Slide 1: KONE Result presentation 2017
KONE Result presentation 2017 JANUARY 25, 2018 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q4 2017 Highlights
Q4 2017 Highlights • Orders received grew in all regions and their margin stabilized in the fourth quarter • Profitability burdened by several headwinds. Actions to counter the headwinds starting to show results • Roll-out of new services gained momentum • Dividend proposal EUR 1.65 per class B shar
Slide 3: Q4 2017 Key figures
Q4 2017 Key figures ORDERS RECEIVED AND SALES GREW IN ALL REGIONS AND IN ALL BUSINESSES - EBIT MARGIN DECLINED Comparable Q4/2017 Q4/2016 Change change Orders received MEUR 1,845.8 1,839.2 0.4% 5.3% Order book MEUR 8,240.2 8,591.9 -4.1% 3.1% Sales MEUR 2,656.9 2,593.2 2.5% 6.8% Operating income (EBI
Slide 4: 1–12/2017 Key figures
1–12/2017 Key figures ORDERS RETURNED TO GROWTH - SEVERAL HEADWINDS IMPACTED THE RESULT Comparable 1–12/2017 1–12/2016 Change change Orders received MEUR 7,554.0 7,621.0 -0.9% 1.7% Order book MEUR 8,240.2 8,591.9 -4.1% 3.1% Sales MEUR 8,942.4 8,784.3 1.8% 4.2% Operating income (EBIT) MEUR 1,217.1 1,
Slide 5: 1–12/2017 Sales split
1–12/2017 Sales split SHARE OF SERVICES AND THE AMERICAS AND EMEA REGIONS CONTINUED TO GROW BY BUSINESS BY AREA 14% (14%) 20% (19%) 39% (41%) 53% 32% (55%) (31%) 41% (40%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 1–12/2016 figures in bracket
Slide 6: Business highlights in 2017
Business highlights in 2017 – Actions to offset the margin headwinds started to show positive NEW EQUIPMENT results Orders received (units): ~158,000 – Solid development in the service business with continued strong (2016: ~158,000) growth in China Units delivered: ~141,000 – We invested more than e
Slide 7: Dividend proposal: EUR 1.65 per class B share
Dividend proposal: EUR 1.65 per class B share Split-adjusted dividend per class B share, EUR, 2006–2017 ▪ Dividend payout in 2017: 87% of earnings 0.65 per share 0.75 CAGR +19 % ▪ Effective dividend yield 1.65 in 2017: 3.7% 1.55 1.40 1.20 0.33 1.00 0.88 0.70 0.45 0.25 0.33 0.33 0.33 2006 2007 2008 2
Slide 8: Market development
Market development r
Slide 9: New equipment market development in Q4
New equipment market development in Q4 GLOBAL NEW EQUIPMENT MARKET GREW SLIGHTLY IN UNITS ORDERED EMEA market North American market Asia-Pacific market Q4 development (in units) + + Stable Share of global ~20% <5% >2/3 market (in units) • Central and North European • Slight growth in the United • St
Slide 10: Chinese property market
Chinese property market Government measures cooling down the housing market Housing inventories Housing sales and prices E&E market • Inventories relatively low in higher-tier • Government’s restrictive measures have • Growth in real estate investment has cities but still somewhat elevated in lower-
Slide 11: Service market development in Q4
Service market development in Q4 GROWTH CONTINUED 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,
Slide 12: Q4 and 2017 financials
Q4 and 2017 financials - |
Slide 13: Orders received
Orders received ORDERS RECEIVED GREW IN ALL REGIONS AT COMPARABLE EXCHANGE RATES IN Q4 2017 ▪ The margin of orders stabilized in Q4 2017 MEUR 2,500 -0.6% -1.5% 5.3% -1.8% +0.4% 2,056 2,000 1,913 1,739 1,846 87 1,839 1,846 1,500 1,000 + Growth in all regions 500 0 2010 Q1 2017 Q2 Q3 Q4 Q4 2016 Growth
Slide 14: Sales
Sales SALES GREW IN ALL BUSINESSES AND IN ALL REGIONS IN Q4 2017 At comparable exchange rates: +6.8% MEUR +2.5% +9.1% 3,000 +0.5% +5.0% +0.9% 2,657 +7.1% 2,500 106 +3.5% 2,284 2,657 2,191 2,593 2,000 1,810 1,500 ▪ EMEA: +3.6% 1,000 ▪ Americas: +17.1% ▪ Asia-Pacific: +5.0% 500 New equipment Maintenan
Slide 15: EBIT
EBIT EBIT MARGIN STILL BURDENED BY SEVERAL HEADWINDS IN Q4 2017 ▪ Restructuring costs related to the Accelerate program were EUR 10 ADJUSTED EBIT*, MEUR million in Q4 2017 500 -4.2% -6.4% -6.2% 376 392 326 17 376 -1.7% 311 + Growth in all businesses 250 218 + Productivity improvements - Raw material
Slide 16: 2017 EBIT bridge
