KONE Oyj - Interim report (Q1 and Q3)

KONE Corporation: Interim Report of KONE Corporation for January-September 2012

KONE Corporation, stock exchange release, October 23, 2012 at 12:30 p.m. EET

KONE's Q3: Continued positive development and record high cash flow

July-September 2012
- In July-September 2012, orders received totaled EUR 1,296 (7-9/2011: 1,095)
million. Orders received grew by 18.3% at historical exchange rates and by
10.5% at comparable exchange rates.
- Net sales grew by 26.0% to EUR 1,634 (1,296) million. At comparable exchange
rates the growth was 18.8%.
- Operating income was EUR 224.5 (188.9) million or 13.7% (14.6%) of net sales.
- Cash flow from operations was EUR 351.9 (240.1) million.
- KONE specifies its outlook for 2012. KONE's net sales is estimated to grow by
13-17% at comparable exchange rates as compared to 2011. The operating income
(EBIT), excluding one-time costs, is expected to be in the range of EUR 780-820
million. KONE previously estimated its net sales to grow by 12-17% at comparable
exchange rates as compared to 2011. The previous operating income (EBIT) outlook
was EUR 760-820 million.

January-September 2012
- In January-September 2012, orders received totaled EUR 4,175 (1-
9/2011: 3,366) million. Orders received grew by 24.0% at historical exchange
rates and by 17.6% at comparable exchange rates. The order book stood at EUR
5,284 (Dec 31, 2011: 4,348) million at the end of September 2012.
- Net sales grew by 21.5% to EUR 4,419 (3,636) million. At comparable exchange
rates the growth was 15.9%.
- Operating income excluding one-time costs was EUR 565.7 (492.1) million or
12.8% (13.5%) of net sales. The operating income, including the one-time cost of
EUR 37.3 million related to the support function development and cost adjustment
programs, was EUR 528.4 million.
- The Board proposes an extra dividend of EUR 1.50 per class B share for the
financial year 2011.

Key Figures

                                        7-9/    7-9/       1-9/    1-9/   1-12/
                                        2012    2011       2012    2011    2011
-------------------------------------------------------------------------------
 Orders received               MEUR  1,295.6 1,095.4    4,174.9 3,366.3 4,465.1

 Order book                    MEUR  5,283.7 4,143.2    5,283.7 4,143.2 4,348.2

 Sales                         MEUR  1,633.7 1,296.2    4,419.1 3,636.4 5,225.2

 Operating income (EBIT)       MEUR    224.5   188.9 565.7 (1))   492.1   725.1

 Operating income (EBIT)          %     13.7    14.6  12.8 (1))    13.5    13.9

 EBITA                         MEUR    233.1   192.5 591.6 (1))   502.6   741.2

 EBITA                            %     14.3    14.9  13.4 (1))    13.8    14.2

 Cash flow from operations
 (before financing items and
 taxes)                        MEUR    351.9   240.1      792.6   607.3   819.8

 Net income                    MEUR    184.5   156.2      428.0   397.9   644.4

 Basic earnings per share       EUR     0.70    0.61       1.65    1.56    2.52

 Interest-bearing net debt     MEUR -1,105.9  -823.2   -1,105.9  -823.2  -829.1

 Total equity/total assets        %     51.1    50.4       51.1    50.4    54.0

 Gearing                          %    -52.4   -47.2      -52.4   -47.2   -40.8

(1)) Excluding a MEUR 37.3 one-time cost related to the support function
development and cost adjustment programs.

Matti Alahuhta, President & CEO, in conjunction with the review:"I am pleased with the continued good development of our business. Orders
received growth was 18%, at comparable exchange rates 10.5%. Sales growth was
26%, at comparable exchange rates 19%. Operating income grew by 19% to EUR
224.5 million. I am particularly pleased with our record strong cash flow of EUR
352 million, which was the result of the growth in operating income and a strong
improvement in net working capital. Our people have continued to do a good job
for which I want to thank them.

Our net cash position is strong, and our cash flow has developed very
positively. Based on this, the KONE Board has proposed an extra dividend of EUR
1.50 per B-share for the financial year 2011 to be paid to shareholders.

We announced in June the introduction of our new global volume elevator
offering. We have now started selling the new products in the EMEA region and
Asia-Pacific. We will launch this new product offering in the Americas in the
first half of 2013. The first customer reactions to our new products have been
very encouraging. By the end of 2014, this new offering will cover a very
significant part of our new elevator and full replacement volumes. We do not
expect the new offering to have a significant impact on our sales yet in 2013 as
we will increase its volumes gradually.

