Slide 1: Result presentation 2016
KONE Result presentation 2016 JANUARY 26, 2017 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Highlights
Highlights Continued good growth in operating income Growth of the service business accelerated Dividend proposal: EUR 1.55 per class B share New strategy launched to drive differentiation 2 January 26, 2017 Results presentation 2016 | © KONE Corporation
Slide 3: Q4 2016 Key figures
Q4 2016 Key figures SOLID PROFIT DEVELOPMENT CONTINUED Historical Comparable Q4/2016 Q4/2015 change change Orders received MEUR 1,839.2 1,947.2 -5.5% -2.9% Order book MEUR 8,591.9 8,209.5 4.7% 5.4% Sales MEUR 2,593.2 2,561.8 1.2% 3.6% Operating income (EBIT) MEUR 392.2 378.5 3.6% Operating income ma
Slide 4: 1–12/2016 Key figures
1–12/2016 Key figures ALL BUSINESSES CONTRIBUTED TO THE GROWTH IN OPERATING INCOME Historical Comparable 1–12/2016 1–12/2015 change change Orders received MEUR 7,621.0 7,958.9 -4.2% -1.6% Order book MEUR 8,591.9 8,209.5 4.7% 5.4% Sales MEUR 8,784.3 8,647.3 1.6% 3.9% Operating income (EBIT) MEUR 1,29
Slide 5: 1–12/2016 Sales split
1–12/2016 Sales split SHARE OF MODERNIZATION AND THE AMERICAS CONTINUED TO GROW BY BUSINESS BY AREA 14% 19% (12%) (17%) 41% (44%) 55% 31% (57%) (31%) 40% (39%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 1–12/2015 figures in brackets. Figures i
Slide 6: Business highlights in 2016
Business highlights in 2016 NEW EQUIPMENT Orders received (units): ~158,000 – New product launches in each geographic area strengthened (2015: ~161,000) competitiveness Units delivered: ~136,000 – Improved product competitiveness enabled strong result in a challenging (2015: ~137,000) environment –
Slide 7: Dividend proposal: EUR 1.55 per class B share
Dividend proposal: EUR 1.55 per class B share Split-adjusted dividend per class B share, EUR, 2006–2016 Dividend payout: 0.65 ~78% of earnings 0.75 per share ~81% of cash flow CAGR +20.0% after investing 1.55 activities 1.40 1.20 Effective dividend yield 0.33 1.00 in 2016: 3.6% 0.88 0.70 0.4
Slide 8: Market development
Market development 8 January 26, 2017 Results presentation 2016 | © KONE Corporation
Slide 9: New equipment market development in Q4
New equipment market development in Q4 GLOBAL MARKET VOLUMES REMAINED RATHER STABLE EMEA market North American market Asia-Pacific market Q4 development (in units) +/- + - Share of global ~20% <5% >2/3 market (in units) • Decline in Central and North • Slight growth in the United • Market in China d
Slide 10: Chinese property market
Chinese property market MARKET CONDITIONS IN CHINA CONTINUED TO BE CHALLENGING IN Q4 Inventories Housing prices E&E market • Inventories of unsold apartments low in • Authorities have taken actions to curb the • Real estate investment recovered in 2016 higher-tier cities but still somewhat steep ris
Slide 11: Service market development in Q4
Service market development in Q4 CONTINUED GROWTH ACROSS REGIONS EMEA market North American market Asia-Pacific market Maintenance Q4 development + + ++ Share of global <50% <10% ~35% market (in units) • Pricing environment remained • Price competition remained • Continued good growth across tough e
Slide 12: Q4 and 2016 financials
Q4 and 2016 financials 12 January 26, 2017 Results presentation 2016 | © KONE Corporation
Slide 13: Orders received
Orders received ORDERS RECEIVED GREW IN ALL REGIONS OUTSIDE CHINA BOTH IN Q4 AND FULL YEAR 2016 The relative margin of orders received declined slightly in MEUR H2/2016 but remained at a good level 2,500 -5.7% -5.4% -2.9% -5.5% 1,947 2,068 +0.4% 2,000 1,942 1,839 1,772 54 1,839 1,500 + Modernizati
Slide 14: Sales
Sales SALES GROWTH DRIVEN BY SERVICE BOTH IN Q4 AND FULL YEAR 2016 At comparable exchange rates: MEUR +3.6% +1.2% 3,000 +2.8% +12.4% -0.6% 2,593 2,500 +7.2% 2,273 60 +3.4% 2,170 2,593 -0.3% 2,000 2,562 1,748 1,500 EMEA: +9.4% 1,000 Americas: +14.3% Asia-Pacific: -6.9% 500 0 New equipment Maint
Slide 15: Operating income
Operating income ALL BUSINESSES CONTRIBUTED TO EBIT GROWTH IN Q4 AND FULL YEAR 2016 MEUR 500 +3.6% +7.2% 14 +1.6% 392 392 349 331 379 +4.5% 250 221 + Productivity improvements especially in new equipment 0 2009 Q1 2016 Q2 Q3 Q4 Q4 2015 Growth Profitability FX Q4 2016 At historical exchange rates 15
Slide 16: Cash flow 2016
Cash flow 2016 NET WORKING CAPITAL CONTINUED TO CONTRIBUTE POSITIVELY TO CASH FLOW 1,509 CASH FLOW FROM OPERATIONS* 1,400 110 +2% 331 MEUR 1,600 1,509 116 82 981 1,200 0 Advances Capex 1.5% of 19 acquisitions 800 received / revenue (excluding GK) inventories (2015: 1.1%) • Focus on improved to acqui
Slide 17: Market and business outlook for 2017
Market and business outlook for 2017 17 January 26, 2017 Results presentation 2016 | © KONE Corporation
Slide 18: Market outlook for 2017
Market outlook for 2017 NEW EQUIPMENT MARKETS Asia-Pacific: The market in China is expected to decline by 0–5% in units ordered, intense competition to continue. In the rest of Asia-Pacific, the market is expected to grow. Europe, Middle East and Africa: the market is expected to grow slightly.
