Slide 1: KONE Q1 2019
KONE Q1 2019 APRIL 25, 2019 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q1 2019 Highlights
Q1 2019 Highlights ▪ Strong growth in orders received ▪ Good development in maintenance ▪ Strong cash flow and growth in adjusted EBIT ▪ Good development towards strategic targets Photo: © Raphaël de Bengy
Slide 3: Q1 2019 Key figures
Q1 2019 Key figures STRONG QUARTER IN ORDERS RECEIVED AND CASH FLOW, ADJUSTED EBIT GREW Comparable Q1/2019 Q1/2018 Change change Orders received MEUR 2,094.1 1,908.7 9.7% 8.0% Order book MEUR 8,454.7 7,786.6 8.6% 4.6% Sales MEUR 2,198.8 2,008.0 9.5% 7.6% Operating income (EBIT) MEUR 215.4 211.5 1.8%
Slide 4: Q1 2019 Business highlights
Q1 2019 Business highlights ▪ Faster than market growth a sign of improved differentiation – New competence hubs and improved offering in the infrastructure segment – New services strengthening our competitiveness in all businesses ▪ Accelerate program on track – Customer solutions engineering organ
Slide 5: Good progress towards our strategic targets
Good progress towards our strategic targets Strong development in both new equipment and services Leader in eco-efficiency, continued reduction in CO2/sales
Slide 6: The new equipment market grew slightly in 2018
The new equipment market grew slightly in 2018 New equipment market in 2018 ~0.9 million units The new equipment market* in 2018 6% ▪ The new equipment market grew slightly in 2018, 3% 3% especially in monetary value. The growth was driven by the Asia-Pacific region and North America 19% 63% KONE’s
Slide 7: The service markets continued to grow in 2018
The service markets continued to grow in 2018 Equipment base ~16 million units The service markets 8% 3% ▪ The global maintenance market continued to grow 8% with strongest growth in China 36% ▪ Also the modernization market continued to grow driven by North America, Europe and China 39% 7% KONE’s m
Slide 8: KONE’s market positions in 2018
KONE’s market positions in 2018 Market position, North Rest of Asia- KONE’s estimate EMEA America China Pacific New equipment Maintenance 8 April 25, 2019 Interim Report January-March 2019 | © KONE Corporation
Slide 9: Good progress in our sustainability goals in 2018
Good progress in our sustainability goals in 2018 We exceeded our target of a 3% annual reduction relative to net sales* Relative operational carbon footprint trend 2016 2017 2018 0 -0.2% 1 2 3 -2.6% Overall operations 4 (scope 1, 2, 3) Read more in our -4.0% -4.2% -4.0% Sustainability 5 Scope 1, 2
Slide 10: Market development
Market development
Slide 11: New equipment market development in Q1 2019
New equipment market development in Q1 2019 NEW EQUIPMENT MARKET GREW SLIGHTLY North American market EMEA market Asia-Pacific market Stable + + <5% of ~20% of >2/3 of global global global market market market (in units) (in units) (in units) ▪ Market was stable on a high ▪ Market grew slightly with
Slide 12: Service market development in Q1 2019
Service market development in Q1 2019 CONTINUED POSITIVE DEVELOPMENT North American market EMEA market Asia-Pacific market Maintenance Modernization Maintenance Modernization Maintenance Modernization + + + + ++ +++ <10% of >25% of ~40% of >1/3 of >40% of >15% of global market global market global m
Slide 13: Chinese property market
Chinese property market GOVERNMENT CONTINUES TO HAVE A RESTRICTIVE POLICY Housing inventories Housing sales E&E market ▪ Housing inventories edged up in the lower ▪ There continue to be a lot of restrictions in ▪ Construction activity increasing tier cities due to cooling sales the residential marke
Slide 14: Q1 Financials
Q1 Financials
Slide 15: Orders received
Orders received GROWTH IN ORDERS RECEIVED DRIVEN BY CHINA AND EMEA ▪ In Q1, the margin of MEUR orders received was stable 8,000 7,000 8.0% 2,094 30 6,000 5,000 155 4,000 Q1 growth 1,909 9.7% 3,000 + Growth 2,000 in all businesses 1,000 1,909 2,094 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 1-3/2
Slide 16: Sales
