KONE Oyj - Interim report (Q1 and Q3)

Interim Report of KONE Corporation for January-June 2013

KONE Corporation, stock exchange release, July 19, 2013  at 12:30 p.m. EET

KONE's Q2: Continued strong progress on a broad basis

April-June 2013
  * In April-June 2013, orders received totaled EUR 1,638 (4-6/2012: 1,513)
    million. Orders received grew by 8.2% at historical exchange rates and by
    8.7% at comparable exchange rates.
  * Net sales grew by 14.1% to EUR 1,762 (1,544) million. At comparable exchange
    rates the growth was 14.8%.
  * Operating income was EUR 242.8 (210.3) million or 13.8% (13.6%) of net sales
    (4-6/2012 figures exclude a one-time cost of EUR 37.3 million related to the
    support function development and cost adjustment programs).
  * Cash flow from operations (before financing items and taxes) was EUR 325.4
    (196.2) million.
  * KONE specifies its outlook for 2013. KONE's net sales is estimated to grow
    by 9-11% at comparable exchange rates as compared to 2012. The operating
    income (EBIT) is expected to be in the range of EUR 890-920 million,
    assuming that translation exchange rates do not materially deviate from the
    situation of the beginning of 2013. KONE previously estimated its net sales
    to grow by 7-10% at comparable exchange rates as compared to 2012. The
    previous operating income (EBIT) outlook was EUR 870-920 million, assuming
    that translation exchange rates do not materially deviate from the situation
    of the beginning of 2013.

January-June 2013
  * In January-June 2013, orders received totaled EUR 3,351 (1-6/2012: 2,879)
    million. Orders received grew by 16.4% at historical exchange rates and by
    16.3% at comparable exchange rates. The order book stood at EUR 5,874 (Dec
    31, 2012: 5,050) million at the end of June 2013.
  * Net sales grew by 13.5% to EUR 3,160 (2,785) million. At comparable exchange
    rates the growth was 13.7%.
  * Operating income was EUR 403.2 (344.9) million or 12.8% (12.4%) of net sales
    (1-6/2012 figures exclude a one-time cost of EUR 37.3 million related to the
    support function development and cost adjustment programs).
  * Cash flow from operations (before financing items and taxes) was EUR 623.2
    (448.4) million.

Key Figures

Comparative figures for 2012 have been restated according to the revised IAS 19"Employee benefits".
                                  4-6/       4-6/    1-6/       1-6/      1-12/
                                  2013       2012    2013       2012       2012

 Orders received          MEUR 1,638.2    1,513.4 3,350.6    2,879.3    5,496.2

 Order book               MEUR 5,874.4    5,305.3 5,874.4    5,305.3    5,050.1

 Sales                    MEUR 1,761.7    1,544.1 3,160.4    2,785.4    6,276.8

 Operating income (EBIT)  MEUR   242.8 210.3 (1))   403.2 344.9 (1)) 828.7 (1))

 Operating income (EBIT)     %    13.8  13.6 (1))    12.8  12.4 (1))  13.2 (1))

 EBITA                    MEUR   247.9 218.9 (1))   413.1 362.2 (1)) 861.5 (1))

 EBITA                       %    14.1  14.2 (1))    13.1  13.0 (1))  13.7 (1))

 Cash flow from
 operations
 (before financing items
 and taxes)               MEUR   325.4      196.2   623.2      448.4    1,070.8

 Net income               MEUR   193.7      134.0   319.5      243.5      611.0

 Total comprehensive                                                      591.7
 income                   MEUR   206.4      155.3   349.4      249.9

 Basic earnings per share  EUR    0.74       0.52    1.23       0.94       2.35

 Interest-bearing net                                                    -574.0
 debt                     MEUR  -613.3     -612.4  -613.3     -612.4

 Total equity/total                                                        47.1
 assets                      %    41.4       47.9    41.4       47.9

 Gearing                     %   -35.3      -32.8   -35.3      -32.8      -31.3


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:"Our business progress continued to be strong in the second quarter of the year.
Orders received grew by 8% to EUR 1,638 million, which is KONE's second highest
quarterly order level ever, right after the exception­ally high order intake of
the first quarter of this year. I am also very pleased with the continued slight
margin improvement of our orders received in a highly competitive market
environment. Sales grew by 14% with particularly strong growth in the new
equipment business. Growth was strongest in Asia-Pacific. Operating income grew
by 16% to EUR 243 million. Cash flow was very strong at EUR 325 million.

