Interim Report of KONE Corporation for January-March 2015

KONE Corporation, stock exchange release, April 22, 2015 at 12.30 p.m. EET

Interim Report of KONE Corporation for January-March 2015

January-March 2015: A good start to the year

• In January-March 2015, orders received totaled EUR 2,054 (1-3/2014: 1,730) million. Orders received grew by 18.7% at historical exchange rates and by 5.5% at comparable exchange rates. The order book stood at EUR 8,530 (March 31, 2014: 6,175) million at the end of March 2015.
• Net sales grew by 17.3% to EUR 1,691 (1,442) million. At comparable exchange rates the growth was 7.1%.
• Operating income was EUR 211.9 (179.6) million or 12.5% (12.5%) of net sales.
• Cash flow from operations (before financing items and taxes) was EUR 212.2 (325.4) million.
• KONE specifies its operating income outlook for 2015. KONE's net sales is estimated to grow by 6-9% at comparable exchange rates as compared to 2014. The operating income (EBIT) is expected to be in the range of EUR 1,140-1,230 million, assuming that translation exchange rates would remain at approximately the average level of January-March 2015. KONE's previous outlook for its operating income (EBIT) was EUR 1,130-1,230 million, assuming that translation exchange rates would have remained at approximately the average level of January 2015.

Key Figures

Henrik Ehrnrooth, President and CEO, in conjunction with the review:

"I am pleased with our good start to the year. Orders received totaled EUR 2,054 million, with a growth of 18.7% at historical and 5.5% at comparable exchange rates. Favorable translation exchange rates had a very positive impact on our reported figures. Sales was EUR 1,691 million, with a growth of 17.3% at historical and 7.1% at comparable rates. Our sales growth accelerated from the end of last year and sales grew in all geographic regions, with good growth in both Asia-Pacific and the Americas. Operating income developed positively and was EUR 212 million. Our cash flow was clearly lower than last year but it was solid at the level of the operating income, EUR 212 million.

I want to express my thanks to our employees for their efforts and commitment. These together with our strong culture are the most important drivers of our good development.

For the most part, markets developed in line with our expectations in the beginning of the year. In new equipment and modernization, market development was overall rather subdued in Europe, but North America remained on a good growth trajectory. In maintenance, both regions continued to grow, but with varying development trends. In Asia-Pacific, the new equipment market in China was rather stable at the previous year's good level as expected, but uncertainty in the market increased somewhat. Maintenance markets in the region continued to develop well.

Despite the overall lower new equipment market growth as compared to last year and increased price pressure, we continue to see good opportunities for profitable growth in all regions and businesses. Our good performance during the first quarter shows again that the investments we have made in the development of our competitiveness, as well as our sales capabilities, are delivering results. Going forward, we will continue increasing our investments in the development of innovative solutions and services for our customers as well as the improvement of our cost competitiveness. Our development programs provide a clear roadmap on how we will deliver upon these actions. I am confident that with the strong execution of our team, we will continue on a good development path."

Operating environment in January-March 2015

In the first quarter of 2015, the global new equipment market was rather stable overall. In Asia-Pacific, growth in the new equipment market leveled off, with the market volumes in China remaining approximately at the previous year's high level. In the Europe, Middle East and Africa (EMEA) region, the market declined slightly. In North America, the market continued to grow. The major projects segment grew in the quarter, driven by activity in Asia-Pacific. The modernization market grew in North America, but was on a more stable trend overall in Europe. Maintenance markets grew globally, although at low rates in such countries, where new equipment activity has been weak for the past years.

Market outlook 2015

In new equipment, the market in Asia-Pacific is expected to grow slightly in 2015, with the expectation that the market in China will remain at the good level of 2014 or grow slightly. In the Europe, Middle East and Africa region, the market is expected to be rather stable. In Central and North Europe, the market is expected to be stable or grow slightly, while in South Europe it is expected to remain at a weak level. In the Middle East, the market is expected to be stable at the previous year's level. The market in North America is expected to continue to grow.

The modernization market is expected to remain rather stable in Europe, but to continue to grow in North America and Asia-Pacific. This is expected to result in a rather stable or slightly growing market globally.

The maintenance markets are expected to develop rather well in most countries.

Business outlook 2015

KONE specifies its operating income outlook for 2015.

KONE's net sales is estimated to grow by 6-9% at comparable exchange rates as compared to 2014.

The operating income (EBIT) is expected to be in the range of EUR 1,140-1,230 million, assuming that translation exchange rates would remain at approximately the average level of January-March 2015.

Previous business outlook

In 2015, KONE's net sales is estimated to grow by 6-9% at comparable exchange rates as compared to 2014.

The operating income (EBIT) is expected to be in the range of EUR 1,130-1,230 million, assuming that translation exchange rates would remain at approximately the average level of January 2015.

Press and analyst meetings

A meeting for the press, conducted in Finnish, will be held on Wednesday, April 22, 2015 at 2:15 p.m. EET.

A meeting for analysts, conducted in English, will begin at 3:45 p.m. EET. The meeting will be available as a live webcast on www.kone.com. The meeting participants can also join a telephone conference that will be arranged in conjunction with the meeting. The telephone conference details can be found below.

Both meetings will take place in the KONE Building, located at Keilasatama 3, Espoo, Finland.

Telephone conference numbers:

US callers: +1 334 323 6203  
UK callers: +44 (0)207 1620 177
Finnish callers: +358 (0)9 2313 9202  

Participant code: KONE

An on-demand version of the webcast will be available on www.kone.com later the same day.

For further information, please contact:
Katri Saarenheimo, Director, Investor Relations, tel. +358 204 75 4705

Sender:

KONE Corporation

Henrik Ehrnrooth
President and CEO

Eriikka Söderström
CFO

About KONE
KONE is one of the global leaders in the elevator and escalator industry.  KONE's objective is to offer the best People Flow® experience by developing and delivering solutions that enable people to move smoothly, safely, comfortably and without waiting in buildings in an increasingly urbanizing environment. KONE provides industry-leading elevators, escalators, automatic building doors and integrated solutions to enhance the People Flow in and between buildings.  KONE's services cover the entire lifetime of a building, from the design phase to maintenance, repairs and modernization solutions. In 2014, KONE had annual net sales of EUR 7.3 billion, and at the end of the year over 47,000 employees. KONE class B shares are listed on the NASDAQ OMX Helsinki Ltd. in Finland.

www.kone.com