Slide 1: KONE H1 2018
KONE H1 2018 JULY 19, 2018 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q2 2018 Highlights
Q2 2018 Highlights ▪ Orders received grew in all regions with stable margins ▪ Service business continued to grow well ▪ EBIT margin still burdened by several headwinds ▪ Positive results from the annual customer and employee surveys
Slide 3: Q2 2018 Key figures
Q2 2018 Key figures CONTINUED GROWTH IN ORDERS RECEIVED AND GOOD CASH GENERATION THE KEY POSITIVES, ADJUSTED EBIT MARGIN STILL DOWN Y/Y Comparable Q2/2018 Q2/2017 Change change Orders received MEUR 2,118.6 2,056.2 3.0% 6.4% Order book MEUR 7,915.3 7,749.2 2.1% 4.0% Sales MEUR 2,330.6 2,337.2 -0.3% 3
Slide 4: January-June 2018 Key figures
January-June 2018 Key figures SOLID GROWTH IN BOTH SERVICES AND NEW EQUIPMENT, ADJUSTED EBIT BURDENED BY SEVERAL HEADWINDS Comparable 1-6/2018 1-6/2017 Change change Orders received MEUR 4,027.2 3,969.2 1.5% 6.6% Order book MEUR 7,915.3 7,749.2 2.1% 4.0% Sales MEUR 4,338.6 4,280.6 1.4% 6.5% Operatin
Slide 5: Good progress towards our strategic targets
Continued improvement in Good progress Customer loyalty (NPS) towards our Employee engagement on a strong level strategic targets Organizational changes initiated in several functions
Slide 6: Market development
Market development
Slide 7: New equipment market development in Q2 2018
New equipment market development in Q2 2018 GLOBAL NEW EQUIPMENT MARKET GREW SLIGHTLY IN UNITS ORDERED North American market EMEA market Asia-Pacific market + + + <5% of ~20% of >2/3 of global global global market market market (in units) (in units) (in units) ▪ Market continued to grow ▪ Central an
Slide 8: Service market development in Q2 2018
Service market development in Q2 2018 GROWTH CONTINUED ACROSS REGIONS North American market EMEA market Asia-Pacific market Maintenance Modernization Maintenance Modernization Maintenance Modernization + + + + +++ +++ <10% of ~25% of <50% of ~1/3 of ~1/3 of ~15% of global market global market global
Slide 9: Chinese property market
Chinese property market GOVERNMENT CONTINUES TO HAVE A RESTRICTIVE POLICY Housing inventories Housing sales and prices E&E market ▪ Housing inventories at a relatively healthy ▪ Government’s restrictive measures have ▪ Growth in real estate investment mainly level cooled down the housing market driv
Slide 10: Q2 Financials
Q2 Financials
Slide 11: Orders received
Orders received ORDERS RECEIVED GREW IN ALL REGIONS AND BUSINESSES IN Q2 2018 ▪ In Q2, the margin of orders was stable MEUR compared to the comparison period 8 000 6.4% 7 000 65 6 000 2,119 5 000 2,056 Q2 growth 4 000 +3.0% + Growth in all 3 000 2 056 2 119 regions and 2 000 businesses 1 000 0 2010
Slide 12: Sales
Sales SALES GROWTH WAS DRIVEN BY SERVICES IN Q2 2018 At comparable FX: MEUR +3.2% 9 000 +3.2% 8 000 +6.3% +1.4% 7 000 79 6 000 2,337 2,331 Q2 growth 5 000 -0.3% 4 000 2 337 2 331 ▪ EMEA: 6.6% 3 000 ▪ Americas: 6.1% 2 000 ▪ Asia-Pacific: -1.3% 1 000 0 New equipment Maintenance Modernization 2010 2011
Slide 13: EBIT
EBIT PROFITABILITY CONTINUED TO BE BURDENED BY SEVERAL HEADWINDS IN Q2 2018 ADJUSTED EBIT*, MEUR AND ADJUSTED EBIT MARGIN ▪ Restructuring costs related to Q2 the Accelerate program were 1,400 14.4% margin 15 EUR 19.9 million in Q2 2018 12.9% 1,200 336 1,000 10 11 300 800 Q2 growth 600 -10.5% − Highe
