Slide 1: KONE Q3 2023
KONE Q3 2023 Henrik Ehrnrooth, President & CEO Ilkka Hara, CFO
Slide 2: Q3 2023 Highlights
Q3 2023 Highlights • Excellent performance in Service and Modernization • Momentum in China regained and growth opportunities in India and the Middle East captured • Stable development in orders received, good achievement considering market backdrop
Slide 3: Q3 2023 key figures
Q3 2023 key figures Orders received stable; strong growth in Service and Modernization sales Comparable Q3/2023 Q3/2022 Change change Orders received MEUR 1,989.9 2,155.5 -7.7% 0.3% Order book MEUR 8,839.5 9,890.5 -10.6% -3.7% Sales MEUR 2,749.9 2,998.2 -8.3% -1.4% Operating income (EBIT) MEUR 316.5
Slide 4: 1–9/2023 key figures
1–9/2023 key figures Sales growth and improved profitability; market backdrop impacted orders received Comparable 1–9/2023 1–9/2022 Change change Orders received MEUR 6,528.5 7,187.1 -9.2% -4.6% Order book MEUR 8,839.5 9,890.5 -10.6% -3.7% Sales MEUR 8,142.4 7,995.2 1.8% 6.5% Operating income (EBIT)
Slide 5: Appointment to the Executive Board
Appointment to the Executive Board Axel Berkling Axel Berkling has been appointed Executive Vice President, Commercial & Operations as of 11 October 2023. Axel will also continue to lead the Strategy & Transformation organization until a successor has been appointed to this role.
Slide 6: Philippe Delorme appointed President and CEO as of 1 January 2024
Philippe Delorme appointed President and CEO of KONE Corporation as of 1 January 2024 • Accomplished leader with over 25 years of business leadership experience from Schneider Electric, most recently as Executive Vice President, Europe Operations • Member of the Schneider Electric Executive Committe
Slide 7: Market development
Market development OCTOBER 25, 2023
Slide 8: New Building Solutions market in Q3 2023
New Building Solutions market in Q3 2023 Markets impacted by continued weakness in China and slower construction activity in Europe and North America North America EMEA China Rest of Asia-Pacific --- -- --- ++ <5% of <20% of >65% of >10% of global global global global market market market market (in
Slide 9: Service and Modernization markets in Q3 2023
Service and Modernization markets in Q3 2023 Positive development continued with growth across all regions North America EMEA China Rest of Asia-Pacific Service Modernization Service Modernization Service Modernization Service Modernization + + + + ++ ++ ++ +++ <10% of <35% of <40% of <40% of <50% o
Slide 10: Market activity in China
Market activity in China • Weak consumer sentiment continued to weigh on new construction activity, policy actions central to recovery • Pricing environment characterized by intense competition • Continued focus on completion of unfinished projects • Strong growth in Service and Modernization market
Slide 11: Growth opportunities in all regions, despite economic uncertainty
Growth opportunities in all regions, despite economic uncertainty in many parts of the world E&E market growth outlook Sales by business Q3/2023 North EMEA China Rest of America Asia-Pacific Europe Middle East 46% New Building (53%) Solutions Service 37% (33%) New Building Solutions Modernization 17
Slide 12: Q3 Financials
Q3 Financials OCTOBER 25, 2023 INTERIM REPORT JANUARY-SEPTEMBER 2023 12
Slide 13: Orders received
Orders received Stable development in Q3 orders, margin on orders received remained on a good level MEUR MEUR 10,000 -7.7% 9,131 9,000 8,853 +0.3% at comp FX 8,400 8,185 2,155 6 8,000 7,797 7,187 7,000 6,529 EMEA: stable -171 APAC: ++ 6,000 Americas: --- 1,990 5,000 4,000 3,000 2,000 Margin on order
Slide 14: Sales
Sales Strong growth in Service and Modernization partly compensated for decline in New Building Solutions MEUR MEUR 10,907 -8.3% 11,000 10,514 9,982 9,939 10,000 -1.4% at comp. FX 9,071 2,998 9,000 7,995 8,142 72 8,000 -197 86 -210 7,000 2,750 6,000 -13.6% +9.2% +18.3% 5,000 4,000 EMEA +6.7% 3,000 A
