Kone Oyj Class B · OMXHEX:KNEBV

Kone Oyj Class B — Q3 2016 Earnings Presentation

26 slides from Kone Oyj Class B's earnings presentation, Oct 26, 2016

  1. Slide 1: KONE's interim report for January–September 2016

    KONE’s interim report for January–September 2016 OCTOBER 26, 2016 HENRIK EHRNROOTH, PRESIDENT & CEO

  2. Slide 2: Key figures for January–September 2016

    Key figures for January–September 2016

  3. Slide 3: Q3 2016 Key figures

    Q3 2016 Key figures SOLID DEVELOPMENT ON A BROAD BASIS Historical Comparable Q3/2016 Q3/2015 change change Orders received MEUR 1,771.7 1,764.5 0.4% 3.3% Order book MEUR 8,699.0 8,350.7 4.2% 5.6% Sales MEUR 2,170.2 2,184.2 -0.6% 1.9% Operating income (EBIT) MEUR 331.1 325.9 1.6% Operating income (EB

  4. Slide 4: January–September 2016 Key figures

    January–September 2016 Key figures CONTINUED GOOD OPERATING PERFORMANCE Historical Comparable 1–9/2016 1–9/2015 change change Orders received MEUR 5,781.8 6,011.8 -3.8% -1.2% Order book MEUR 8,699.0 8,350.7 4.2% 5.6% Sales MEUR 6,191.1 6,085.5 1.7% 4.0% Operating income (EBIT) MEUR 901.1 863.0 4.4%

  5. Slide 5: Orders received

    Q3 2016 Orders received ORDERS RECEIVED GREW IN ALL REGIONS OUTSIDE CHINA MEUR At comparable exchange rates 2,500 -5.7% -5.4%  Clear growth in +0.4% modernization orders; 2,068 1,942 stable new equipment 2,000 1,772 orders  Growth in EMEA and 1,500 in the Americas; orders in Asia-Pacific declined

  6. Slide 6: Sales

    Q3 2016 Sales STABLE SALES WITH GOOD DEVELOPMENT IN SERVICES MEUR At comparable 3,000 exchange rates +2.8% -0.6% 2,500 New equipment -2.5% 2,273 +3.4% 2,170 Maintenance +6.1% 2,000 Modernization +13.4% 1,748 1,500 EMEA +7.2% Americas +9.4% 1,000 Asia-Pacific -4.9% 500 0 2009 2016 Q1 Q2 Q3 Q4 At hist

  7. Slide 7: Operating income

    Q3 2016 Operating income GROWTH DRIVEN BY POSITIVE DEVELOPMENT IN THE SERVICE BUSINESS MEUR +7.2% 400 +1.6%  The EMEA and 349 Americas regions 350 331 contributed to the 300 +4.5% growth in operating income 250 221  Progress in product 200 and cost 150 competitiveness helped in offsetting the 100

  8. Slide 8: 1–9/2016 Sales split

    1–9/2016 Sales split SHARE OF MODERNIZATION AND THE AMERICAS OUT OF TOTAL SALES GREW BY BUSINESS BY AREA 13% 18% (11%) (16%) 44% (45%) 54% 33% (57%) (32%) 38% (38%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 1–9/2015 figures in brackets Figure

  9. Slide 9: Business and market development

    Business and market development

  10. Slide 10: Business development highlights

    Q3 2016 Business development highlights OUR DEVELOPMENT PROGRAMS  The results of our customer loyalty survey remained at a high level First in Customer Loyalty  Positive development in service business customer loyalty A Winning Team of thanks to our structured approach to drive actions based on T

  11. Slide 11: New equipment markets

    Q3 2016 New equipment markets GLOBAL MARKET VOLUMES RATHER STABLE NEW EQUIPMENT  New equipment market in Asia-Pacific was rather stable  Market in China declined slightly in units and clearly in monetary value; ASIA-PACIFIC price competition remained intense  Market grew in India, was rather stab

  12. Slide 12: Service markets

    Q3 2016 Service markets SERVICE MARKETS GREW IN ALL GEOGRAPHIC REGIONS MAINTENANCE MODERNIZATION  Maintenance market grew in the region with  Modernization market grew somewhat in EMEA REGION variation between countries; price competition Central and North Europe; South Europe remained intense sho

  13. Slide 13: Outlook

    Outlook

  14. Slide 14: Market outlook (updated)

    Market outlook (updated) NEW EQUIPMENT MARKETS  Asia-Pacific: The market in China is expected to decline by approximately 5% in units ordered. Competition is expected to continue intense. In the rest of Asia- Pacific, the market is expected to see some growth.  Europe, Middle East and Africa: the

