Slide 1: KONE Result presentation 2019
KONE Result presentation 2019 JANUARY 28, 2020 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q4 2019 Highlights
Q4 2019 Highlights ▪ Continued good growth in all regions and all businesses ▪ Improved adjusted EBIT margin ▪ Important strategic milestone: launch of DX Class elevators ▪ Dividend proposal EUR 1.70 per class B share
Slide 3: Q4/2019 Key figures
Q4/2019 Key figures SOLID SALES GROWTH AND IMPROVED MARGIN Comparable Q4/2019 Q4/2018 Change change Orders received MEUR 1,988.3 1,937.9 2.6 % 0.7 % Order book MEUR 8,051.5 7,950.7 1.3 % -0.6 % Sales MEUR 2,684.6 2,443.4 9.9 % 7.9 % Operating income (EBIT) MEUR 356.4 292.5 21.8 % Operating income ma
Slide 4: 1-12/2019 Key figures
1-12/2019 Key figures SOLID EARNINGS GROWTH WITH STRONG CASH CONVERSION Comparable 1-12/2019 1-12/2018 Change change Orders received MEUR 8,399.8 7,797.0 7.7 % 5.9 % Order book MEUR 8,051.5 7,950.7 1.3 % -0.6 % Sales MEUR 9,981.8 9,070.7 10.0 % 8.2 % Operating income (EBIT) MEUR 1,192.5 1,042.4 14.4
Slide 5: Winning with Customers is taking us towards our strategic targets
Winning with Customers is taking us towards our strategic targets BUSINESS HIGHLIGHTS IN 2019 New equipment orders units 4% 6% ▪ Customer focus and continued investments in 200 000 Growth in new ~166k ~173k equipment differentiation drive improved margins and value per 150 000 orders*, MEUR unit 100
Slide 6: KONE DX Class
KONE DX Class A NEW ERA FOR ELEVATORS – UPGRADEABLE SOLUTION THROUGHOUT THE LIFECYCLE OF A BUILDING Create value with connected Differentiating with a Partner for people flow solutions redefined user experience smarter buildings Connecting elevators with new Customizable, multisensory Next-generatio
Slide 7: Dividend proposal: EUR 1.70 per class B share
Dividend proposal: EUR 1.70 per class B share Split-adjusted dividend per class B share ▪ Dividend payout in EUR, 2006-2019 2019: 94% of earnings per share ▪ Effective dividend yield, 2019: 2.9% +16% 0.65 0.75 1.65 1.65 1.70 1.55 1.40 1.20 0.33 1.00 0.88 0.70 0.45 Ordinary dividend 0.33 0.33 0.33 0.
Slide 8: Market development
Market development
Slide 9: New equipment market development in Q4/2019
New equipment market development in Q4/2019 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 10: Service market development in Q4/2019
Service market development in Q4/2019 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 11: Chinese property market in Q4/2019
Chinese property market in Q4/2019 GOVERNMENT CONTINUES TO BALANCE BETWEEN SUPPORTING THE ECONOMY AND RESTRICTIONS IN THE RESIDENTIAL MARKET ▪ In units ordered, the new equipment market grew slightly y-o-y ▪ Pricing environment was fairly stable ▪ Government continued to support the economic activit
Slide 12: Q4 and 2019 Financials
Q4 and 2019 Financials
Slide 13: Orders received
Orders received CONTINUED CLEAR GROWTH IN THE VOLUME BUSINESS, LESS MAJOR PROJECT ORDERS IN Q4 2019 growth ▪ In Q4, the margin of MEUR 7.7% orders received improved slightly 9,000 Q4 growth 8,000 2.6% 1,988 1,988 7,000 1,938 37 6,000 0.7% 5,000 1,938 4,000 3,000 2,000 1,000 0 FX comp. FX Q4/2018 Q4/
Slide 14: Sales
Sales STRONG SALES GROWTH IN ALL BUSINESSES 2019 growth Growth at comp. FX MEUR 10.0% 7.9% Q4 growth 10,000 9.9% 9,000 2,685 9.5% 2,685 8,000 2,443 44 6.0% 7,000 8.7% 6,000 5,000 2,443 4,000 3,000 EMEA 8.0% 2,000 APAC 5.4% Americas 12.7% 1,000 0 New Modernization Maintenance Q4/2018 Q4/2019 equipmen
Slide 15: Adjusted EBIT profitability
Adjusted EBIT STRONG PROFITABLE GROWTH Adjusted EBIT* and adjusted EBIT margin ▪ In Q4, restructuring MEUR; % Q4 adj. EBIT margin costs related to the 13.7% Accelerate program: 1,400 13.1% 14 EUR 11.1 million 1,200 12 0.1 367 367 8 1,000 10 320 800 8 Q4 growth 600 6 15.0% 320 400 2019 growth 4 11.3%
Slide 16: Cash flow
