Slide 1: KONE Q3 2020
KONE Q3 2020 OCTOBER 22, 2020 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q3 2020 Highlights
Q3 2020 Highlights • Growing earnings and strong cash flow in a tough environment • Strong development in China, mixed elsewhere • Positive development in customer loyalty • Raising our ambitions in sustainability
Slide 3: Q3 2020 Key figures
Q3 2020 Key figures GROWING EARNINGS AND STRONG CASH FLOW, INCREASED UNCERTAINTY VISIBLE IN ORDERS RECEIVED Comparable 7–9/2020 7–9/2019 Change change Orders received MEUR 1,931.7 2,007.3 -3.8 % 0.4 % Order book MEUR 7,914.4 8,399.8 -5.8 % -1.4 % Sales MEUR 2,587.0 2,557.6 1.1 % 4.9 % Operating inco
Slide 4: 1-9/2020 Key figures
1-9/2020 Key figures RESILIENT SALES AND ADJUSTED EBIT, INCREASED UNCERTAINTY VISIBLE IN ORDERS RECEIVED Comparable 1–9/2020 1–9/2019 Change change Orders received MEUR 6,116.4 6,411.5 -4.6 % -3.2 % Order book MEUR 7,914.4 8,399.8 -5.8 % -1.4 % Sales MEUR 7,317.3 7,297.2 0.3 % 1.7 % Operating income
Slide 5: Elevator usage is recovering but still clearly below normal levels
Elevator usage is recovering but still clearly below normal levels Monthly average number of starts per elevator, data from connected units Indexed, indicative as data from a limited number of units 1.2 1.0 Germany, top to bottom -29%, top to current -11% Italy , top to bottom -47%, top to current -
Slide 6: Q3 2020 Business highlights
Q3 2020 Business highlights ▪ Good progress with the KONE DX Class elevators and KONE 24/7 Connected Services – Roll out of DX Class elevators expanded to new areas and also for modernizations – Momentum improving in 24/7 Connected Services, 24/7 Planner introduced as an add-on ▪ Launch of KONE Mono
Slide 7: Taking stronger action to tackle climate change by setting science-based targets
Taking stronger action to tackle climate change by setting science-based targets KONE PLEDGES FOR CARBON SIGNIFICANT REDUCTIONS NEUTRAL OPERATIONS BY 2030 ACROSS THE VALUE CHAIN Targets for our own operations: Target for our value chain: 50% absolute reduction in GHG emissions from 40% reduction in
Slide 8: We have refreshed our values to define who we are and what we aspire to become
We have refreshed our values to define who we are and what we aspire to become We care for We are committed to We collaborate We perform each other our customers' success as one team with courage 8 October 22, 2020 Interim Report January-September 2020 | © KONE Corporation
Slide 9: Appointment to the Executive Board
Appointment to the Executive Board Tricia Weener Tricia Weener has been appointed Chief Marketing Officer and Executive Vice President, Marketing and Communications, as of January 18, 2021. 9 October 22, 2020 Interim Report January-September 2020 | © KONE Corporation
Slide 10: Market development
Market development
Slide 11: New equipment market development in Q3/2020
New equipment market development in Q3/2020 STRONG DEMAND IN CHINA, UNCERTAINTY IMPACTING DEMAND IN OTHER REGIONS 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 declined signif
Slide 12: Service market development in Q3/2020
Service market development in Q3/2020 GLOBAL MAINTENANCE MARKET WAS RESILIENT, MIXED DEVELOPMENT IN THE MODERNIZATION MARKETS North American market EMEA market Asia-Pacific market Maintenance Modernization Maintenance Modernization Maintenance Modernization stable --- + --- ++ - <10% of >25% of ~40%
Slide 13: Chinese property market in Q3/2020
Chinese property market in Q3/2020 ▪ In units ordered, the new equipment market grew significantly y-o-y ▪ Pricing environment continues to be characterized by intense competition ▪ Exceptionally strong activity in the real estate sector in Q3. Financing environment tightening for the developers ▪ I
Slide 14: Q3 Financials
Q3 Financials
Slide 15: Mixed development amidst the COVID-19 pandemic
Mixed development amidst the COVID-19 pandemic STRONG DEVELOPMENT IN CHINA, RESTRICTIONS AND UNCERTAINTY STILL IMPACTING OTHER MARKETS IN Q3 KONE’s orders received growth at comparable FX rates KONE’s sales growth at comparable FX rates New equipment Modernization Maintenance New equipment Moderniza
Slide 16: Orders received
