Slide 1: KONE Q1 2018
KONE Q1 2018 APRIL 25, 2018 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q1 2018 Highlights
Q1 2018 Highlights ▪ Solid growth in orders received with stabilizing margins ▪ Profitability continued to be burdened ▪ Good progress in driving differentiation
Slide 3: Q1 2018 Key figures
Q1 2018 Key figures SOLID GROWTH IN ORDERS RECEIVED AT COMPARABLE CURRENCIES Comparable Q1/2018 Q1/2017 Change change Orders received MEUR 1,908.7 1,913.0 -0.2% 6.8% Order book MEUR 7,786.6 7,960.5 -2.2% 5.9% Sales MEUR 2,008.0 1,943.4 3.3% 10.6% Operating income (EBIT) MEUR 211.5 245.8 -14.0% Opera
Slide 4: Q1 2018 Business overview
Q1 2018 Business overview ▪ Orders received grew in all regions and in all businesses, margin of orders received continued to stabilize ▪ Solid progress in both maintenance and modernization ─ Maintenance prices improving, particularly in Central and Northern Europe ─ Roll-out of New KONE Care and 2
Slide 5: Our vision is to deliver the best People Flow experience
PEOPLE FLOW PLANNING AND CONSULTING ANALYTICS DESIGN PLAN RECOMMENDATION SIMULATION Data & insights for better performing buildings ADVANCED PEOPLE DESTINATION ACCESS INFOTAINMENT MONITORING FLOW SOLUTIONS for smarter buildings EQUIPMENT MAINTENANCE & for new buildings MODERNIZATION for existing bui
Slide 6: Market development
Market development
Slide 7: New equipment market development in Q1/2018
New equipment market development in Q1/2018 GLOBAL NEW EQUIPMENT MARKET GREW SLIGHTLY IN UNITS ORDERED 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 continued to grow ▪ Central an
Slide 8: Service market development in Q1/2018
Service market development in Q1/2018 GROWTH CONTINUED ACROSS REGIONS North American market EMEA market Asia-Pacific market Maintenance Modernization Maintenance Modernization Maintenance Modernization + + + + ++ +++ <10% of ~25% of <50% of ~1/3 of ~1/3 of ~15% of global market global market global
Slide 9: Chinese property market
Chinese property market GOVERNMENT MEASURES COOLING DOWN THE HOUSING MARKET Housing inventories Housing sales and prices E&E market ▪ Housing inventory at a relatively healthy ▪ Government’s restrictive measures have ▪ Growth in real estate investment mainly level cooled down the housing market driv
Slide 10: The global new equipment market was stable in 2017
The global new equipment market was stable in 2017 NEW EQUIPMENT MARKET 825,000 units (2016: 825,000 units) The new equipment market ▪ The new equipment market was stable in 2017 5% 3% (4%) in both units ordered and in monetary value (3%) after declining for two consecutive years 2% 20% (3%) (20%) 6
Slide 11: The service markets continued to grow in 2017
The service markets continued to grow in 2017 EQUIPMENT BASE <15 M (>14 M) units The service markets: ▪ The global maintenance market continued to grow driven by China in particular 3% 8% 8% (4%) (9%) ▪ Also the global modernization market 33% (8%) (31%) continued to grow in all regions KONE’s marke
Slide 12: KONE's market positions in 2017
KONE's market positions in 2017 STRONG MARKET POSITION IN NEW EQUIPMENT FEEDING THROUGH TO GOOD DEVELOPMENT IN MAINTENANCE Rest of Market position, North Asia- KONE’s estimate EMEA America China Pacific New equipment #2 #4 #1 #1 Maintenance #3 #4 #1 #2 12 April 25, 2018 Interim Report January-March
Slide 13: Q1 Financials
Q1 Financials
Slide 14: Orders received
Orders received ORDERS RECEIVED GREW IN ALL REGIONS AND BUSINESSES AT COMPARABLE EXCHANGE RATES IN Q1 2018 MEUR ▪ The margin of orders continued to stabilize in Q1 8,000 6.8% 6,000 127 1,913 1,909 4,000 + Growth in all -0.2% regions and 2,000 businesses 1,913 1,909 0 2010 2011 2012 2013 2014 2015 20
Slide 15: Sales
