Slide 1: KONE's interim report for January–March 2016
KONE’s interim report for January–March 2016 APRIL 21, 2016 HENRIK EHRNROOTH, PRESIDENT & CEO
Slide 2: Figures for January–March 2016
Figures for January–March 2016
Slide 3: Q1 2016 Key figures
Q1 2016 Key figures STRONG OPERATING PERFORMANCE; ORDERS DECLINED FROM A HIGH LEVEL Historical Comparable Q1/2016 Q1/2015 change change Orders received MEUR 1,942.3 2,053.8 -5.4% -4.3% Order book MEUR 8,529.7 8,529.6 0.0% 7.6% Sales MEUR 1,748.3 1,690.6 3.4% 4.2% Operating income (EBIT) MEUR 221.4 2
Slide 4: Orders received
Q1 2016 Orders received DECLINE IN CHINA; GROWTH IN THE EMEA AND AMERICAS REGIONS MEUR 2,500 -5.4% Growth in the EMEA region and the 2,000 1,942 Americas, significant decline in Asia-Pacific due to China 1,500 Some growth in modernization orders; 1,000 clear decline in new equipment orders 500 0
Slide 5: Sales
Q1 2016 Sales GROWTH IN SALES DRIVEN BY THE SERVICE BUSINESS, MODERNIZATION IN PARTICULAR MEUR 3,000 New equipment sales was stable, some 2,500 growth in maintenance 3.4% and significant growth 2,000 in modernization 1,748 1,500 Sales in EMEA was stable, slight growth in Asia-Pacific and 1,000 s
Slide 6: Operating income
Q1 2016 Operating income GROWTH DRIVEN BY POSITIVE DEVELOPMENT ACROSS REGIONS AND IN ALL BUSINESSES MEUR 400 Development particularly positive in 350 North America and 300 4.5% Asia-Pacific 250 221 Progress in product and cost 200 competitiveness 150 helped in offsetting price pressure 100 50 0
Slide 7: Sales split
Q1 2016 Sales split SHARE OF MODERNIZATION AND THE AMERICAS OUT OF TOTAL SALES GREW BY BUSINESS BY AREA 13% 18% (11%) (17%) 41% 49% (41%) (51%) 38% (38%) 41% (42%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 1–3/2015 figures in brackets. Figure
Slide 8: Business and market development
Business and market development
Slide 9: Business development highlights
Q1 2016 Business development highlights OUR DEVELOPMENT PROGRAMS Development of our personnel continued as a focus area First in Customer Loyalty We extended opportunities for learning through job rotation and A Winning Team of True Professionals we introduced new mobile training solutions The M
Slide 10: New equipment markets
Q1 2016 New equipment markets GLOBAL NEW EQUIPMENT MARKET VOLUMES WEAKENED FOLLOWING A DECLINE IN CHINA NEW EQUIPMENT Market weakened following a clear market decline in China Markets in India and Australia grew, while other markets in the region ASIA-PACIFIC remained varied Pricing competitio
Slide 11: Service markets
Q1 2016 Service markets SERVICE MARKETS CONTINUED TO GROW GLOBALLY MAINTENANCE MODERNIZATION Maintenance market grew in the region, Modernization market grew clearly in Central although with significant variation between and North Europe, while South Europe saw EMEA REGION countries; price compe
Slide 12: Elevator and escalator market in 2015
Elevator and escalator market in 2015 NEW EQUIPMENT MARKET EQUIPMENT BASE 840,000 units (2014: 850,000 units, adjusted*) 13.5 M (>12.5 M) units 3% 4% 9% (3%) (3%) 4% (9%) 2% 28% 9% (4%) China 20% (2%) (26%) (9%) Rest of Asia-Pacific (19%) EMEA North America South America 63% 7% Japan and Korea 8% (6
Slide 13: KONE's market positions in 2015
KONE’s market positions in 2015 STRONG MARKET POSITION IN NEW EQUIPMENT; CHALLENGER IN MAINTENANCE Market position, North Rest of Asia- EMEA China KONE’s estimate America Pacific shared New equipment #2 #3 #1 #1 shared Maintenance #3 #4 #1 #2 13 April 21, 2016 Interim Report January-March 2016 | © K
Slide 14: Outlook
