KONE s Interim Report for January September 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 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 3
Q3 2014 Orders received: Significant growth driven by positive development in the new equipment business in particular MEUR 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 +1.0% 1,730 +10.0% 1,802 +18.8% 1,577 0 2005 2014 Q1 Q2 Q3 Q4 4
Q3 2014 Sales: Good growth in new equipment and maintenance MEUR 2,200 +5.0% +8.0% 2,000 1,800 +3.1% 1,849 1,878 1,600 1,400 1,442 1,200 1,000 800 600 400 200 0 2005 2014 Q1 Q2 Q3 Q4 5
Q3 2014 Operating income: Solid development in Asia- Pacific, North America and maintenance business globally drove growth of operating income MEUR 300 +8.4% 250 263 +7.8% 277 200 +12.0% 180 150 100 50 0 2005 2014 Q1 Q2 Q3 Q4 6 Operating income excluding one-time items.
1 9/2014: The weight of new equipment and the Asia-Pacific region continued to grow Sales by business Sales by market 34% 54% (53%) (34%) 42% (39%) 44% (45%) 12% (13%) 14% (16%) New equipment EMEA (Europe, Middle East and Africa) Maintenance Americas Modernization Asia-Pacific 7 (1 9/2013 figures in brackets) Figures in charts are rounded.
Q3 2014 EMEA: The market environment remained mixed, uncertainty increased slightly New equipment markets 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. Modernization markets The market declined slightly in Central and North Europe, and remained depressed in South Europe. Maintenance markets The market grew, although with significant variation between countries. The pricing environment remained characterized by intense competition, particularly in South Europe. 8
Q3 2014 North America: Positive development continued New equipment markets In the United States, the market saw continued solid growth driven by positive development across segments. Demand in Canada was rather stable. Modernization markets The market growth continued. Maintenance markets The market continued to grow, but price competition remained intense. 9
Q3 2014 Asia-Pacific: Continued demand growth in China New equipment markets 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. Modernization markets The modernization market in Australia saw some growth. Maintenance markets The market continued to grow well. 10
Our development programs are central in driving differentiation we have had good progress in customer loyalty First in Customer Loyalty A Winning Team of True Professionals The Most Competitive People Flow Solutions Preferred Maintenance Partner Our customer loyalty continued to improve More systematic feedback collection from customers on an ongoing basis Improved use of field communications tools Top Modernization Provider 11
Market outlook 2014 New equipment markets 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. Modernization markets The modernization market is expected to be rather stable or grow slightly. Maintenance markets The maintenance markets are expected to develop rather well in most countries. 12
Business outlook 2014 (specified) Sales KONE s net sales is estimated to grow by 6 8 % at comparable exchange rates as compared to 2013. Operating income The operating income (EBIT) is expected to be in the range of EUR 1,015 1,045 million. 13
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E&E market and KONE s performance in China in Q3/2014 New equipment growth New equipment orders received in units KONE Market China s share of total OR and sales In monetary value ~44% <40% ~ 30% <40% <35% ~20% ~23% <20% 15+% ~15% ~10% <15% ~10% 10+% CAGR 2006-2012 2013 Q1/2014 Q2/2014 Q3/2014 Share of orders received Share of sales Share of orders received Share of sales Based on KONE estimate FY2013 Q3/2014 15 Share of China of group sales for FY2013 corrected Nov 4, 2014.