  15. Slide 15: Business outlook (specified)

    Business outlook (specified) SALES  KONE’s net sales is estimated to grow by 3–5% at comparable exchange rates as compared to 2015 (previously 2–6%). OPERATING INCOME  The operating income (EBIT) is expected to be in the range of EUR 1,260–1,320 million, assuming that translation exchange rates wo

  16. Slide 16: Orders received grew thanks to good development on a broad basis

    Orders received grew thanks to good development on a broad basis Continued growth in EBIT driven by positive development in the service business We have been able to find good opportunities despite mixed market trends 16 October 26, 2016 Interim Report January-September 2016 | © KONE Corporation

  17. Slide 17: Dedicated to People Flow

    Dedicated to People Flow" KOIN|E

  18. Slide 18: Appendix

    APPENDIX 18 October 26, 2016

  19. Slide 19: Chinese elevator and escalator market and KONE's performance in China

    Chinese elevator and escalator market and KONE’s performance in China in Q3 2016 NEW EQUIPMENT MARKET CHINA’S SHARE OF KONE’S ORDERS AND SALES New equipment orders received in units vs. market development In monetary value 50 ~44% KONE <35% >30% 40 Market ~40% ~35% 30 ~23% ~20% 20 >15% >15% ~10% 10

  20. Slide 20: Balance sheet – assets employed

    Q3 2016 Balance sheet – assets employed MEUR Sep 30, 2016 Sep 30, 2015 Dec 31, 2015 Assets employed Goodwill 1,346.7 1,293.3 1,306.7 Other intangible assets 266.7 271.9 271.5 Tangible assets 362.9 328.3 345.4 Investments 143.1 120.2 122.7 Net working capital -1,052.8 -968.7 -983.4 Assets employed to

  21. Slide 21: Net working capital

    Q3 2016 Net working capital MEUR Sep 30, 2016 Sep 30, 2015 Dec 31, 2015 Net working capital Inventories 1,531.8 1,444.3 1,326.7 Advance payments received -2,134.7 -2,022.2 -1,829.4 Accounts receivable 1,470.7 1,421.2 1,480.2 Other non-interest-bearing assets 564.8 498.3 434.0 Net deferred tax assets

  22. Slide 22: Consolidated cash flow

    Q3 2016 Consolidated cash flow MEUR 7–9/2016 7–9/2015 1–9/2016 1–9/2015 1–12/2015 Operating income 331.1 325.9 901.1 863.0 1,241.5 Change in working capital before financing items 42.9 81.1 120.6 132.9 132.3 and taxes Depreciation and amortization 26.6 25.0 77.9 74.4 100.0 Cash flow from operations

  23. Slide 23: Approximately 75% of KONE's revenues are in other currencies than the euro

    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 A substantial part of KONE operations are denominated EUR in local functional currencies and do not therefore give Others rise to t

  24. Slide 24: Our EBIT has grown faster than sales

    Our EBIT has grown faster than sales 12 months quarterly rolling EBIT and EBIT margin progression, 2009–Q3/2016 MEUR 1,400 14.6% 16% 1,200 14% 1,000 12.1% We have seen improvement both 800 12% in absolute and 600 relative EBIT 10% 400 EBIT 200 EBIT-% 0 0% Q1/2010 Q1/2011 Q1/2012 Q1/2013 Q1/2014 Q1/2

  25. Slide 25: Sales by market 2005–2015 (MEUR)

    Sales by market 2005–2015 (MEUR) CAGR, % 10,000 8,647 10.3% 8,000 7,334 6,933 6,277 39% 4.6% 6,000 4,987 5,225 44% 4,603 4,744 46% 4,079 49% 17% 7.7% 4,000 3,601 3,242 58% 55% 15% 65% 62% 16% 65% 16% 66% 65% 25.4% 2,000 18% 44% 21% 21% 38% 41% 21% 19% 35% 22% 22% 27% 12% 13% 14% 16% 17% 21% 0 2005*

  26. Slide 26: Sales by business 2005–2015 (MEUR)

    Sales by business 2005–2015 (MEUR) CAGR, % 10,000 10.3% 8,647 8,000 7,334 6,933 6,277 6,000 57% 14.3% 4,987 5,225 4,603 4,744 54% 55% 4,079 50% 4,000 3,601 46% 46% 3,242 48% 47% 6.0% 45% 12% 41% 16% 14% 13% 40% 17% 2,000 19% 17% 19% 19% 19% 19% 31% 7.0% 37% 37% 34% 32% 32% 41% 40% 36% 33% 34% 0 2005

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