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Slide 15: Market outlook
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 expect
Slide 16: Business outlook
Business outlook SALES KONE’s net sales is estimated to grow by 2–6% at comparable exchange rates as compared to 2015. OPERATING INCOME The operating income (EBIT) is expected to be in the range of EUR 1,220–1,320 million, assuming that translation exchange rates would remain at approximately th
Slide 17: Dedicated to People Flow
Dedicated to People Flow" K|OIN|E
Slide 18: Appendix
APPENDIX 18 April 21, 2016
Slide 19: E&E market and KONE's performance in China in Q1 2016
E&E market and KONE’s performance in China in Q1 2016 NEW EQUIPMENT MARKETS CHINA’S SHARE OF TOTAL ORDERS/SALES New equipment orders received in units vs. market growth In monetary value 50 ~44% KONE ~30% 40 Market <40% ~35% ~40% 30 ~23% 20 ~20% >15% >15% ~10% 10 <5% 0 -10 ~-5% ~-8% Share of Share S
Slide 20: Balance sheet - assets employed
Q1 2016 Balance sheet - assets employed MEUR Mar 31, 2016 Mar 31, 2015 Dec 31, 2015 Assets employed Goodwill 1,300.0 1,306.8 1,306.7 Other intangible assets 266.8 274.7 271.5 Tangible assets 347.4 339.2 345.4 Investments 125.4 126.2 122.7 Net working capital -1,107.9 -880.2 -983.4 Assets employed to
Slide 21: Net working capital
Q1 2016 Net working capital MEUR Mar 31, 2016 Mar 31, 2015 Dec 31, 2015 Net working capital Inventories 1,428.6 1,438.7 1,326.7 Advance payments received -2,044.7 -1,955.5 -1,829.4 Accounts receivable 1,421.6 1,472.1 1,480.2 Other non-interest-bearing assets 493.6 469.5 434.0 Net deferred tax assets
Slide 22: Consolidated cash flow
Q1 2016 Consolidated cash flow MEUR 1–3/2016 1–3/2015 1–12/2015 Operating income 221.4 211.9 1,241.5 Change in working capital before financing items and taxes 58.8 -24.2 132.3 Depreciation and amortization 25.5 24.4 100.0 Cash flow from operations before financing items and taxes 305.7 212.2 1,473.
Slide 23: Currency impact on revenues and translation risk
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 A substantial part of KONE operations are denominated EUR in local functional currencies and do not therefore give Others rise t
Slide 24: Our absolute EBIT has grown faster than sales
Our absolute EBIT has grown faster than sales 12 months quarterly rolling absolute EBIT and EBIT margin progression, 2009–Q1/2016 MEUR 1,400 16% 14.4 1,200 14% 1,000 12.1 We have seen 800 improvement both 12% in absolute and 600 relative EBIT 10% 400 EBIT 200 EBIT-% 0 0% Q1/2010 Q1/2011 Q1/2012 Q1/2
Slide 25: Sales by market 2005–2015 (MEUR)
Sales by market 2005–2015 (MEUR) 10,000 8,647 8,000 7,334 6,933 6,277 39% 6,000 4,987 5,225 44% 4,603 4,744 46% 4,079 49% 17% 4,000 3,601 3,242 58% 55% 15% 65% 62% 16% 65% 16% 66% 65% 2,000 18% 44% 21% 21% 38% 41% 21% 19% 35% 22% 22% 27% 12% 13% 14% 16% 17% 21% 0 2005* 2006 2007 2008 2009 2010 2011
Slide 26: Sales by business 2005–2015 (MEUR)
Sales by business 2005–2015 (MEUR) 10,000 8,647 8,000 7,334 6,933 6,277 6,000 57% 4,987 5,225 4,603 4,744 54% 55% 4,079 50% 4,000 3,601 46% 46% 3,242 48% 47% 45% 12% 41% 16% 14% 13% 40% 17% 2,000 19% 17% 19% 19% 19% 19% 34% 32% 32% 31% 40% 36% 33% 34% 37% 37% 41% 0 2005* 2006 2007 2008 2009 2010 201
Slide 27: Market size development 2013–2015
Market size development 2013–2015 IN NEW EQUIPMENT UNITS ORDERED 850,000 840,000 780,000 19% 20% 18% 3% 3% EMEA 3% 2% 4% 2% 4% 3% 3% North America South America Japan and Korea 64% 66% 63% China Rest of APAC 8% 7% 8% 2013 2014 2015 KONE’s estimate for new equipment market size have been readjusted f