Slide 1: KONE H1 2021
KONE H1 2021 JULY 20, 2021 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q2 2021 Highlights
Q2 2021 Highlights • Strong financial performance across the board • Recovery solidified and market prices started to improve • High employee engagement and improved customer loyalty
Slide 3: Q2 2021 Key figures
Q2 2021 Key figures STRONG GROWTH IN ORDERS AND SALES, MARGIN EXPANSION CONTINUED Comparable Q2/2021 Q2/2020 Change change Orders received MEUR 2,410.7 2,075.4 16.2% 17.2% Order book MEUR 8,272.5 8,307.3 -0.4% -0.2% Sales MEUR 2,810.8 2,532.1 11.0% 12.7% Operating income (EBIT) MEUR 367.1 315.5 16.3
Slide 4: 1–6/2021 Key figures
1–6/2021 Key figures ROBUST PERFORMANCE ACROSS THE BOARD Comparable 1–6/2021 1–6/2020 Change change Orders received MEUR 4,486.6 4,184.7 7.2% 9.3% Order book MEUR 8,272.5 8,307.3 -0.4% -0.2% Sales MEUR 5,137.3 4,730.3 8.6% 11.0% Operating income (EBIT) MEUR 616.9 512.7 20.3% Operating income margin
Slide 5: High employee engagement and improved customer loyalty
High employee engagement and improved customer loyalty Employee engagement index well above high Net promoter score improved in both new performance benchmark equipment and services KONE Employee engagement index High performing norm Industry norm 2013 2014 2015 2016- 2018 2019- 2021 2013 2014 2015
Slide 6: Market development
Market development
Slide 7: Elevator usage continued to recover in many markets
Elevator usage continued to recover in many markets Monthly average number of starts per elevator, data from connected units Indexed, indicative as data from a limited number of units 1.2 Jun 21 vs. Dec 20 US +41% 1.0 Germany +22% Italy +30% 0.8 UK +37% Singapore -11% 0.6 0.4 0.2 0.0 2020/07 2020/09
Slide 8: New equipment market development in Q2 2021
New equipment market development in Q2 2021 DEMAND INCREASED IN ALL 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 grew clearly ▪ Market grew slightly across the ▪ In Ch
Slide 9: Service market development in Q2 2021
Service market development in Q2 2021 MAINTENANCE ACTIVITY STARTED TO NORMALIZE AND DEMAND FOR MODERNIZATION PICKED UP North American market EMEA market Asia-Pacific market Maintenance Modernization Maintenance Modernization Maintenance Modernization + +++ + ++ ++ +++ <10% of >25% of ~40% of >1/3 of
Slide 10: Chinese property market in Q2 2021
Chinese property market in Q2 2021 ▪ In units ordered, the new equipment market grew significantly y-o-y ▪ The pricing environment continues to be characterized by intense competition, but market prices are starting to improve ▪ Macro momentum solid but moderating ▪ Real estate investments and sales
Slide 11: Market recovery impacting global supply chains
Market recovery impacting global supply chains LOGISTICS AND COMPONENT AVAILABILITY CONSTRAINTS EXPECTED TO GRADUALLY EASE Electronic Elevated Increasing component material prices logistics costs availability Pricing environment starting to improve 11 July 20, 2021 Half-year Financial Report January
Slide 12: Q2 Financials
Q2 Financials
Slide 13: Orders received
Orders received STRONG GROWTH IN ORDERS FOR BOTH NEW EQUIPMENT AND MODERNIZATION ▪ In Q2, the margin of MEUR orders received declined slightly 10,000 9,000 8,400 7,959 8,185 8,000 7,621 7,554 7,797 6,813 17.2% 7,000 6,151 Q2 growth 2,411 6,000 5,496 16.2% -19 354 5,000 4,465 2,075 4,000 3,000 2,310
Slide 14: Sales