Slide 19: Business outlook for 2017
Business outlook for 2017 SALES KONE’s net sales is estimated to grow by -1% to 3% at comparable exchange rates as compared to 2016. OPERATING INCOME The operating income (EBIT) is expected to be in the range of EUR 1,180–1,300 million, assuming that translation exchange rates would remain at ap
Slide 20: A new phase in KONE's strategy
A new phase in KONE’s strategy 20 January 26, 2017 Results presentation 2016 | © KONE Corporation
Slide 21: Sales and operating income 2013–2016
Sales and operating income 2013–2016 SALES BY AREA SALES BY BUSINESS OPERATING INCOME MEUR MEUR MEUR CAGR +11% CAGR +8% 1,293 8,784 1,241 8,647 8,784 8,647 CAGR CAGR 1,036 7,335 7,334 6,933 6,933 953 3% 9% 14% 8% 11% 8% 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 EMEA Americas Asia-P
Slide 22: Achievements from Development Programs 2014-2016
Achievements from Development Programs 2014-2016 COMPETITIVENESS IMPROVED AND GROWTH IN SERVICES ACCELERATED First in Customer Loyalty A clear improvement in customer loyalty through actions on customer communication and interactions A Winning Team of True Improved employee engagement. Close to 100%
Slide 23: We are entering a new phase in our strategy
We are entering a new phase in our strategy Capitalize on new Cater to changing Drive smart and technologies to add value customer expectations sustainable urbanization for customers in new ways Increased differentiation Higher speed of bringing new services and solutions to market
Slide 24: Winning with Customers
Winning with Customers
Slide 25: Mission, strategic targets and ways to win
= = Kone MEGATRENDS, KONE DELIVERS THE BEST @ URBANIZATION cts PEOPLE FLOW® EXPERIENCE DISRUPTION STRATEGIC TARGETS Most loyal Great place Faster than Best financial Leader in customers to work market growth development sustainability OUR MISSION WINNING WITH CUSTOMERS + IS TO IMPROVE Collaborative
Slide 26: How do we bring our strategy to life?
How do we bring our strategy to life? WE INTRODUCE FOUR WAYS TO WIN WITH OUR CUSTOMERS OUR AIM IS TO PROVIDE EASE, EFFECTIVENESS AND EXPERIENCES TO USERS AND CUSTOMERS Collaborative innovation Customer-centric solutions and new competencies and services Ways to Win True service Fast and smart mindse
Slide 27: We are improving the flow of urban life
We are improving the flow of urban life 2016 another strong year for KONE New strategic phase: increased differentiation and stronger customer-centricity Technological disruption and connectivity bring opportunities to create value to our customers in new ways We are in a strong position to
Slide 28: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 29: APPENDIX
APPENDIX 29 January 26, 2017
Slide 30: 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 <25% >25% 40 <35% ~30% Market >35% 30 <20% 20 10 <5% ~5% 0 Slight Slight ~-5% ~-5%~-5% ~-5% ~-5% decline >-5% decline -10 ~-8% Share of
Slide 31: Currencies
Currencies SALES BY CURRENCY 1–12/2016 CURRENCY IMPACT MAIN CURRENCIES, AVERAGE RATES USD 9 (MEUR) Q4 2016 Others Sales -60 -195 8 7 EBIT -14 -44 RMB Orders -54 -211 1 received EUR 0 2014 2015 2016 25.1.2017 EUR-RMB EUR-GBP EUR-USD EUR-AUD 31 January 26, 2017 Results presentation 2016 | © KONE Corpo
Slide 32: Q4 2016 Balance sheet – assets employed
Q4 2016 Balance sheet – assets employed MEUR Dec 31, 2016 Dec 31, 2015 Assets employed Goodwill 1,371.8 1,306.7 Other intangible assets 292.9 271.5 Tangible assets 368.3 345.4 Investments 129.9 122.7 Net working capital -1,054.8 -983.4 Assets employed total 1,108.0 1,062.9 Financed by Equity 2,795.6
Slide 33: Q4 2016 Net working capital
Q4 2016 Net working capital MEUR Dec 31, 2016 Dec 31, 2015 Net working capital Inventories 1,373.5 1,326.7 Advance payments received -1,976.9 -1,829.4 Accounts receivable 1,573.7 1,480.2 Other non-interest-bearing assets 429.8 434.0 Net deferred tax assets / liabilities -1,692.5 158.8 Provisions -18
Slide 34: Q4 2016 Consolidated cash flow
Q4 2016 Consolidated cash flow MEUR 10–12/2016 10–12/2015 1–12/2016 1–12/2015 Operating income 392.2 378.5 1,293.3 1,241.5 Change in working capital before financing items and -10.9 -0.6 109.7 132.3 taxes Depreciation and amortization 28.6 25.6 106.5 100.0 Cash flow from operations before financing