Slide 14: Cash flow
Cash flow CASH GENERATION WAS STRONG IN Q2 CASH FLOW FROM OPERATIONS* 366 MEUR 1,600 320 56 1,400 54 44 1,200 1,000 800 Working capital developed positively during Q2 600 320 400 366 200 0 Cash flow Change in Change in Change in Cash flow 2010 2011 2012 2013 2014 2015 2016 2017 H1/2018 from EBITDA w
Slide 15: Market and business outlook for 2018
Market and business outlook for 2018
Slide 16: Market outlook for 2018
Market outlook for 2018 NEW EQUIPMENT MARKETS ▪ Asia-Pacific: The market in China is expected to be stable or to decline slightly in units ordered and competition to remain intense. In the rest of Asia-Pacific, the market is expected to grow ▪ Europe, Middle East and Africa: The market is expected t
Slide 17: Business outlook for 2018
Business outlook for 2018 Sales Boosting our performance Burdening our result ▪ In 2018, KONE’s sales is estimated to grow by 3–7% at comparable exchange rates as compared to the Solid order book Price pressure in earlier restated 2017 sales orders received in China Services business growth Higher r
Slide 18: Summary
Summary ▪ Clearly improved growth momentum in orders received ▪ Continued actions to improve margins ▪ Continuous good growth in services through improved differentiation ▪ Increasingly loyal customers and motivated employees
Slide 19: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 20: APPENDIX
APPENDIX
Slide 21: Q2 2018 Sales split
Q2 2018 Sales split BY BUSINESS BY AREA 14% (14%) 19% (19%) 40% (42%) 55% 32% (56%) (31%) 41% (39%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas Q2/2017 figures in brackets. Figures in charts are rounded and at historical exchange rates. 21 July
Slide 22: KONE in China
KONE in China 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 KONE Market 45 >25% >25% <35% <35% 40 >35% The China market was 35 rather stable in units 30 KONE’s orders grew slightly units and clearly 25
Slide 23: Currencies
Currencies SALES BY CURRENCY 1–12/2017 CURRENCY IMPACT MAIN CURRENCIES USD (MEUR) Q2/2018 1-6/2018 1-6/2018 2017 Jun 30, average average 2018 spot Others Sales -79 -206 EUR / RMB 7.7119 7.6299 7.7170 EUR / USD 1.2060 1.1307 1.1658 EBIT -11 -32 RMB EUR / GBP 0.8811 0.8742 0.8861 Orders -65 -191 recei
Slide 24: Q2 2018 Balance sheet – assets employed
Q2 2018 Balance sheet – assets employed MEUR Jun 30, 2018 Jun 30, 2017 Dec 31, 2017 Assets employed Goodwill 1,324.1 1,333.2 1,325.5 Other intangible assets 266.7 276.8 274.5 Tangible assets 378.0 365.8 377.0 Investments 134.7 145.4 134.3 Net working capital -725.7 -861.7 -772.6 Assets employed tota
Slide 25: Q2 2018 Net working capital
Q2 2018 Net working capital MEUR Jun 30, 2018 Jun 30, 2017 Dec 31, 2017 Net working capital Inventories 634.5 611.8 626.8 Advance payments received and deferred revenue -1,465.1 -1,376.8 -1,404.6 Accounts receivable 1,953.3 1,866.1 1,910.8 Other non-interest-bearing assets 690.6 531.8 472.0 Other no
Slide 26: Q2 2018 Consolidated cash flow
Q2 2018 Consolidated cash flow MEUR 1-6/2018 1-6/2017 1-12/2017 Operating income 492.0 581.6 1,192.3 Change in working capital before financing items and taxes -5.2 -12.5 -43.3 Depreciation and amortization 58.5 56.6 114.3 Cash flow from operations before financing items and taxes 545.2 625.7 1,263.