Cash flow STRONG CASH CONVERSION Cash flow from operations* ▪ Net working capital MEUR contributed positively to the cash flow in 1,600 1,550 1-12/2019, driven by 1,400 strong development in 386 advances received and 1,200 1,150 progress payments 1,000 332 ▪ Adoption of IFRS 16 800 had a positive im
Slide 17: Market and business outlook for 2020
Market and business outlook for 2020
Slide 18: Market outlook for 2020
Market outlook for 2020 New equipment markets ▪ The new equipment market is expected to be relatively stable or to grow slightly. However, the coronavirus outbreak creates uncertainty to the outlook ▪ In China, the market is expected to be relatively stable or to grow slightly, while in the rest of
Slide 19: Business outlook for 2020
Business outlook for 2020 Sales Boosting our performance Burdening our result ▪ In 2020, KONE’s sales is estimated to grow by 0–6% at comparable exchange rates as Improved margin of Labor and compared to 2019 orders received subcontracting cost increases Services business Adjusted EBIT growth Invest
Slide 20: Summary
Summary ▪ Strategy execution on track – strong competitiveness ▪ Continued profitable growth expected in 2020 ▪ We continue to invest in renewing ourselves to be able to deliver better outcomes to our customers every day
Slide 21: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 22: Appendix
Appendix
Slide 23: 1-12/2019 Sales split
1-12/2019 Sales split By business By area 15% 21% (14%) (20%) 39% (38%) 53% (53%) 32% (33%) 41% (42%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 1-12/2018 figures in brackets. Figures in charts are rounded and at historical exchange rates. 23
Slide 24: IFRS 16
IFRS 16 IMPACT IN Q4 AND 2019 Balance sheet Income statement Cash flow statement ▪ EUR 358 million increase in the 2019 ▪ EUR 0.1 million positive impact on ▪ EUR 32 million positive impact on cash opening interest-bearing debt EBIT in 10-12/2019. In 1-12/2019, the flow from operations (before finan
Slide 25: 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 >25% <30% 40 >30% <35% >35% 35 The market grew slightly in units 30 New equipment orders declined 25 slightly in units a
Slide 26: Chinese property market
Chinese property market Housing inventories Housing sales E&E market Newly built area for sale / monthly sales 3-m MVA Sales area growth, change Y-o-Y 50 60 30 40 40 20 12/2019: 30 Q4/2019: 24,1% 20 10 12/2019: 8,2% 20 11,9% Slight 0 0 growth 10 8,9% -1,7% 0 -20 -10 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
Slide 27: Currencies
Currencies Sales by currencies 1-12/2019 Currency impact Main currencies USD 2019 2018 Dec 31, MEUR Q4/2019 1-12/2019 average average 2019 spot Others EUR / Sales 44 153 7.7353 7.8148 7.8205 RMB EUR / 1.1214 1.1809 1.1234 USD EBIT 8 23 EUR / 0.8773 0.8861 0.8508 RMB GBP Orders 37 134 received EUR /
Slide 28: Balance sheet – assets employed
Balance sheet – assets employed MEUR Dec 31, 2019 Dec 31, 2018 Assets employed Goodwill 1,366.5 1,333.4 Other intangible assets 248.2 260.2 Tangible assets 742.2 397.4 Investments 139.2 143.3 Net working capital -856.0 -757.8 Assets employed total 1,640.0 1,376.6 Financed by Equity 3,192.9 3,080.6 N
Slide 29: Net working capital
Net working capital Dec 31, 2019 Dec 31, 2018 MEUR Net working capital Inventories 648.6 624.1 Advance payments received and deferred revenue -1,753.8 -1,562.2 Accounts receivable 2,232.3 1,988.3 Other non-interest-bearing assets 669.6 660.5 Other non-interest-bearing liabilities -1,848.0 -1,647.3 P
Slide 30: Consolidated statement of cash flows
Consolidated statement of cash flows MEUR 1-12/2019 1-12/2018 Operating income 1,192.5 1,042.4 Change in working capital before financing items and taxes 115.7 -11.2 Depreciation and amortization 241.5 118.9 Cash flow from operations before financing items and 1,549.6 1,150.1 taxes Financing items a