Slide 1: KONE Result presentation 2022
KONE Result presentation 2022 JANUARY 26, 2023 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q4 2022 Highlights
Q4 2022 Highlights ▪ Solid sales development in the prevailing market conditions ▪ Strong growth in services continued ▪ Weakness in China markets impacted orders and cash flow ▪ Successful price increases drove order margin recovery ▪ Dividend proposal EUR 1.75 per B class share
Slide 3: Q4 2022 Key figures
Q4 2022 Key figures Q4 DEVELOPED LARGELY IN LINE WITH EXPECTATIONS Comparable Q4/2022 Q4/2021 Change change Orders received MEUR 1,944.2 2,155.1 -9.8% -11.2% Order book MEUR 9,026.1 8,564.0 5.4% 5.4% Sales MEUR 2,911.5 2,766.8 5.2% 2.9% Operating income (EBIT) MEUR 367.1 351.9 4.3% Operating income
Slide 4: 1–12/2022 Key figures
1–12/2022 Key figures STRONG GROWTH IN SERVICES, NEW EQUIPMENT BUSINESS IMPACTED BY CONSIDERABLE CHANGES IN MARKET CONDITIONS Comparable 1–12/2022 1–12/2021 Change change Orders received MEUR 9,131.3 8,852.8 3.1% -2.5% Order book MEUR 9,026.1 8,564.0 5.4% 5.4% Sales MEUR 10,906.7 10,514.1 3.7% -1.8%
Slide 5: 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 ▪ Dividend payout EUR, 2006–2022 in 2022: 117% of earnings per share ▪ Effective dividend 0.50 yield* in 2022: 3.6% 0.35 CAGR: 13% 0.65 0.75 1.65 1.70 1.75 1.75 1.75 1.55 1.65 1.40 1.20 0.33 1.00 0.88 0.70 0.45 D
Slide 6: Good progress in business priorities for 2022: pricing, productivity and service growth
Good progress in business priorities for 2022: pricing, productivity and service growth Maintenance base +5.4% millions of units 2.0 ▪ Successful price increases resulted in the <1.5 >1.5 1.5 margin of orders received improving compared 1.0 to the end of 2021 0.5 ▪ Offering development drove good de
Slide 7: Good development towards our strategic targets
Good development towards our STRATEGIC TARGETS strategic targets Great place to work Employee engagement continues clearly above the global norm Most loyal customers Sustained upward trend in customer loyalty Faster than market Strong growth in services, growth new equipment development in line with
Slide 8: Planned operating model renewal strengthens competitiveness and customer focus
Planned operating model renewal strengthens competitiveness and customer focus What Why Targeted outcome Better capture Simplify our Respond faster to regional growth operating model local customer opportunities needs and market Strengthen local conditions Improve accountability competitiveness and
Slide 9: Market development
Market development
Slide 10: New equipment market development in Q4 2022
New equipment market development in Q4 2022 MARKET CONDITIONS REMAINED WEAK IN CHINA, ECONOMIC ENVIRONMENT IMPACTED SENTIMENT IN MORE MATURE MARKETS North America EMEA China Rest of Asia-Pacific -- -- --- - <5% of ~15% of >65% of ~10% of global global global global market market market market (in un
Slide 11: Service market development in Q4 2022
Service market development in Q4 2022 CONTINUED BROAD-BASED GROWTH IN MAINTENANCE AND MODERNIZATION North America EMEA China Rest of Asia-Pacific Maintenance Modernization Maintenance Modernization Maintenance Modernization Maintenance Modernization + + + + ++ + ++ Stable <10% of ~30% of ~40% of >40
Slide 12: Chinese property market in Q4 2022
Chinese property market in Q4 2022 ▪ In units ordered, the new equipment market declined significantly y-o-y ▪ The pricing environment continues to be characterized by intense competition ▪ Economic environment impacted by COVID-19 restrictions and rising infections ▪ Financing for developers remain
Slide 13: Q4 Financials
Q4 Financials
Slide 14: Orders received
Orders received ORDERS IMPACTED BY WIDESPREAD DIFFICULTIES IN CHINA’S PROPERTY SECTOR; CONTINUED IMPROVEMENT IN MARGIN OF ORDERS RECEIVED MEUR MEUR +3.1% 10,000 -9.8% 9,131 2,155 9,000 8,853 8,400 8,185 8,000 7,797 7,554 244 7,000 34 1,944 6,000 5,000 EMEA: - Asia-Pacific: - - - 4,000 Americas: - -
Slide 15: Sales
Sales Q4 SALES DRIVEN BY STRONG GROWTH IN BOTH SERVICES AND THE AMERICAS REGION MEUR +3.7% MEUR 10,907 +5.2% 11,000 10,514 9,982 9,939 2,911 10,000 9,071 61 9,000 8,797 +11.4% 8,000 +7.6% 47 7,000 -2.4% 2,767 6,000 72 36 5,000 4,000 EMEA +4.8% 3,000 Asia-Pacific -3.9% 2,000 Americas +14.1% 1,000 +2.