2017 EBIT bridge SEVERAL FACTORS BURDENED THE PROFITABILITY IN 2017 + Productivity 37 improvements + Focused pricing actions + Share of Maintenance 1,293 increasing ~40 - Price pressure in China - Share of China Biggest impact decreasing from EUR Sales grew in all strengthening businesses against CN
Slide 17: Cash flow 2017
Cash flow 2017 CASH FLOW WAS SOLID BUT BELOW THE STRONG LEVEL OF RECENT YEARS 1,510 CASH FLOW FROM OPERATIONS* 76 68 110 1,263 MEUR 7 -16% 1,600 Advances received / inventories stable Working capital contributed 1,263 positively to cash flow in at 145% 1,200 (2016: 144%) 2016 Receivables somewhat hi
Slide 18: Market and business outlook for 2018
Market and business outlook for 2018
Slide 19: Market outlook for 2018
Market outlook for 2018 NEW EQUIPMENT MARKETS ▪ Asia-Pacific: The market in China is expected to decline slightly or to be stable in units ordered and competition to remain intense. In the rest of Asia-Pacific, the market is expected to grow. ▪ Europe, Middle East and Africa: The market is expected
Slide 20: Business outlook for 2018
Business outlook for 2018 Sales Boosting our performance Burdening our result ▪ In 2018, KONE’s sales is estimated to grow at around a similar rate as in 2017 at Solid order book Margin pressure in comparable exchange rates. earlier orders received Services business from intense competition growth i
Slide 21: January 25, 2018 Results presentation 2017 | © KONE Corporation
21 January 25, 2018 Results presentation 2017 | © KONE Corporation
Slide 22: Our strategy is delivering results and we are accelerating the execution
Our strategy is delivering results and we are accelerating the execution of the strategy TO GET FULL BENEFITS WE NEED TO ACCELERATE THE PROGRESS 22 January 25, 2018 Results presentation 2017 | © KONE Corporation
Slide 23: Winning with Customers
Winning with Customers BRINGING OUR NEW STRATEGY ALIVE TOGETHER WITH OUR CUSTOMERS We don’t just transport people within buildings – we want to give them the best experience We help our customers differentiate and improve their businesses 23 January 25, 2018 Results presentation 2017 | © KONE Corpor
Slide 24: Summary
Summary • Sales growth continues • The actions to counter the margin headwinds are already showing positive results • Our latest solutions and services resonate well with customers – strengthened differentiation
Slide 25: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 26: APPENDIX
APPENDIX
Slide 27: 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 45 Market <35% >30% ~30% >25% 40 The China market >35% 35 was stable in units 30 KONE’s orders were stable in 25 units and grew <20% cle
Slide 28: Currencies
Currencies SALES BY CURRENCY 1–12/2017 CURRENCY IMPACT MAIN CURRENCIES USD (MEUR) Q4/2017 1-12/2017 2017 2016 Dec 31, average average 2017 spot Others Sales -106 -200 EUR / RMB 7,5828 7,3199 7,8534 EUR / USD 1,1151 1,1021 1,1806 EBIT -17 -37 RMB EUR / GBP 0,8719 0,8159 0,8818 Orders -87 -195 receive
Slide 29: Q4 2017 Balance sheet – assets employed
Q4 2017 Balance sheet – assets employed MEUR Dec 31, 2017 Dec 31, 2016 Assets employed Goodwill 1,325.5 1,371.8 Other intangible assets 274.5 292.9 Tangible assets 377.0 368.3 Investments 115.8 129.9 Net working capital -875.6 -1,054.8 Assets employed total 1,217.2 1,108.0 Financed by Equity 2,907.4
Slide 30: Q4 2017 Net working capital
Q4 2017 Net working capital MEUR Dec 31, 2017 Dec 31, 2016 Net working capital Inventories 1,244.6 1,373.5 Advance payments received -1,806.1 -1,976.9 Accounts receivable 1,608.7 1,573.7 Other non-interest-bearing assets 445.8 429.8 Other non-interest-bearing liabilities -1,653.4 -1,692.5 Provisions
Slide 31: Q4 2017 Consolidated cash flow
Q4 2017 Consolidated cash flow MEUR 10-12/2017 10-12/2016 1-12/2017 1-12/2016 Operating income 365.7 392.2 1,217.1 1,293.3 Change in working capital before financing items and taxes -60.3 -10.9 -68.1 109.7 Depreciation and amortization 29.5 28.6 114.3 106.5 Cash flow from operations before financing