Slide 1: KONE's interim report for January–June 2016
KONE’s interim report for January–June 2016 JULY 19, 2016 HENRIK EHRNROOTH, PRESIDENT & CEO
Slide 2: Key figures January–June 2016
Figures Key for for figures January–June 2016
Slide 3: Q2 2016 Key figures
Q2 2016 Key figures STRONG EXECUTION AND PROFITABLE SALES GROWTH Historical Comparable Q2/2016 Q2/2015 change change Orders received MEUR 2,067.8 2,193.5 -5.7% -1.9% Order book MEUR 8,763.6 8,627.4 1.6% 5.5% Sales MEUR 2,272.6 2,210.4 2.8% 6.0% Operating income (EBIT) MEUR 348.6 325.2 7.2% Operating
Slide 4: January–June 2016 Key figures
January–June 2016 Key figures SOLID OPERATING PERFORMANCE Historical Comparable 1–6/2016 1–6/2015 change change Orders received MEUR 4,010.1 4,247.3 -5.6% -3.1% Order book MEUR 8,763.6 8,627.4 1.6% 5.5% Sales MEUR 4,020.9 3,901.2 3.1% 5.2% Operating income (EBIT) MEUR 570.0 537.1 6.1% Operating inco
Slide 5: Orders received
Q2 2016 Orders received ORDERS RECEIVED DECLINED BUT REMAINED AT A HIGH LEVEL MEUR 2,500 -5.7% -5.4% Significant growth in 2,068 modernization orders; 2,000 1,942 some decline in new equipment orders 1,500 Some growth in the EMEA region and clear growth in the 1,000 Americas; orders in Asia-Paci
Slide 6: Sales
Q2 2016 Sales GOOD GROWTH IN SERVICE BUSINESSES MEUR 3,000 Slight growth in new +2.8% equipment, some 2,500 growth in maintenance 2,273 +3.4% and strong growth in 2,000 modernization sales 1,748 1,500 Sales in EMEA was stable, some growth in Asia-Pacific and 1,000 significant growth in the Ameri
Slide 7: Operating income
Q2 2016 Operating income GROWTH DRIVEN BY POSITIVE DEVELOPMENT IN ALL REGIONS AND BUSINESSES MEUR +7.2% 400 Development 349 particularly positive in 350 North America and 300 +4.5% Asia-Pacific 250 221 Progress in product 200 and cost competitiveness 150 helped in offsetting the intense price pr
Slide 8: 1–6/2016 Sales split
1–6/2016 Sales split SHARE OF MODERNIZATION AND THE AMERICAS OUT OF TOTAL SALES CONTINUED TO GROW BY BUSINESS BY AREA 13% 18% (11%) (16%) 43% (44%) 53% 34% (56%) (33%) 39% (40%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 1–6/2015 figures in br
Slide 9: Business and market development
Figures forand market Business January–June 2016 development
Slide 10: Business development highlights
Q2 2016 Business development highlights OUR DEVELOPMENT PROGRAMS In June, we opened our new R&D and manufacturing facility in First in Customer Loyalty Allen, Texas to support the growth of the North American business A Winning Team of True Professionals The facility enables us to further improv
Slide 11: New equipment markets
Q2 2016 New equipment markets GLOBAL NEW EQUIPMENT MARKET VOLUMES WEAKENED DUE TO A DECLINE IN CHINA NEW EQUIPMENT Market weakened slightly as the market in China declined Markets in India and Australia grew, while other markets in the region ASIA-PACIFIC remained slow In China, price competit
Slide 12: Service markets
Q2 2016 Service markets SERVICE MARKETS CONTINUED TO GROW GLOBALLY MAINTENANCE MODERNIZATION Maintenance market grew in the region, but with Modernization market grew strongly in Central EMEA REGION significant variation between countries; price and North Europe; South Europe saw further competi
Slide 13: Outlook
Figures for January–June 2016 Outlook
Slide 14: Market outlook
Market outlook NEW EQUIPMENT MARKETS Asia-Pacific: The market in China is expected to decline by 5–10% in units ordered and also the price competition to continue intense. In the rest of Asia-Pacific, the market is expected to see some growth. Europe, Middle East and Africa: the market is expect
