Kone Oyj Class B · OMXHEX:KNEBV
Kone Oyj Class B — Q4 2023 Earnings Presentation
31 slides from Kone Oyj Class B's earnings presentation, Jan 26, 2024
Slide 1: KONE Result Presentation 2023
KONE Result Presentation 2023 Philippe Delorme, President & CEO Ilkka Hara, CFO
Slide 2: Highlights
Highlights • Strong finish to the year and good progress on many fronts in 2023 • Positive outlook and solid starting point for 2024 • Dividend proposal EUR 1.75 per class B share
Slide 3: Q4 2023 financial highlights
Q4 2023 financial highlights Strong growth in orders Continued strong growth in Continued improvement in received across businesses Service and Modernization adjusted EBIT margin and and areas sales strong cash flow Orders received, EUR bn Sales, EUR bn Adjusted EBIT margin, % of sales +11% +1% at c
Slide 4: 2023 financial performance highlights the resilience of our business
2023 financial performance highlights the resilience of our business Improving momentum in Solid sales growth Clear improvement in Solid cash conversion orders received in demonstrating the adjusted EBIT margin signaling the health of H2/2023 resilience of our bringing us back on the our business bu
Slide 5: 2023 business highlights
2023 business highlights Service Modernization New Building Solutions • Record level of units added to our • >20% growth in Modernization • Stable order book at comparable Service base highlighting our competitiveness exchange rates despite challenging • Continued increase in 24/7 and the abundance
Slide 6: Strengthening our position as a leader in sustainability
Strengthening our position as a leader in sustainability Progress to meet our Science Moving towards our diversity, Improvement in our Based Targets continued equity and inclusion targets safety performance in the industry with carbon Share of women Industrial Injury neutral manufacturing units at d
Slide 7: Positive development towards our strategic targets
Strategic Positive development towards our targets strategic targets Great place to work Employee engagement has stayed clearly above the global norm in the latest survey Most loyal customers Customer loyalty on a solid level Faster than market growth Faster than market growth in all businesses Bes
Slide 8: New operating model strengthening our competitiveness
New operating model strengthening our competitiveness 100 MEUR savings, Acting fast, close to Competitiveness, actions completed customers with speed and scale by the end of 2023 stronger Areas through global functions
Slide 9: Appointments to the Executive Board
Appointments to the Executive Board Nicolas Alchal Kaori Uehigashi Nicolas Alchal has been appointed Kaori Uehigashi has been Executive Vice President, Strategy named interim Executive & Transformation as of Jan 1, 2025. Vice President for Strategy Before he will start in this role in & Transformati
Slide 10: Market development
— "A Market development RESULT PRESENTATION 2023
Slide 11: Market development in Q4 2023
Market development in Q4 2023 North EMEA APAC (excl. China America China) New Building Solutions in units --- - +++ -- Service in units + + ++ ++ Modernization in monetary value + +++ +++ +++ - - - Significant decline (>10%), - - Clear decline (5-10%), - Slight decline (<5%), Stable, + Slight growth
Slide 12: Q4 Financials
Q4 Financials JANUARY 26, 2024 RESULT PRESENTATION 2023 12
Slide 13: Orders received
Orders received Strong order growth across businesses and areas MEUR -1.4% at comp. FX MEUR +5.4% 10,000 9,131 9,000 8,853 +10.5% at comp FX 8,400 8,578 8,185 8,000 7,797 -90 2,049 7,000 195 6,000 1,944 5,000 EMEA: ++ 4,000 APAC: +++ Americas: ++ 3,000 2,000 Margin on orders received was stable 1,00
Slide 14: Sales
Sales Excellent Service and Modernization growth across all regions +5.0% at comp. FX MEUR MEUR 10,907 10,952 -3.5% 11,000 10,514 9,982 9,939 10,000 +0.7% at comp. FX 9,071 2,911 9,000 87 8,000 -121 -150 2,810 7,000 82 6,000 -11.1% +8.3% +19.5% 5,000 4,000 EMEA +6.8% 3,000 APAC -9.8% 2,000 Americas
Slide 15: Adjusted EBIT and profitability
Adjusted EBIT and profitability Continued margin improvement MEUR, % MEUR, % 12.3% 12.4% 12.6% 12.5% 1,600 11.4% 1,400 1,310 12.5% 12.8% 1,237 1,251 9.9% 1,248 1,200 1,112 1,077 365 1,000 359 800 + Service and Modernization sales 600 growth + Improved price/cost dynamics 400 + Savings from operating
Slide 16: Cash flow from operations and net working capital