Sales CLEAR GROWTH IN ALL BUSINESSES, STRONG NEW EQUIPMENT DELIVERIES IN CHINA Growth at comp. FX MEUR 7.6% 10,000 9,000 8.3% 2,199 8,000 36 5.4% 7,000 9.0% 6,000 5,000 Q1 growth 2,008 4,000 9.5% 3,000 EMEA 1.7% 2,000 APAC 17.4% Americas 4.6% 1,000 2,008 2,199 0 Modernization Maintenance New equipme
Slide 17: Adjusted EBIT
Adjusted EBIT ADJUSTED EBIT GREW Adjusted EBIT* and adjusted EBIT margin ▪ Restructuring costs MEUR; % related to the 10.9% Accelerate program: 1,400 10.4% 11 EUR 13 million 10 1,200 9 1,000 8 7 228 800 2 6 5 5 218 600 Q1 growth 4 400 4.6% 3 2 200 218 228 1 0 0 Profitability Q1 2018 IFRS 16 Q1 2019
Slide 18: Cash flow
Cash flow STRONG CASH FLOW IN Q1 2019 Cash flow from operations* ▪ Net working capital MEUR contributed positively driven by strong 1,600 development in 1,400 advances received and progress payments 1,200 ▪ Adoption of IFRS 16 1,000 had a positive impact 800 of EUR 28 million in Q1 2019 600 400 200
Slide 19: IFRS 16
IFRS 16 IMPACT IN Q1 Balance sheet Income statement Cash flow statement ▪ EUR 358 million increase in the ▪ EUR 2 million positive impact on ▪ EUR 28 million positive impact on opening interest-bearing debt Q1 EBIT cash flow from operations (before financing items and taxes) ▪ EUR 5 million increase
Slide 20: Market and business outlook for 2019
Market and business outlook for 2019
Slide 21: Market outlook for 2019
Market outlook for 2019 New equipment markets ▪ The new equipment market is expected to be relatively stable overall. ▪ In China the market is expected to be relatively stable in units ordered, while in the rest of the Asia-Pacific, the market is expected to grow slightly. ▪ The new equipment market
Slide 22: Business outlook for 2019 (specified)
Business outlook for 2019 (specified) Sales Boosting our performance Burdening our result ▪ In 2019, KONE’s sales is estimated to grow by 3-7% (previously 2-7%) at comparable exchange Solid order book Raw material prices and rates as compared to 2018 trade tariffs Services business (MEUR <50) growth
Slide 23: Summary
Summary ▪ With the Q1 results we are on track to meet the full year targets ▪ We continue to drive further differentiation with our Winning with Customers strategy Photo: © Raphaël de Bengy
Slide 24: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 25: Appendix
Appendix
Slide 26: Q1 2019 Sales split
Q1 2019 Sales split By business By area 15% 21% (15%) (21%) 36% (34%) 50% (50%) 35% (36%) 42% (46%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 1-3/2018 figures in brackets. Figures in charts are rounded and at historical exchange rates. 26 Apr
Slide 27: 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 >20% Market ~25% 40 <35% <35% >35% 35 The market grew slightly in units 30 KONE’s orders grew clearly in 25 units and significa
Slide 28: Currencies
Currencies Sales by currencies 1-12/2018 Currency impact Main currencies USD Q1/19 2018 Mar 31, MEUR Q1 2019 1-12/2018 average average 2019 spot Others EUR / Sales 36 -260 7.6867 7.8148 7.5397 RMB EUR / 1.1397 1.1809 1.1235 USD EBIT 5 -41 EUR / RMB 0.8717 0.8861 0.8583 GBP Orders 30 -239 received EU
Slide 29: Balance sheet – assets employed
Balance sheet – assets employed MEUR Mar 31, 2019 Mar 31, 2018 Dec 31, 2018 Assets employed Goodwill 1,355.8 1,316.2 1,333.4 Other intangible assets 259.7 267.4 260.2 Tangible assets 755.8 370.2 397.4 Investments 143.6 139.3 143.3 Net working capital -938.5 -735.9 -757.8 Assets employed total 1,576.
Slide 30: Net working capital
Net working capital Mar 31, 2019 Mar 31, 2018 Dec 31, 2018 MEUR Net working capital Inventories 645.5 599.8 624.1 Advance payments received and deferred revenue -1,671.9 -1,418.9 -1,562.2 Accounts receivable 2,057.6 1,835.6 1,988.3 Other non-interest-bearing assets 731.0 626.2 660.5 Other non-intere
Slide 31: Consolidated statement of cash flows
Consolidated statement of cash flows MEUR 1-3/2019 1-3/2018 1-12/2018 Operating income 215.4 211.5 1,042.4 Change in working capital before financing items and taxes 105.3 -61.5 -11.2 Depreciation and amortization 56.9 29.0 118.9 Cash flow from operations before financing items and 377.6 179.0 1,150