Slide 16: Adjusted EBIT and profitability
Adjusted EBIT and profitability FULL-YEAR PROFITABILITY BURDENED BY COST HEADWINDS AND THE DECLINE IN NEW EQUIPMENT DELIVERIES, IMPROVEMENT IN Q4 MEUR, % MEUR, % 13.7% 1,600 12.3% 12.4% 12.6% 12.5% 13.0% 12.5% 1,400 1,310 1,251 1,077 + Services sales growth 1,206 1,237 1,200 9.9% 1,112 1,000 365 359
Slide 17: Cash flow from operations
Cash flow from operations* 2022 CASH FLOW IMPACTED BY THE DECLINE IN OPERATING INCOME AND INCREASED WORKING CAPITAL MEUR MEUR 2,000 1,908 1,829 525 15 − Timing of accounts payable 1,600 1,550 − Increased accounts receivable due to tight liquidity in China 1,263 1,200 1,150 511 755 800 4 33 400 2017
Slide 18: Market and business outlook
Market and business outlook
Slide 19: Market outlook for 2023
Market outlook for 2023 New equipment markets ▪ The Chinese new equipment market is expected to decline by somewhat over 10%. Markets are expected to start to recover towards the end of the first half as a result of the broad stimulus measures that have already been announced ▪ In the rest of the wo
Slide 20: Business outlook for 2023
Business outlook for 2023 Sales Supporting our performance Burdening our result ▪ KONE expects its sales at comparable exchange rates for the year 2023 to be at a similar level as in Positive outlook for Slower order book services rotation the previous year Adjusted EBIT Strong order book and Antici
Slide 21: Summary
Summary ▪ Growth opportunities in services and positive results on profitability actions ▪ Competitive offering and customer focus driving long-term growth ▪ Further improve competitiveness with planned operating model renewal
Slide 22: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 23: Appendix
Appendix
Slide 24: 1–12/2022 Sales split
1–12/2022 Sales split By business By region 15% 21% (14%) (18%) 41% 50% (44%) (54%) 36% (33%) 39% (38%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 1–12/2021 figures in brackets. Figures in charts are rounded and at historical exchange rates. 2
Slide 25: 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 KONE’s new equipment orders KONE 40 declined significantly in units Market >35% ~35% ~35% ~30% and in monetary value. ~40% 30 <20% 20 >
Slide 26: Currencies
Currencies Sales by currencies 1–12/2022 Currency impact* Main currencies EUR Q4/2022 2021 Dec 31, Other MEUR Q4 Full year average average 2022 spot EUR / 7.0836 7.6388 7.3582 Sales 61.2 592.6 CNY EUR / 1.0563 1.1851 1.0666 USD EBIT 6.1 64.8 EUR / 0.8537 0.8615 0.8869 GBP USD Orders CNY 33.5 515.1 E
Slide 27: Balance sheet – assets employed
Balance sheet – assets employed MEUR Dec 31, 2022 Dec 31, 2021 Assets employed Goodwill 1,414.7 1,405.2 Other intangible assets 208.2 216.9 Tangible assets 716.8 736.7 Investments 121.7 144.6 Net working capital -903.9 -1,468.2 Assets employed total 1,557.5 1,035.1 Financed by Equity 2,866.5 3,199.2
Slide 28: Net working capital
Net working capital MEUR Dec 31, 2022 Dec 31, 2021 Net working capital Inventories 843.6 717.8 Advance payments received and deferred revenue -1,973.8 -1,957.0 Accounts receivable 2,668.1 2,421.4 Deferred assets and income tax receivables 826.9 898.1 Accruals and income tax payables -2,181.2 -2,268.