Construction in most western markets is at a weak level, and also the world's
largest new equipment markets, China and India, are going through a lower growth
phase in their cycles. The prolonged weakness in many new equipment markets has
led to an adverse impact in the development of the maintenance market in some
countries. We have been able to continue the good pricing development in all our
businesses, but pricing has become more challenging in the current market
environment.

Our approach continues to be to take the difficult market situation as an
opportunity. We work all the time actively to understand the markets with better
granularity in order to be able to catch growth opportunities. We also work hard
to further improve quality and productivity. We will continue to invest a lot in
developing our people and keeping up the good spirit. This approach with a
positive forward-looking mindset will be very essential, because going forward
it is very likely that our business environment will continue to become more
challenging as a result of the difficulties and uncertainties in the world
economy."

Operating environment in July-September
In the third quarter of 2012, the development of the operating environment was
largely in line with KONE's expectations. In new equipment, in the Europe,
Middle East and Africa (EMEA) region, the market declined somewhat in Central
and North Europe, but remained at a relatively good level. In South Europe, the
market declined further from an already weak level. In the Americas region, the
gradual recovery continued. The market in Asia-Pacific continued to grow,
although at a somewhat slower rate than in the first half of the year. The major
projects segment remained active, but lead times in decision-making became
longer, which impacted the growth. The global modernization market was
relatively stable, although with regional variations. Maintenance markets
continued to develop favorably in most countries. Price competition intensified
further in most markets, particularly in regions where the new equipment market
deteriorated.

Operating environment in January-September
During January-September 2012, the new equipment market declined somewhat in
Central and North Europe but remained at a relatively good level, whereas the
market situation in South Europe weakened further from an already low level. The
gradual recovery of the new equipment market in the Americas continued to
progress. The growth of the new equipment market in Asia-Pacific continued,
albeit at a clearly lower rate than in the previous year. Modernization markets
declined slightly. Maintenance markets continued to grow, but the growth rate
slowed down in South Europe and the United States. The pricing environment was
challenging in all businesses, particularly in markets suffering from a
prolonged weakness in the new equipment market.

Market outlook 2012
In new equipment, the markets in Asia-Pacific are expected to grow slightly in
the last quarter of the year. The markets in Central and North Europe are
expected to decline somewhat, and the markets in South Europe are expected to
further decline from an already weak level. The market in North America is
expected to continue to gradually recover from a low level. The modernization
markets are expected to be stable or decline slightly in the last quarter of the
year. The maintenance markets are expected to continue to develop rather well in
most countries.

Business outlook 2012
KONE specifies its outlook for 2012.

KONE's net sales is estimated to grow by 13-17% at comparable exchange rates as
compared to 2011.

The operating income (EBIT), excluding one-time costs, is expected to be in the
range of EUR 780-820 million.

Previous business outlook 2012
KONE's net sales is estimated to grow by 12-17% at comparable exchange rates as
compared to 2011.

The operating income (EBIT), excluding one-time costs, is expected to be in the
range of EUR 760-820 million.

Analyst and media meeting and conference call
A meeting for the press, conducted in Finnish, will be held on Tuesday, October
23, 2012 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 the KONE Investor website. 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:

Finnish callers: +358 9 23 113 289
US callers: +1 866 682 8490
UKcallers: +44 8 445 718 957
Other callers: +44 1452 555 131
Participant code: KONE

An on-demand version of the webcast will be available on the KONE Investor
website later the same day.

For further information, please contact:
Henrik Ehrnrooth, CFO, tel. +358 (0) 204 75 4260
Karla Lindahl, Director,Investor Relations, tel. +358 (0) 204 75 4441

About KONE
KONE is one of the global leaders in the elevator and escalator industry. The
company has been committed to understanding the needs of its customers for the
past century, providing industry-leading elevators, escalators and automatic
building doors as well as innovative solutions for modernization and
maintenance. The company'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. In 2011, KONE had annual net sales of EUR
5.2 billion and on average 35,000 employees. KONE class B shares are listed on
the NASDAQ OMX Helsinki Ltd inFinland.

www.kone.com

Sender:

KONE Corporation

Henrik Ehrnrooth
CFO

Anne Korkiakoski
Executive Vice President
Marketing & Communications

[HUG#1651444]

Attachments:

KONE_Interim Report_Q3_2012_EN.pdf