Slide 1: KONE Results presentation 2020
KONE Results presentation 2020 JANUARY 28, 2021 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q4 2020 Highlights
Q4 2020 Highlights • Growing orders and earnings in a challenging environment • Strong development in China, mixed elsewhere • Entering a new strategic phase: ‘Sustainable success with customers’ • Dividend proposal: EUR 1.75 dividend and EUR 0.50 extraordinary dividend per class B share
Slide 3: Q4 2020 Key figures
Q4 2020 Key figures SOLID END TO THE YEAR Comparable Q4 2020 Q4 2019 Change change Orders received MEUR 2,068.7 1,988.3 4.0% 7.9% Order book MEUR 7,728.8 8,051.5 -4.0% 0.7% Sales MEUR 2,621.2 2,684.6 -2.4% 0.8% Operating income (EBIT) MEUR 367.1 356.4 3.0% Operating income margin (EBIT %) % 14.0 13.
Slide 4: FY 2020 Key figures
FY 2020 Key figures GROWING EARNINGS AND EXCEPTIONALLY STRONG CASH FLOW Comparable FY 2020 FY 2019 Change change Orders received MEUR 8,185.1 8,399.8 -2.6% -0.6% Order book MEUR 7,728.8 8,051.5 -4.0% 0.7% Sales MEUR 9,938.5 9,981.8 -0.4% 1.4% Operating income (EBIT) MEUR 1,212.9 1,192.5 1.7% Operati
Slide 5: Business highlights for 2020
Business highlights for 2020 ▪ Resilient operations despite COVID 19 restrictions New equipment orders +4.0% units 200,000 ~173k ~180k ▪ Connected services and solutions delivering value for 150,000 our customers and improving differentiation 100,000 – Adaptability and enhanced user experience throu
Slide 6: Dividend proposal: EUR 2.25 per class B share including extraordinary dividend
Dividend proposal: EUR 2.25 per class B share including extraordinary dividend Split-adjusted dividend per class B share ▪ Dividend payout in EUR, 2006-2020 2020: 97% of earnings per share excluding the extraordinary 0.50 dividend ▪ Effective dividend yield, 2020: CAGR: 15% ▪ 2.6% excluding the 0.65
Slide 7: Changes in the Executive Board
Changes in the Executive Board Johannes Frände ▪ Thomas Hinnerskov appointed EVP, South Europe, Middle East and Africa Johannes Frände appointed EVP, General region (previously EVP, Central and Counsel North Europe) ▪ Axel Berkling appointed EVP, Central and North Europe (previously EVP, Asia Pacifi
Slide 8: Market development
Market development
Slide 9: Elevator usage still clearly below normal levels
Elevator usage still clearly below normal levels Monthly average number of starts per elevator, data from connected units Indexed, indicative as data from a limited number of units 1.2 Dec 20 1.0 vs Dec 19 Singapore -13% 0.8 Germany -22% US -30% 0.6 Italy -35% UK -41% 0.4 0.2 0.0 1/2019 3/2019 5/201
Slide 10: New equipment market development in Q4 2020
New equipment market development in Q4 2020 GROWTH CONTINUED IN CHINA, UNCERTAINTY IMPACTING DEMAND IN OTHER REGIONS 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 declined signi
Slide 11: Service market development in Q4 2020
Service market development in Q4 2020 GLOBAL MAINTENANCE MARKET WAS RESILIENT, MIXED DEVELOPMENT IN MODERNIZATION North American market EMEA market Asia-Pacific market Maintenance Modernization Maintenance Modernization Maintenance Modernization + +++* + - ++ Stable <10% of >25% of ~40% of >1/3 of >
Slide 12: Chinese property market in Q4/2020
Chinese property market in Q4/2020 ▪ In units ordered, the new equipment market grew slightly y-o-y ▪ Pricing environment continues to be characterized by intense competition ▪ Continued strong activity in the real estate sector in Q4 ▪ Financing environment tightening for the developers ▪ High leve
Slide 13: Q4 and 2020 Financials
Q4 and 2020 Financials
Slide 14: Mixed development amidst the COVID pandemic
Mixed development amidst the COVID 19 pandemic STRONG DEVELOPMENT IN CHINA, RESTRICTIONS AND UNCERTAINTY STILL IMPACTED OTHER MARKETS IN Q4 KONE’s Q4 orders received growth at comparable FX rates KONE’s Q4 sales growth at comparable FX rates New equipment Modernization Maintenance New equipment Mode
Slide 15: Orders received
Orders received ORDERS RECEIVED GREW IN ALL AREAS IN Q4 2020 growth ▪ In Q4, the margin of MEUR -2.6% orders received was Q4 growth stable 10,000 4.0% 9,000 8,400 7,959 8,185 8,000 7,621 7,554 7,797 6,813 1,988 2,069 7.9% 7,000 6,151 2,069 6,000 5,496 71 1,988 151 5,000 4,465 4,000 3,809 3,000 2,000
Slide 16: Sales
Sales SALES GROWTH WAS DRIVEN BY HIGH ACTIVITY IN CHINA OFFSETTING THE DECLINE IN ACTIVITY IN MANY OTHER AREAS 2020 growth Growth at comp. FX -0.4% 0.8% MEUR Q4 growth 11,000 -2.4% 9,982 9,939 1.6% -4.7% 10,000 9,071 2.3% 9,000 8,647 8,784 8,797 2,685 2,621 19 19 8,000 7,334 2,685 22 6,933 7,000 6,2
Slide 17: Adjusted EBIT
Adjusted EBIT GOOD DEVELOPMENT IN A TOUGH ENVIRONMENT IN Q4 Adjusted EBIT* and adjusted EBIT margin Q4 adj. ▪ In Q4, restructuring MEUR; % EBIT margin costs related to the 14.5% Accelerate program: 1,600 13.7% EUR 13.5 million 1,400 1,293 1,241 1,237 1,251 1,206 1,200 1,112 -8 381 1,036 953 367 381