Orders received ORDERS RECEIVED GREW SIGNIFICANTLY IN APAC BUT DECLINED CLEARLY IN EMEA AND SIGNIFICANTLY IN THE AMERICAS IN Q3 ▪ In Q3, the margin of MEUR orders received was stable excluding the 9,000 8,400 Q3 positive mix impact 7,959 7,797 8,000 7,621 7,554 growth from China 7,000 6,813 -3.8% 6,
Slide 17: Sales
Sales ALL BUSINESSES GREW IN Q3, MIXED DEVELOPMENT ACROSS THE REGIONS Growth at comp. FX MEUR 4.9% 9,982 Q3 10,000 growth 7.5% 1.3% 9,071 9,000 8,647 8,784 8,797 1.1% 2.1% 8,000 7,334 7,317 6,933 7,000 6,277 92 6,000 2,558 2,587 5,225 2,587 4,987 5,000 2,558 4,000 3,000 EMEA 1.4% 2,000 APAC 11.1% Am
Slide 18: Adjusted EBIT
Adjusted EBIT GOOD DEVELOPMENT IN A TOUGH ENVIRONMENT IN Q3 Adjusted EBIT* and adjusted EBIT margin Q3 adj. ▪ In Q3, restructuring MEUR; % EBIT margin costs related to the 13.1% Accelerate program: 1,600 12.6% EUR 6.7 million 1,400 1,293 1,241 1,206 1,237 Q3 1,200 1,112 growth -9 340 1,036 1,000 953
Slide 19: Cash flow
Cash flow EXCEPTIONALLY STRONG CASH FLOW Cash flow from operations* ▪ Net working capital MEUR contributed positively to the cash flow in 1,600 1,550 1,539 1,474 1,509 1-9/2020 1,400 1,346 1,263 ▪ Increase in accounts 1,213 600 payable due to strong 1,200 1,150 1,071 recovery in China 1,000 ▪ Some c
Slide 20: Market and business outlook
Market and business outlook
Slide 21: Market outlook for 2020 (unchanged)
Market outlook for 2020 (unchanged) New equipment markets ▪ The Chinese market is expected to grow ▪ In other regions, the new equipment market is expected to decline as a result of the increased economic uncertainty Maintenance markets ▪ The maintenance markets are expected to be resilient, excludi
Slide 22: Business outlook for 2020 (unchanged)
Business outlook for 2020 (unchanged) Sales Supporting our performance Burdening our result ▪ KONE estimates that in 2020, its sales growth will be in the range of -1% to 2% at comparable Solid order book and Impacts of COVID-19 exchange rates as compared to 2019 maintenance base outbreak Improved m
Slide 23: There are both headwinds and tailwinds going into 2021
There are both headwinds and tailwinds going into 2021 BOOSTING OUR PERFORMANCE Strong order book with improved margin in the orders received Solid growth in service business Accelerate savings and performance improvements BURDENING OUR RESULT Uncertain demand outlook and intensifying competition Ge
Slide 24: Summary
Summary ▪ Strong performance overall in the third quarter, mixed development across geographies ▪ Expecting solid results in 2020 despite the challenging environment thanks to the commitment of our people and the trust of our customers
Slide 25: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 26: Appendix
Appendix
Slide 27: Q3/2020 Sales split
Q3/2020 Sales split By business By area 14% 18% (14%) (20%) 44% (42%) 56% 31% (55%) (31%) 38% (38%) New equipment Asia-Pacific Maintenance EMEA (Europe, Middle East and Africa) Modernization Americas 7-9/2019 figures in brackets. Figures in charts are rounded and at historical exchange rates. 27 Oct
Slide 28: 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 <30% 40 >35% >30% The market grew significantly in >40% >35% 35 units 30 KONE’s new equipment orders 25 grew significant
Slide 29: 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 Q3/2020: 40 40 20 Significant 8/2020: growth 30 20 9/2020: 10 11.8% 20 19.4% 0 7.3% 0 10 10.2% -20 8.4% 0 -40 -10 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
Slide 30: Currencies
Currencies Sales by currencies 1-12/2019 Currency impact Main currencies USD 1-9/2020 2019 Sept 30, MEUR Q3/2020 1-12/2019 average average 2020 spot Others EUR / 7.8872 7.7353 7.9720 Sales -92.2 153.4 RMB EUR / 1.1293 1.1214 1.1708 USD EBIT -8.9 23.3 EUR / 0.8823 0.8773 0.9124 RMB GBP Orders -83.2 1
Slide 31: Balance sheet – assets employed
Balance sheet – assets employed MEUR Sep 30, 2020 Sep 30, 2019 Dec 31, 2019 Assets employed Goodwill 1,343.5 1,379.2 1,366.5 Other intangible assets 218.4 254.4 248.2 Tangible assets 690.6 758.2 742.2 Investments 132.6 152.3 139.2 Net working capital -1,200.3 -871.5 -856.0 Assets employed total 1,18
Slide 32: Net working capital
Net working capital MEUR Sep 30, 2020 Sep 30, 2019 Dec 31, 2019 Net working capital Inventories 640.9 700.0 648.6 Advance payments received and deferred revenue -1,817.7 -1,808.8 -1,753.8 Accounts receivable 2,133.9 2,182.0 2,232.3 Deferred assets and income tax receivables 802.7 815.4 669.6 Accrual