA Maintenance market grew slightly; price competition remained rather intense Modernization market saw slight growth ASIA-PACIFIC Maintenance market continued to develop positively Demand developed positively 12

13 Figures for January June 2016 Outlook

14 Market outlook NEW EQUIPMENT MARKETS Asia-Pacific: The market in China is expected to decline by 5 10% in units ordered and also the price competition to continue intense. In the rest of Asia-Pacific, the market is expected to see some growth. Europe, Middle East and Africa: the market is expected to grow slightly with growth in Central and North Europe and a more stable development in South Europe and the Middle East. North America: the market is expected to see some growth. MAINTENANCE MARKETS The maintenance markets are expected to see the strongest growth rate in Asia- Pacific, and to develop rather well also in other regions. MODERNIZATION MARKETS The modernization market is expected to grow slightly in Europe, to continue to grow in North America, and to develop strongly in Asia-Pacific. 14

15 Business outlook (upgraded) SALES KONE s net sales is estimated to grow by 2 6% at comparable exchange rates as compared to OPERATING INCOME The operating income (EBIT) is expected to be in the range of EUR 1,250 1,330 million, assuming that translation exchange rates would remain at approximately the average level of January June

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17 APPENDIX 17

18 KONE s Capital Markets Day 2016 KONE s CMD 2016 will be held in Helsinki on September 28, The event will be held in central Helsinki, followed by an optional tour of KONE s manufacturing facilities in Hyvinkää. Presentations will be held by: Henrik Ehrnrooth, CEO Tomio Pihkala, CTO Larry Wash, EVP, Americas William B. Johnson, EVP, Greater China

19 E&E market and KONE s performance in China in Q NEW EQUIPMENT MARKETS New equipment orders received in units vs. market growth CHINA S SHARE OF TOTAL ORDERS/SALES In monetary value ~44% KONE Market <40% ~35% ~40% ~35% ~23% ~20% >15% >15% ~10% <5% CAGR ~-5% 2015 ~-5% ~-5% ~-8% >-10% Q1/2016 Q2/2016 Share of orders received Q Share of sales Share of orders received FY 2015 Share of sales 19

20 Q Balance sheet - assets employed MEUR Jun 30, 2016 Jun 30, 2015 Dec 31, 2015 Assets employed Goodwill 1, , ,306.7 Other intangible assets Tangible assets Investments Net working capital -1, Assets employed total 1, , ,062.9 Financed by Equity 2, , ,575.5 Net debt -1, ,512.6 Equity and net debt total 1, , ,

21 Q Net working capital MEUR Jun 30, 2016 Jun 30, 2015 Dec 31, 2015 Net working capital Inventories 1, , ,326.7 Advance payments received -2, , ,829.4 Accounts receivable 1, , ,480.2 Other non-interest-bearing assets Net deferred tax assets / liabilities Provisions Accounts payable Other non-interest-bearing liabilities -1, , ,651.3 Net working capital total -1,

22 Q Consolidated cash flow MEUR 4 6/ / / / /2015 Operating income ,241.5 Change in working capital before financing items and taxes Depreciation and amortization Cash flow from operations before financing items and taxes ,473.7 Financing items and taxes Cash flow from operating activities ,446.7 Investing activities Purchase of own shares Increase in equity (option rights) Profit distribution Changes in non-controlling interest Free cash flow

23 As approximately 75% of KONE s revenues are in other currencies than the euro, currency fluctuations have a translation impact SALES BY CURRENCY 1 12/2015 TRANSACTION RISK Others EUR 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. TRANSLATION RISK USD RMB As approximately 75% of KONE s revenues occur in functional currencies other than the euro, the translation risk is significant for KONE. In 2015, KONE s biggest geographical market areas outside the eurozone in terms of net sales included China, United States, Great Britain, Australia, Sweden and India. 23

24 Our absolute EBIT has grown faster than sales 12 months quarterly rolling absolute EBIT and EBIT margin progression, 2009 Q2/2016 MEUR 1, % 1,200 1, % 12% We have seen improvement both in absolute and relative EBIT % EBIT EBIT-% 0 Q1/2010 Q1/2011 Q1/2012 Q1/2013 Q1/2014 Q1/2015 Q1/2016 0% 24

25 Sales by market (MEUR) 10,000 8,647 CAGR, % 10.3% 8,000 6,000 4,000 2, ,242 66% 22% 12% 2005* 3,601 65% 22% 13% ,079 65% 21% 14% ,603 65% 19% 16% ,744 62% 21% 17% ,987 58% 21% 21% ,225 55% 18% 27% ,277 49% 16% 35% ,933 46% 16% 38% ,334 44% 15% 41% % 17% 44% % 7.7% 25.4% 8.4% 10.0% 11.6% 12.1% 12.7% 14.0% 13.9% 13.2% 13.8% 14.1% 14.4% EBIT margin % EMEA Americas Asia-Pacific *2005 figures are pro forma. 25

26 Sales by business (MEUR) 10,000 8,647 CAGR, % 10.3% 8,000 6,000 4,000 2, ,242 40% 19% 41% 2005* 3,601 41% 19% 40% ,079 45% 19% 36% ,603 48% 19% 33% ,744 47% 19% 34% ,987 46% 17% 37% ,225 46% 17% 37% ,277 50% 16% 34% ,933 54% 14% 32% ,334 55% 13% 32% % 12% 31% % 6.0% 7.0% 8.4% 10.0% 11.6% 12.1% 12.7% 14.0% 13.9% 13.2% 13.8% 14.1% 14.4% EBIT margin % New equipment Modernization Maintenance *2005 figures are pro forma. 26