Slide 1: KONE H1 2022
KONE H1 2022 JULY 20, 2022 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q2 2022 Highlights
Q2 2022 Highlights ▪ COVID-19 lockdowns in China significantly disrupted deliveries, order development robust ▪ Another excellent quarter in Services, growth driven by both volume and pricing ▪ Profitability improvement actions progressing well and remain a top priority
Slide 3: Q2 2022 Key figures
Q2 2022 Key figures SECOND QUARTER STRONGLY IMPACTED BY COVID-19 LOCKDOWNS IN CHINA Comparable Q2/2022 Q2/2021 Change change Orders received MEUR 2,609.0 2,410.7 8.2% 0.6% Order book MEUR 10,000.4 8,272.5 20.9% 12.2% Sales MEUR 2,555.1 2,810.8 -9.1% -15.2% Operating income (EBIT) MEUR 189.0 367.1 -4
Slide 4: 1–6 2022 Key figures
1–6 2022 Key figures GOOD GROWTH IN ORDERS, RESULT BURDENED BY SUPPLY CHAIN CONSTRAINTS AND CHINA LOCKDOWNS Comparable 1–6/2022 1–6/2021 Change change Orders received MEUR 5,031.7 4,486.6 12.1% 5.2% Order book MEUR 10,000.4 8,272.5 20.9% 12.2% Sales MEUR 4,997.0 5,137.3 -2.7% -8.5% Operating income
Slide 5: High employee engagement and continued improvement in customer loyalty
High employee engagement and continued improvement in customer loyalty Employee engagement above Net promoter score improved in both pre-pandemic levels new equipment and services KONE Employee engagement index Global average norm 2013 2014 2015 2016- 2018 2020 2021 2022* 2013 2014 2015 2016 2017 20
Slide 6: Market development
Market development
Slide 7: New equipment market development in Q2 2022
New equipment market development in Q2 2022 MARKET ACTIVITY IN CHINA DECLINED SIGNIFICANTLY, FAVORABLE DEVELOPMENT IN OTHER REGIONS North American market EMEA market Asia-Pacific market ++ + --- <5% of ~15% of >75% of global global global market market market (in units) (in units) (in units) ▪ Clear
Slide 8: Service market development in Q2 2022
Service market development in Q2 2022 BROAD-BASED GROWTH IN BOTH MAINTENANCE AND MODERNIZATION North American market EMEA market Asia-Pacific market Maintenance Modernization Maintenance Modernization Maintenance Modernization + +++ + ++ ++ +++ <10% of ~30% of ~40% of >40% of ~50% of ~25% of global
Slide 9: Elevator usage at pre-pandemic level
Elevator usage at pre-pandemic level MONTHLY AVERAGE NUMBER OF STARTS PER ELEVATOR, DATA FROM CONNECTED UNITS By country By segment Indexed, indicative Indexed, indicative 1.2 1.6 1.4 1.0 1.2 0.8 1.0 0.6 Jun 22 0.8 Jun 22 vs. Dec vs. Dec 21 21 0.6 0.4 Germany +16% Hotel +44% UK +17% 0.4 Medical 0% S
Slide 10: Market activity and KONE’s operations in China
Market activity and KONE’s operations in China Property markets impacted by liquidity constraints and COVID-19 lockdowns ▪ New equipment market declined >20% in Q2; pricing environment characterized by intense competition ▪ Lockdowns significantly disrupted business operations and raised market unce
Slide 11: Q2 Financials
Q2 Financials
Slide 12: Orders received
Orders received Q2 ORDERS ROBUST CONSIDERING CHINESE PROPERTY MARKET DEVELOPMENT MEUR MEUR 10,000 +8.2% 8,853 2,609 9,000 8,400 8,185 8,000 7,797 7,554 182 7,000 16 +12.1% 2,411 6,000 5,032 5,000 4,487 EMEA: ++ APAC: - - 4,000 Americas: +++ 3,000 +0.6% 2,000 Q2 orders received margin declined 1,000
Slide 13: Sales
Sales Q2 SALES SIGNIFICANTLY IMPACTED BY COVID-19 LOCKDOWNS IN CHINA MEUR MEUR 11,000 -9.1% 10,514 9,982 9,939 2,811 10,000 9,071 9,000 8,797 8,000 2,555 523 7,000 -2.7% 201 +7.6% -0.5% 6,000 5,137 4,997 68 2 5,000 -30.1% 4,000 EMEA -1.4% 3,000 APAC -31.5% 2,000 Americas +2.0% 1,000 -15.2% at comp.