Sales SALES GREW IN ALL REGIONS AND ALL BUSINESSES AT COMPARABLE RATES IN Q1 2018, HIGH LEVEL OF PROJECT STARTS DROVE STRONG GROWTH IN NEW EQUIPMENT At comparable FX: MEUR +10.6% 10,000 +10.3% +5.4% 8,000 +14.6% 127 2,008 6,000 1,943 4,000 ▪ EMEA: 19.8% +3.3% ▪ Americas: 3.5% ▪ Asia-Pacific: 4.1% 2,
Slide 16: EBIT
EBIT EBIT MARGIN CONTINUED TO BE BURDENED BY SEVERAL HEADWINDS IN Q1 2018 ADJUSTED EBIT*, MEUR AND ADJUSTED EBIT MARGIN ▪ Restructuring costs related to the Accelerate program were 1,400 14 EUR 6.9 million in Q1 2018 12.6% 10.9% 12 246 1,000 10 21 218 8 600 6 − Higher raw material costs 4 combined w
Slide 17: Cash flow
Cash flow CASH FLOW DECLINED AGAINST A STRONG COMPARISON PERIOD CASH FLOW FROM OPERATIONS* 305 MEUR 34 1,600 31 1,400 1,200 62 179 1,000 800 Working capital contributed positively to cash flow in the 600 comparison period and negatively in Q1 2018 400 200 305 179 0 Cash flow Change in Change in Chan
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 by 3–7% at comparable exchange rates as compared to the Solid order book Price pressure in earlier restated 2017 sales orders received in China Services business growth Higher r
Slide 21: Summary
Summary ▪ Good start to the year in terms of growth in orders received ▪ Actions to improve profitability showing progress ▪ Gaining momentum in strategic initiatives such as new services 2017 Sustainability Report published today
Slide 22: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 23: APPENDIX
APPENDIX
Slide 24: 2017 Sustainability highlights
2017 Sustainability highlights ▪ We are proud to have been recognized as one of the best employers in the world by Forbes (73rd in a list of 2,000 in the World’s Best Employers list) ▪ We have continued to improve the energy efficiency of our offering and remain the leader in the industry in terms o
Slide 25: Q1 2018 Sales split
Q1 2018 Sales split BY BUSINESS BY AREA 15% (15%) 21% (24%) 34% (36%) 50% (48%) 36% (37%) 46% (40%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 1–3/2017 figures in brackets. Figures in charts are rounded and at historical exchange rates. 25 Apr
Slide 26: 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 >20% >20% <35% <35% 40 The China >35% market was 35 stable in units 30 KONE’s orders grew slightly in 25 both units and <20% i
Slide 27: Currencies
Currencies SALES BY CURRENCY 1–12/2017 CURRENCY IMPACT MAIN CURRENCIES USD (MEUR) Q1/2018 1-12/2017 Q1 2017 Mar 31, average average 2018 spot Others Sales -127 -200 EUR / RMB 7.7784 7.3199 7.7468 EUR / USD 1.2246 1.1021 1.2321 EBIT -21 -37 RMB EUR / GBP 0.8813 0.8159 0.8749 Orders -127 -195 received
Slide 28: Q1 2018 Balance sheet – assets employed
Q1 2018 Balance sheet – assets employed MEUR Mar 31, 2018 Mar 31, 2017 Dec 31, 2017 Assets employed Goodwill 1,316.2 1,369.9 1,325.5 Other intangible assets 267.4 287.2 274.5 Tangible assets 370.2 369.7 377.0 Investments 139.3 155.1 134.3 Net working capital -735.9 -995.3 -772.6 Assets employed tota
Slide 29: Q1 2018 Net working capital
Q1 2018 Net working capital MEUR Mar 31, 2018 Mar 31, 2017 Dec 31, 2017 Net working capital Inventories 599.8 617.7 626.8 Advance payments received and deferred revenue -1,418.9 -1,474.4 -1,404.6 Accounts receivable 1,835.6 1,813.0 1,910.8 Other non-interest-bearing assets 626.2 545.6 472.0 Other no
Slide 30: Q1 2018 Consolidated cash flow
Q1 2018 Consolidated cash flow MEUR 1-3/2018 1-3/2017 1-12/2017 Operating income 211.5 245.8 1,192.3 Change in working capital before financing items and taxes -61.5 31.1 -43.3 Depreciation and amortization 29.0 28.4 114.3 Cash flow from operations before financing items and taxes 179.0 305.3 1,263.
Slide 31: IFRS 15 and IFRS 9 restated financials
IFRS 15 and IFRS 9 restated financials KEY FIGURES Q1 Q2 Q3 Q4 1-12/2017 Orders received MEUR 1,913.0 2,056.2 1,739.0 1,845.8 7,554.0 Order book MEUR 7,960.5 7,749.2 7,473.5 7,357.8 7,357.8 Sales MEUR 1,943.4 2,337.2 2,209.7 2,306.3 8,796.7 Operating income (EBIT) MEUR 245.8 335.8 317.9 292.8 1,192.