Slide 15: Business outlook (upgraded)
Business outlook (upgraded) SALES KONE’s net sales is estimated to grow by 2–6% at comparable exchange rates as compared to 2015. OPERATING INCOME The operating income (EBIT) is expected to be in the range of EUR 1,250–1,330 million, assuming that translation exchange rates would remain at appro
Slide 16: Dedicated to People Flow
Dedicated to People Flow” K|OIN|E
Slide 17: Appendix
APPENDIX 17 July 19, 2016
Slide 18: KONE's Capital Markets Day 2016
KONE’s Capital Markets Day 2016 KONE’s CMD 2016 will be held in Helsinki on September 28, 2016. The event will be held in central Helsinki, followed by an optional tour of KONE’s manufacturing facilities in Hyvinkää. Presentations will be held by: Henrik Ehrnrooth, CEO Tomio Pihkala, CTO Larry
Slide 19: E&E market and KONE's performance in China in Q2 2016
E&E market and KONE’s performance in China in Q2 2016 NEW EQUIPMENT MARKETS CHINA’S SHARE OF TOTAL ORDERS/SALES New equipment orders received in units vs. market growth In monetary value 50 ~44% KONE 40 Market <40% ~35% ~35% ~40% 30 ~23% 20 ~20% >15% >15% ~10% 10 <5% 0 -10 ~-5% ~-5% ~-5% ~-8% Share
Slide 20: Balance sheet - assets employed
Q2 2016 Balance sheet - assets employed MEUR Jun 30, 2016 Jun 30, 2015 Dec 31, 2015 Assets employed Goodwill 1,305.4 1,297.8 1,306.7 Other intangible assets 271.2 275.9 271.5 Tangible assets 357.6 328.4 345.4 Investments 139.9 118.7 122.7 Net working capital -1,033.4 -940.0 -983.4 Assets employed to
Slide 21: Net working capital
Q2 2016 Net working capital MEUR Jun 30, 2016 Jun 30, 2015 Dec 31, 2015 Net working capital Inventories 1,457.1 1,428.4 1,326.7 Advance payments received -2,055.3 -2,002.3 -1,829.4 Accounts receivable 1,512.4 1,500.1 1,480.2 Other non-interest-bearing assets 532.8 467.3 434.0 Net deferred tax assets
Slide 22: Consolidated cash flow
Q2 2016 Consolidated cash flow MEUR 4–6/2016 4–6/2015 1–6/2016 1–6/2015 1–12/2015 Operating income 348.6 325.2 570.0 537.1 1,241.5 Change in working capital before financing items 18.9 75.9 77.7 51.7 132.3 and taxes Depreciation and amortization 25.8 24.9 51.3 49.3 100.0 Cash flow from operations be
Slide 23: Currency fluctuations have a translation impact
As approximately 75% of KONE’s revenues are in other currencies than the euro, currency fluctuations have a translation impact SALES BY CURRENCY 1–12/2015 TRANSACTION RISK A substantial part of KONE operations are denominated EUR in local functional currencies and do not therefore give Others rise t
Slide 24: Our absolute EBIT has grown faster than sales
Our absolute EBIT has grown faster than sales 12 months quarterly rolling absolute EBIT and EBIT margin progression, 2009–Q2/2016 MEUR 1,400 14.5 16% 1,200 14% 1,000 12.1 We have seen 800 improvement both 12% in absolute and 600 relative EBIT 10% 400 EBIT 200 EBIT-% 0 0% Q1/2010 Q1/2011 Q1/2012 Q1/2
Slide 25: Sales by market 2005–2015 (MEUR)
Sales by market 2005–2015 (MEUR) CAGR, % 10,000 8,647 10.3% 8,000 7,334 6,933 6,277 39% 4.6% 6,000 4,987 5,225 44% 4,603 4,744 46% 4,079 49% 17% 7.7% 4,000 3,601 3,242 58% 55% 15% 65% 62% 16% 65% 16% 66% 65% 25.4% 2,000 18% 44% 21% 21% 38% 41% 21% 19% 35% 22% 22% 27% 12% 13% 14% 16% 17% 21% 0 2005*
Slide 26: Sales by business 2005–2015 (MEUR)
Sales by business 2005–2015 (MEUR) CAGR, % 10,000 10.3% 8,647 8,000 7,334 6,933 6,277 6,000 57% 14.3% 4,987 5,225 4,603 4,744 54% 55% 4,079 50% 4,000 3,601 46% 46% 3,242 48% 47% 6.0% 45% 12% 41% 16% 14% 13% 40% 17% 2,000 19% 17% 19% 19% 19% 19% 31% 7.0% 37% 37% 34% 32% 32% 41% 40% 36% 33% 34% 0 2005