Cash flow from operations and net working capital Cash flow improved due to increased operating income and changes in net working capital Cash flow from operations*, MEUR Net working capital**, MEUR 2,000 1,908 12/2021 12/2022 12/2023 1,829 1,600 1,550 1,485 1,200 1,150 800 755 -904 -861 400 -1,468
Slide 17: Dividend proposal: EUR 1.75 per class B share
Dividend proposal: EUR 1.75 per class B share Split-adjusted dividend per class B share EUR, 2006–2023 • Dividend payout 0.50 in 2023: 97.8% of 0.35 earnings per share • Effective dividend yield* in 2023: 3.88% 0.65 0.75 CAGR: 12% 1.65 1.70 1.75 1.75 1.75 1.75 1.55 1.65 1.40 1.20 0.33 1.00 0.88 0.70
Slide 18: Market and business outlook
— "A Market and business outlook RESULT PRESENTATION 2023
Slide 19: Market outlook for 2024
Market outlook for 2024 Nine out of KONE’s 12 end-markets growing North Europe Asia-Pacific, China America Middle East and Africa New Building Solutions in units - - ++ -- Service in units + + ++ ++ Modernization in monetary value + ++ +++ +++ - - - Significant decline (>10%), - - Clear decline (5-1
Slide 20: Business outlook for 2024
Business outlook for 2024 Sales Supporting our Burdening our performance performance • KONE expects its sales to be stable or to grow slightly at comparable exchange rates in 2024 Strong growth in Declining New Service and Building Solutions Modernization market in China, and Adjusted EBIT uncertain
Slide 21: Summary
Summary • Strong finish to the year • Excellent performance in Service and Modernization highlighting the resilience of our business • Stable order book and positive outlook in majority of our markets gives us a solid basis for 2024 KONE’s Capital Markets Day is planned to be held on Friday, Septemb
Slide 22: Slide 22
Slide 23: Appendix
Appendix
Slide 24: Q4 2023 key figures
Q4 2023 key figures Strong finish to the year Comparable Q4/2023 Q4/2022 Change change Orders received MEUR 2,049.2 1,944.2 5.4% 10.5% Order book MEUR 8,715.7 9,026.1 -3.4% 0.1% Sales MEUR 2,809.9 2,911.5 -3.5% 0.7% Operating income (EBIT) MEUR 362.1 367.1 -1.4% Operating income margin (EBIT %) % 12
Slide 25: 1–12/2023 key figures
1–12/2023 key figures Solid sales growth and profitability improvement; market backdrop impacted orders received Comparable 1–12/2023 1–12/2022 Change change Orders received MEUR 8,577.7 9,131.3 -6.1% -1.4% Order book MEUR 8,715.7 9,026.1 -3.4% 0.1% Sales MEUR 10,952.3 10,906.7 0.4% 5.0% Operating i
Slide 26: 2023 Sales split
2023 Sales split By business By region 17% 23% (15%) (21%) 36% 45% (41%) (50%) 38% (36%) 41% (39%) New Building Solutions Asia-Pacific Service EMEA Modernization Americas 2022 figures in brackets. Figures in charts are rounded and at historical exchange rates.
Slide 27: Currencies
Currencies Sales by currencies Currency impact* Main currencies 1-12/2023 Other Q4/2023 2022 Dec 31, MEUR Q4 Full year EUR average average 2023 spot EUR / CNY 7.6589 7.0836 7.8509 Sales -120.9 -472.0 INR SEK AUD EUR / USD 1.0816 1.0563 1.1050 GBP EBIT -14.4 -37.5 EUR / GBP 0.8702 0.8537 0.8691 CNY U
Slide 28: Balance sheet – assets employed
Balance sheet – assets employed MEUR Dec 31, 2023 Dec 31, 2022 Assets employed Goodwill 1,469.0 1,414.7 Other intangible assets 287.2 208.2 Tangible assets 779.7 716.8 Investments 97.9 121.7 Net working capital -861.2 -903.9 Assets employed total 1,772.6 1,557.5 Financed by Equity 2,786.0 2,866.5 Ne
Slide 29: Net working capital
Net working capital* MEUR Dec 31, 2023 Dec 31, 2022 Net working capital Inventories 820.9 843.6 Advance payments received and deferred revenue -1,915.7 -1,973.8 Accounts receivable 2,495.1 2,668.1 Deferred assets and income tax receivables 759.7 826.9 Accruals and income tax payables -2,131.1 -2,181
Slide 30: KONE in China
KONE in China New Building Solutions market China’s share of KONE’s orders received and sales New Building Solutions orders received in units vs. market Monetary value (at comp. FX) development 50 45 KONE’s New Building 40 Solutions orders grew ~30% ~30% ~25% >35% significantly in units and in ~35%
Slide 31: Market activity in China
Market activity in China • Weak consumer sentiment continued to weigh on new construction activity, policy actions also key to recovery • Pricing environment characterized by intense competition • Strong growth in Service and Modernization markets Q4 2023 y/y 1-12/2023 y/y Real estate investment -11