Slide 1: KONE Q1 2020
KONE Q1 2020 APRIL 22, 2020 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q1 2020 Highlights
Q1 2020 Highlights ▪ Resilient sales and orders in an exceptional operating environment ▪ Profitability burdened by COVID-19 related items ▪ Robust global supply chain despite restrictions ▪ Good progress in the roll out of KONE DX Class elevators
Slide 3: Q1 2020 Key figures
Q1 2020 Key figures RESILIENT ORDERS AND SALES, ADJUSTED EBIT MARGIN BURDENED BY COVID-19 RELATED FACTORS Comparable Q1/2020 Q1/2019 Change change Orders received MEUR 2,109.3 2,094.1 0.7% 0.3% Order book MEUR 8,386.4 8,454.7 -0.8% 1.2% Sales MEUR 2,198.3 2,198.8 0.0% -0.5% Operating income (EBIT) M
Slide 4: How is the COVID-19 crisis impacting KONE?
How is the COVID-19 crisis impacting KONE? New equipment and modernization KONE’s exposure to different customer segments Illustrative ▪ Some construction sites and buildings closed due to the lockdowns ▪ KONE’s robust global supply chain has enabled minimal Other disruptions for customers Hotels, l
Slide 5: KONE's global supply chain has remained robust during the crisis
KONE’s global supply chain has remained robust during the crisis KONE’s key manufacturing units Status as on April 22, 2020 Hyvinkää, Finland Coal Valley, Usti nad Labem, USA Czech Republic Kunshan & Nanxun, China Allen, USA Pero & Cadrezzate, Italy Closed after Chinese New Year for >1 week with Tor
Slide 6: Focus areas in COVID-19 environment
Focus areas in COVID-19 environment WE ENSURE THE HEALTH AND WELLBEING OF OUR EMPLOYEES. WE SUPPORT OUR CUSTOMERS AND WE WILL FIND OPPORTUNITIES TO BECOME EVEN STRONGER Safe working and Wellbeing, Cost containment Customer activity Mid- and long-term business engagement and care and financial risk a
Slide 7: Appointments to the Executive Board
Appointments to the Executive Board Ken Schmid Ken Schmid has been appointed Executive Vice President of KONE Americas as of April 1, 2020. 7 April 22, 2020 Interim Report January-March 2020 | © KONE Corporation
Slide 8: KONE's market position strengthened in 2019
KONE’s market position strengthened in 2019 New equipment market in 2019 Equipment base in 2019 ~1 million units ~17 million units 5% 7% 3% 3% 2% 7% China 19% SE-Asia, India 39% and Australia EMEA North America 63% South America 8% Other 37% 7% In new equipment KONE’s market share increased slightly
Slide 9: KONE is leading the way in sustainability
KONE is leading the way in sustainability -3.1% A Operational carbon 37% of all electricity 15 elevator models with A class Achieved a place on CDP’s footprint consumption at KONE ISO 25745 highest energy efficiency prestigious A List for Climate facilities comes from ratings and 4 escalator models
Slide 10: Market development
Market development
Slide 11: Operating environment in the Americas region
Operating environment in the Americas region Current situation in COVID-19 related restrictions ▪ Stable market environment until March after which wide-ranging restrictions were imposed ▪ The situation varies significantly between the states and provinces ▪ Elevator and escalator maintenance deemed
Slide 12: Operating environment in the EMEA region
Operating environment in the EMEA region Current situation in COVID-19 related restrictions ▪ Stable market environment until March after which wide-ranging restrictions were imposed ▪ In Middle East and Africa, the situation is becoming more difficult with currency fluctuations and low oil price co
Slide 13: Operating environment in the Asia-Pacific region
Operating environment in the Asia-Pacific region Current situation in COVID-19 related restrictions ▪ Elevator and escalator demand declined significantly in the region in Q1 ▪ Full lockdown in China for around three weeks around the Chinese New Year. Gradual opening-up since mid- February and curre
Slide 14: Chinese property market in Q1 2020
Chinese property market in Q1 2020 ▪ In units ordered, the new equipment market declined significantly y-o-y ▪ Pricing environment was fairly stable, some signs of intensifying price competition ▪ Infrastructure investments expected to grow significantly to boost economic activity ▪ Government conti
Slide 15: Q1 Financials
Q1 Financials
Slide 16: Orders received
Orders received ORDERS GREW CLEARLY IN AMERICAS AND SLIGHTLY IN APAC AND DECLINED SLIGHTLY IN EMEA ▪ In Q1, the margin of MEUR orders received improved slightly 9 000 8 000 2,109 0.3% 7 000 9 2,094 6 000 5 000 4 000 Q1 growth 3 000 0.7% 2 000 1 000 2 094 2,094 2 109 2,109 0 FX comp. FX Q1/2019 Q1/20
