Preliminary information on KONE's 2017 financials and outlook for 2018: Q4 2017 sales was higher than expected, the pressure on adjusted EBIT margin is expected to continue in 2018

KONE Corporation, stock exchange release, January 12, 2018 at 9.00 a.m. EET

Preliminary information on KONE's 2017 financials and outlook for 2018: Q4 2017 sales was higher than expected, the pressure on adjusted EBIT margin is expected to continue in 2018

KONE's 2017 full year sales was higher than expected due to strong new equipment deliveries in the fourth quarter. Based on preliminary information, KONE's sales grew by 4.2% at comparable exchange rates in 2017 against the earlier estimated 1-3%. The preliminary adjusted EBIT for the full year 2017 was EUR 1,230 million which is within the earlier given outlook range of EUR 1,200-1,250 million.

Preliminary financial information for 2017:
(unaudited)

The margin of the orders received stabilized in Q4 2017.

Business outlook for 2018:

In 2018, KONE's sales is estimated to grow at around a similar rate as in 2017 at comparable exchange rates. The adjusted EBIT margin is expected to continue to decline in 2018 as witnessed in 2017. However, the margin pressure is expected to start to ease towards the end of 2018 as a result of pricing and productivity actions that have been taken.

The outlook is based on KONE's maintenance base and order book as well as the market outlook. The main factors continuing to pressure the adjusted EBIT margin in 2018 are the decrease in the margin of orders received witnessed in 2017, in China in particular, and the increased raw material prices. The margin pressure is expected to start to ease towards the end of 2018 as a result of pricing actions taken and general productivity improvements as well as the first savings from the Accelerate program. New equipment business outside China and the service business are expected to continue to develop positively. Foreign exchange rates are estimated to have an approximately EUR 40 million negative impact on KONE's EBIT in 2018 assuming that translation exchange rates would remain at the end of December 2017 level.

As a result of the adoption of new IFRS 15 accounting principles effective from January 1, 2018, KONE's sales recognition will change in 2018. The IFRS 15 restated figures for 2017 will be published in March 2018. Given this change, KONE will provide a more precise business outlook for 2018 in connection to the Q1 2018 report that will be published on April 25, 2018. The change in accounting principles is not expected to have a material impact on the annual sales and operating income.

KONE will publish its Financial Statement Bulletin for the January 1-December 31, 2017 on Thursday, January 25, 2018 at 12:30 p.m. EET, until when KONE's silent period continues. There will be a teleconference on the same day with opportunity to ask questions. The teleconference details can be found here: http://www.kone.com/en/investors/

For further information, please contact:
Sanna Kaje, Vice President, Investor Relations, tel. +358 (0)204 75 4705

Sender:
KONE Corporation

Henrik Ehrnrooth
President and CEO

Ilkka Hara
CFO

About KONE

At KONE, our mission is to improve the flow of urban life. As a global leader in the elevator and escalator industry, KONE provides elevators, escalators and automatic building doors, as well as solutions for maintenance and modernization to add value to buildings throughout their life cycle. Through more effective People Flow®, we make people's journeys safe, convenient and reliable, in taller, smarter buildings. In 2016, KONE had annual net sales of EUR 8.8 billion and at the end of the year over 52,000 employees. KONE class B shares are listed on the Nasdaq Helsinki Ltd. in Finland.

www.kone.com