Slide 15: Adjusted EBIT and profitability
Adjusted EBIT and profitability Margin expansion driven by sales mix and improved price/cost dynamics on deliveries MEUR, % MEUR, % 12.3% 12.4% 12.6% 12.5% 1,600 10.9% 10.2% 11.5% 1,400 1,310 1,237 1,251 9.9% 1,200 1,112 8.9% 1,077 -17 316 1,000 890 306 800 712 600 + Service and Modernization sales
Slide 16: Cash flow from operations and net working capital
Cash flow from operations and net working capital Cash flow improved due to increased operating income, net working capital broadly stable Cash flow from operations*, MEUR Net working capital**, MEUR 2,000 1,908 9/2022 12/2022 9/2023 1,829 1,600 1,550 1,200 1,150 1,104 800 755 721 -904 -873 400 -1,3
Slide 17: Market and business outlook
— "A Market and business outlook OCTOBER 25, 2023
Slide 18: Market outlook for 2023 (unchanged)
Market outlook for 2023 (unchanged) New Building Solutions markets • In China, the market is expected to decline by approximately 10–15% during 2023. Policy actions are central to market recovery. • In the rest of Asia-Pacific, activity is expected to grow clearly • Activity is expected to decline c
Slide 19: Business outlook for 2023 (reiterated)
Business outlook for 2023 (reiterated) Sales Supporting our Burdening our performance performance • KONE expects its sales growth at comparable exchange rates for the year 2023 to be in the range of 3–6% Growth in Service and Decline in China’s Modernization New Building Solutions market Adjusted EB
Slide 20: Headwinds and tailwinds going into 2024
Headwinds and tailwinds going into 2024 Boosting our performance Positive outlook for Service and Modernization Improved margins on orders received Cost savings related to the operating model renewal Burdening our result Continued soft outlook for New Building Solutions in several regions Persistent
Slide 21: Summary
Summary • Solid development in the third quarter • Strong position in the growing markets in India, Southeast Asia and the Middle East • Excellent performance and continued growth prospects in Service & Modernization
Slide 22: Slide 22
Slide 23: Appendix
Appendix
Slide 24: KONE in China
KONE in China New Building Solutions market China’s share of KONE’s orders received and sales New Building Solutions orders received in units vs. market Monetary value (at comp. FX) development 50 45 KONE’s New Building 40 Solutions orders grew ~30% ~25% >35% ~35% >30% 35 significantly in units and
Slide 25: 7–9/2023 Sales split
7–9/2023 Sales split By business By region 17% 23% (14%) (19%) 38% 46% (46%) (53%) 37% (33%) 39% (35%) New Building Solutions Asia-Pacific Service EMEA Modernization Americas 7-9/2022 figures in brackets. Figures in charts are rounded and at historical exchange rates.
Slide 26: Currencies
Currencies Sales by currencies Currency impact* Main currencies 1-9/2023 Other Q3/2023 2022 Sep 30, MEUR Q3 Full year MEUR EUR average average 2023 spot INR EUR / CNY 7.6145 7.0836 7.7352 Sales -209.5 -441.4 SEK AUD EUR / USD 1.0801 1.0563 1.0594 GBP EBIT -17.2 -35.0 EUR / GBP 0.8706 0.8537 0.8646 U
Slide 27: Balance sheet – assets employed
Balance sheet – assets employed MEUR Sep 30, 2023 Sep 30, 2022 Dec 31, 2022 Assets employed Goodwill 1,479.3 1,465.9 1,414.7 Other intangible assets 302.5 211.0 208.2 Tangible assets 743.9 744.5 716.8 Investments 95.2 135.0 121.7 Net working capital -872.6 -1,318.9 -903.9 Assets employed total 1,748
Slide 28: Net working capital
Net working capital* MEUR Sep 30, 2023 Sep 30, 2022 Dec 31, 2022 Net working capital Inventories 852.2 935.9 843.6 Advance payments received and deferred revenue -1,964.2 -2,153.3 -1,973.8 Accounts receivable 2,508.0 2,656.4 2,668.1 Deferred assets and income tax receivables 916.3 1,002.1 826.9 Accr