Slide 14: Adjusted EBIT and profitability
Adjusted EBIT and profitability PROFITABILITY BURDENED BY SALES DECLINE AND CONTINUED COST HEADWINDS MEUR, % MEUR, % 13.7% + Good development in services 1,600 - Sales impact of COVID-19 lockdowns in 12.4% 12.6% 12.5% China 12.3% 12.1% 13.3% 1,400 1,310 1,206 1,237 1,251 374 1,200 1,112 1,000 8.1% 8
Slide 15: We are taking strong actions to drive improved financial performance
We are taking strong actions to drive improved financial performance Driving pricing across all regions Lowering product Improving margins of and businesses, and cost through existing order book implementing more sourcing and offering with productivity dynamic contract developments models Accelerati
Slide 16: Cash flow from operations*
Cash flow from operations* CASH FLOW DECLINED FROM AN EXCEPTIONALLY HIGH LEVEL DUE TO DECLINE IN OPERATING INCOME AND INCREASED NET WORKING CAPITAL MEUR MEUR + Growth in the maintenance business 2,000 1,908 − Sales impact of COVID-19 1,829 513 lockdowns in China − Continued cost headwinds 1,600 1,55
Slide 17: Market and business outlook
Market and business outlook
Slide 18: Market outlook for 2022 (updated)
Market outlook for 2022 (updated) New equipment markets ▪ The Chinese new equipment market is expected to decline significantly due to the tightened liquidity situation in the property markets and COVID-19 restrictions ▪ In the rest of the world, activity in the new equipment markets is expected to
Slide 19: Business outlook for 2022 (revised)
Business outlook for 2022 (revised) Sales Supporting our performance Burdening our result ▪ KONE estimates that in 2022, its sales growth will be in the range of -1% to +3% at comparable Positive outlook for Approx. MEUR 200 services and solid order headwind in 2022 from exchange rates as compared t
Slide 20: Summary
Summary ▪ Continued strong development in Services ▪ Strong focus on delivery execution and securing continued progress in actions to improve profitability ▪ High employee engagement and customer loyalty provides a solid foundation for capturing market opportunities
Slide 21: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 22: Appendix
Appendix
Slide 23: KONE in China
KONE in China New equipment market China’s share of KONE’s orders received and sales New equipment orders received in units vs. market development Monetary value 50 40 KONE’s new equipment orders >35% <30% declined clearly in units and ~35% >40% ~40% 30 declined significantly in monetary value. <20%
Slide 24: 4–6/2022 Sales split
4–6/2022 Sales split By business By region 15% 21% (13%) (17%) 38% 47% (46%) (57%) 38% (30%) 40% (37%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 4–6/2021 figures in brackets. Figures in charts are rounded and at historical exchange rates. 24
Slide 25: Currencies
Currencies Sales by currencies 1–6/2022 Currency impact* Main currencies Q2/2022 2021 Jun 30, EUR MEUR Q2 Full year average average 2022 spot Other EUR / 7.0636 7.6388 6.9624 Sales 200.9 526.8 CNY EUR / 1.0917 1.1851 1.0387 USD EBIT 22.3 60.3 EUR / 0.8431 0.8615 0.8582 GBP Orders 182.4 464.8 EUR / U
Slide 26: Balance sheet – assets employed
Balance sheet – assets employed MEUR Jun 30, 2022 Jun 30, 2021 Dec 31, 2021 Assets employed Goodwill 1,437.8 1,352.9 1,405.2 Other intangible assets 216.7 217.4 216.9 Tangible assets 735.8 720.1 736.7 Investments 133.1 139.7 144.6 Net working capital -1,308.1 -1,311.0 -1,468.2 Assets employed total
Slide 27: Net working capital
Net working capital MEUR Jun 30, 2022 Jun 30, 2021 Dec 31, 2021 Net working capital Inventories 873.4 622.0 717.8 Advance payments received and deferred revenue -2,184.3 -1,807.4 -1,957.0 Accounts receivable 2,541.1 2,283.1 2,421.4 Deferred assets and income tax receivables 1,040.6 805.2 898.1 Accru