Sales SALES GROWTH ACROSS ALL REGIONS AND BUSINESSES WITH STRONG REBOUND IN SERVICES Growth at comp. FX MEUR 12.7% 11,000 9,982 9,939 12.0% 18.8% 10,000 8,797 9,071 11.7% 9,000 8,647 8,784 2,811 57 8,000 -38 7,334 89 6,933 Q2 growth 7,000 6,277 6,000 11.0% 171 5,225 5,000 2,532 4,000 2,541 2,532 2,8
Slide 15: Adjusted EBIT
Adjusted EBIT INCREASED EARNINGS DESPITE RISING COMPONENT AND LOGISTICS COSTS Adjusted EBIT* and adjusted EBIT margin Q2 adj. + Previously improved MEUR; % pricing of orders EBIT margin + Fixed cost absorption 13.3% + Lower discretionary 1,600 12.6% 12.8% spend - Rising costs 1,400 1,293 1,241 1,237
Slide 16: Cash flow
Cash flow CASH FLOW REMAINED STRONG Cash flow from operations* ▪ Operating income and MEUR net working capital contributed positively 2,000 1,908 to the cash flow 1,509 1,550 1,500 1,474 1,346 1,213 1,263 1,150 1,071 1,000 820 592 513 500 323 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1-6/2
Slide 17: Market and business outlook
Market and business outlook
Slide 18: Market outlook for 2021 (updated)
Market outlook for 2021 (updated) New equipment markets ▪ In China, the new equipment market is expected to grow clearly compared to 2020, which was already a very strong year in terms of market activity ▪ In the rest of the world, the new equipment markets are expected to grow from a low comparison
Slide 19: Business outlook for 2021 (specified)
Business outlook for 2021 (specified) Sales Supporting our performance Burdening our result ▪ KONE estimates that in 2021, its sales growth will be in the range of 4% to 6% (2% to 6%) at Solid order book and Increased component maintenance base and logistics costs, comparable exchange rates as compa
Slide 20: Summary
Summary ▪ Strong financial performance continued ▪ Addressing rising costs from a position of strength ▪ Improved momentum in value- adding services and solutions
Slide 21: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 22: Appendix
Appendix
Slide 23: Q2/2021 Sales split
Q2/2021 Sales split By business By region 13% 17% (12%) (19%) 46% 30% (45%) 57% (31%) (57%) 37% (36%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 4–6/2020 figures in brackets. Figures in charts are rounded and at historical exchange rates. 23 J
Slide 24: 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 KONE’s new equipment orders Market ~30% 40 grew significantly in units and in ~40% ~40% ~35% >35% monetary value. 35 30 25 <20%
Slide 25: Currencies
Currencies Sales by currencies 1–6/2021 Currency impact* Main currencies EUR Q2/2021 2020 Jun 30, Other MEUR Q2 Full year average average 2021 spot EUR / 7.8010 7.8916 7.6742 Sales -38.1 -66.1 CNY EUR / 1.2060 1.1452 1.1884 USD EBIT -2.4 -2.6 EUR / 0.8703 0.8864 0.8581 GBP USD Orders -18.5 -43.0 EUR
Slide 26: Balance sheet – assets employed
Balance sheet – assets employed MEUR Jun 30, 2021 Jun 30, 2020 Dec 31, 2020 Assets employed Goodwill 1,352.9 1,361.1 1,327.0 Other intangible assets 217.4 219.4 223.2 Tangible assets 720.1 708.0 710.0 Investments 139.7 130.9 143.2 Net working capital -1,311.0 -1,057.7 -1,160.1 Assets employed total
Slide 27: Net working capital
Net working capital MEUR Jun 30, 2021 Jun 30, 2020 Dec 31, 2020 Net working capital Inventories 622.0 672.1 597.0 Advance payments received and deferred revenue -1,807.4 -1,811.3 -1,766.8 Accounts receivable 2,283.1 2,200.9 2,178.6 Deferred assets and income tax receivables 805.2 751.0 720.9 Accrual