Slide 18: Cash flow
Cash flow Q4 CASH FLOW DECLINED SLIGHTLY FROM COMPARISON PERIOD, FULL YEAR CASH FLOW EXCEPTIONALLY STRONG Cash flow from operations* ▪ Net working capital MEUR contributed positively to the cash flow in 2,000 1,908 2020 1,550 368 ▪ Improvement was 1,474 1,509 1,500 driven by a positive 1,346 1,213 1
Slide 19: Market and business outlook for 2021
Market and business outlook for 2021
Slide 20: Market outlook for 2021
Market outlook for 2021 New equipment markets ▪ The Chinese market is expected to be stable or to grow ▪ In the rest of the world, the market is expected to be down y-o-y in the first quarter due to a high comparison point and then to start recovering Maintenance markets ▪ The maintenance markets ar
Slide 21: Business outlook for 2021
Business outlook for 2021 Sales Supporting our performance Burdening our result ▪ KONE estimates that in 2021, its sales growth will be in the range of 0% to 6% at comparable Solid order book and Impacts of COVID-19 exchange rates as compared to 2020 maintenance base Raw materials and Improved margi
Slide 22: Entering the next phase in KONE's strategy
Entering the next phase in KONE’s strategy
Slide 23: What did we accomplish during 'Winning with customers' strategy phase?
What did haswe changed accomplish duringduring ’Winning this strategy period? with customers’ strategy phase? 1 Customer centricity ▪ Mindset MINDSET ▪ Ways of working Customer-centricity New capabilities 2 3 OFFERING WAYS OF WORKING New services and solutions Smarter and more efficient delivering v
Slide 24: Good development in our strategic targets over the strategy period
Good development in our strategic targets over the strategy period Positive development in Net Promotor Score Very positive development in Employee engagement Strong development in both new equipment and services EBIT-% burdened by several headwinds, positive development in 2020 Leader in eco-effici
Slide 25: Sustainable success with customers
Sustainable success with customers KONE STRATEGY 2021–2024
Slide 26: January 28, 2021 Results presentation for 2020 | © KONE Corporation
26 January 28, 2021 Results presentation for 2020 | © KONE Corporation
Slide 27: Where to win, ways to win
WHERE TO WIN WAYS TO WIN Where we grow faster than market How we develop KONE Way and our capabilities and how we differentiate to succeed in a dynamic environment Core products and services Empowered people New solutions for customer value Marketing and sales renewal Smart and sustainable cities Le
Slide 28: Summary
Summary ▪ Strong performance overall in an exceptional environment ▪ Entering the next phase of our strategy with optimism and from a position of strength
Slide 29: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 30: Appendix
Appendix
Slide 31: 1-12/2020 Sales split
1-12/2020 Sales split By business By area 14% 20% (15%) (21%) 41% (39%) 54% 32% (53%) (32%) 39% (41%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 1-12/2019 figures in brackets. Figures in charts are rounded and at historical exchange rates. 31
Slide 32: 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 45 Market <30% 40 <35% ~30% <40% >35% The market grew slightly in units 35 30 KONE’s new equipment orders grew significantly in un
Slide 33: Currencies
Currencies Sales by currencies 1-12/2020 Currency impact Main currencies USD 1-12/2020 1-12/2019 Dec 31, MEUR Q4/2020 1-12/2020 average average 2020 spot Other EUR / 7.8916 7.7353 8.0225 Sales -84.9 -184.1 RMB EUR / 1.1452 1.1214 1.2271 USD EBIT -8.0 -18.4 EUR / 0.8864 0.8773 0.8990 GBP RMB Orders -
Slide 34: Balance sheet – assets employed
Balance sheet – assets employed MEUR Dec 31, 2020 Dec 31, 2019 Assets employed Goodwill 1,327.0 1,366.5 Other intangible assets 223.2 248.2 Tangible assets 710.0 742.2 Investments 143.2 139.2 Net working capital -1,160.1 -856.0 Assets employed total 1,243.4 1,640.0 Financed by Equity 3,197.3 3,192.9
Slide 35: Net working capital
Net working capital MEUR Dec 31, 2020 Dec 31, 2019 Net working capital Inventories 597.0 648.6 Advance payments received and deferred revenue -1,766.8 -1,753.8 Accounts receivable 2,178.6 2,232.3 Other non-interest-bearing assets 720.9 669.6 Other non-interest-bearing liabilities -1,996.2 -1,848.0 P
Slide 36: Consolidated statement of cash flows
Consolidated statement of cash flows MEUR 1-12/2020 1-12/2019 Operating income 1,212.9 1,192.5 Change in working capital before financing items and taxes 455.6 115.7 Depreciation and amortization 239.0 241.5 Cash flow from operations before financing items and 1,907.5 1,549.6 taxes Financing items a