Slide 17: Sales
Sales GROWTH IN SERVICES OFFSET THE DECLINE DRIVEN BY COVID-19 IN NEW EQUIPMENT Growth at comp. FX MEUR -0.5% 10,000 9,000 -5.3% 2,199 1.4% 2,198 8,000 5.7% 10 7,000 6,000 5,000 4,000 Q1 growth 3,000 0.0% EMEA 1.5% 2,000 APAC -6.3% Americas 5.3% 1,000 2,199 2,198 0 New Modernization Maintenance Q1/2
Slide 18: Adjusted EBIT
Adjusted EBIT ADJUSTED EBIT MARGIN BURDENED BY COVID-19 RELATED ITEMS Adjusted EBIT* and adjusted EBIT margin ▪ In Q1, restructuring MEUR; % Q1 adj. costs related to the EBIT margin Accelerate program: 1,400 10.4% 11 EUR 8.4 million 9.4% 10 1,200 9 228 1,000 8 7 800 6 206 1 5 600 Q1 growth 4 - COVID
Slide 19: Cash flow
Cash flow SOLID CASH FLOW IN Q1 Cash flow from operations* ▪ Net working capital MEUR contributed positively to the cash flow in 1,600 1-3/2020, driven by 1,400 strong development in advances received and 1,200 progress payments 1,000 ▪ KONE’s liquidity 800 position is strong: ▪ EUR 1 billion of net
Slide 20: Market and business outlook for 2020
Market and business outlook for 2020
Slide 21: Market outlook for 2020
Market outlook for 2020 New equipment markets ▪ The new equipment market is expected to decline across regions as a result of the increased uncertainty related to the COVID-19 outbreak ▪ The Chinese market started to recover in March Maintenance markets ▪ The maintenance markets are expected to be r
Slide 22: Business outlook for 2020 (unchanged)
Business outlook for 2020 (unchanged) ▪ KONE estimates that in 2020, its sales will decline or be Supporting our performance Burdening our result stable at best at comparable exchange rates as compared to 2019. The rate of decline in sales will depend on the Solid order book and Impacts of COVID-19
Slide 23: Summary
Summary ▪ Solid performance in demanding environment ▪ We are in a good position to capture future opportunities with our capable and committed teams, strong competitiveness and strong balance sheet
Slide 24: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 25: Appendix
Appendix
Slide 26: New equipment market development in Q1/2020
New equipment market development in Q1/2020 NEW EQUIPMENT MARKET DECLINED CLEARLY DUE TO THE COVID-19 OUTBREAK North American market EMEA market Asia-Pacific market Stable Stable --- <5% of ~20% of >2/3 of global global global market market market (in units) (in units) (in units) ▪ Market was stable
Slide 27: Service market development in Q1/2020
Service market development in Q1/2020 CONTINUED POSITIVE DEVELOPMENT BUT WITH INCREASED UNCERTAINTY 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
Slide 28: Q1/2020 Sales split
Q1/2020 Sales split By business By area 15% (15%) 23% (21%) 34% (36%) 48% (50%) 37% (35%) 43% (42%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 1-3/2019 figures in brackets. Figures in charts are rounded and at historical exchange rates. 28 Apr
Slide 29: 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 Market ~25% <25% 40 <35% ~35% >35% The market declined significantly in units 30 New equipment orders grew <20% slightly in units
Slide 30: 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 3/2020: 60 30 42,2% 40 40 20 30 20.8% 20 10 20 17,9% 3/2020: 0 0 10 Q1/2020: -7,7% 0 -20 -14.1% -10 Significant Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q
Slide 31: Currencies
Currencies Sales by currencies 1-12/2019 Currency impact Main currencies USD Q1/2019 2019 Mar 31, MEUR Q1/2019 1-12/2019 average average 2020 spot Others EUR / Sales 9.5 153 7.7329 7.7353 7.7784 RMB EUR / 1.1055 1.1214 1.0956 USD EBIT 0.8 23 EUR / 0.8580 0.8773 0.8864 RMB GBP Orders 9.1 134 received
Slide 32: Balance sheet – assets employed
Balance sheet – assets employed MEUR Mar 31, 2020 Mar 31, 2019 Dec 31, 2019 Assets employed Goodwill 1,370.7 1,355.8 1,366.5 Other intangible assets 229.4 259.7 248.2 Tangible assets 730.2 755.8 742.2 Investments 137.0 143.6 139.2 Net working capital -964.3 -938.5 -856.0 Assets employed total 1,502.
Slide 33: Net working capital
Net working capital Mar 31, 2020 Mar 31, 2019 Dec 31, 2019 MEUR Net working capital Inventories 666.0 645.5 648.6 Advance payments received and deferred revenue -1,774.3 -1,671.9 -1,753.8 Accounts receivable 2,192.8 2,057.6 2,232.3 Other non-interest-bearing assets 741.1 731.0 669.6 Other non-intere