We have worked very actively to be able to further differentiate from our
competition with our product and service offerings. Last year we launched a new
global volume elevator offering, and the latest inspiring result of our R&D work
is the KONE UltraRope(TM) hoisting technology introduced during the second
quarter. This innovative technology brings significant benefits for elevator
solutions to buildings higher than 150 meters. It decreases the required space
and energy as well as the life-cycle costs, and on the other hand makes the
life-cycle longer. It also makes the installation faster, and additionally
reduces elevator downtime caused by building sway. KONE UltraRope(TM) has
already received the Council of Tall Buildings and Urban Habitat 2013 Innovation
Award.

I would like to take this opportunity to again thank all of our people for their
continued good work in all areas of our business. The good spirit within the
company and the desire to learn and develop our competitiveness have
continuously improved.

Our operating environment developed in line with our expectations in the second
quarter. The growth in China slowed down somewhat from the first quarter's level
as we expected but the market growth rate was above 10%, and our expectation is
that in 2013 the new equipment market in China will grow by 10-15%. Our long-
term view on the market in China also remains favorable, although we believe
that its development is transitioning from the very fast growth phase of the
past years towards a phase of more moderate growth. Also other markets in Asia-
Pacific developed positively during the quarter. In North America, market growth
contin­ued. Europe remains challenging, and very few new equipment markets in
Europe are experiencing growth. In addition to the weakness in Europe, the
pricing environment continues to intensify in many countries around the world in
both the new equipment and service markets.

We continue to actively develop KONE in the long-term in this globally diverse
market situation. We build new strengths in our development programs all the
time, we develop the quality and productivity of all of our operations, and we
invest increasingly in the development of our personnel as we strive for
catching the full potential of growth opportunities."


Operating environment in April-June 2013

In the second quarter of 2013, the new equipment market in Asia-Pacific
continued to grow rapidly, although growth slowed down clearly from the previous
quarter's rate. In other regions, market development remained largely unchanged.
New equipment demand in the EMEA region declined slightly in Central and North
Europe but remained at a relatively good level, and declined further in South
Europe. Market growth continued in North America. The major projects segment
grew driven by high activity levels in China and Southeast Asia. The global
modernization market was relatively stable, although with regional variation.
Maintenance markets grew in most countries, although at low rates in countries
where new equipment activity has been weak over the past years. Price
competition remained very intense, particularly in regions where the overall
market was at a low level.


Operating environment in January-June 2013

During January-June 2013, the new equipment market declined slightly in Central
and North Europe but remained at a relatively good level, whereas the market
situation in South Europe weakened further. Market recovery contin­ued in the
Americas. The market in Asia-Pacific continued to grow. The Chinese market grew
rapidly, although the growth rate slowed down as expected in the second quarter
of the year. The global modernization market was relatively stable, although
with clear regional variation. The maintenance mar­ket continued to grow. The
pricing environment was chal­lenging in all businesses, in particular in markets
suffering from a prolonged weakness in the new equipment market.

Market outlook 2013

In new equipment, the market in Asia-Pacific is expected to grow clearly in
2013. The new equipment market in China is expected to grow by 10-15% in 2013.
The market in Central and North Europe is expected to decline slightly, and the
mar­ket in South Europe to further decline from an already weak level. The
market in North America is expected to continue to grow.

The modernization market is expected to be at about the same level as in 2012 or
decline slightly.

The maintenance market is expected to continue to develop rather well in most
countries.

Business outlook 2013

KONE specifies its outlook for 2013.

KONE's  net sales is estimated to grow by 9-11% at com­parable exchange rates as
compared to 2012.

The  operating income  (EBIT) is  expected to  be in  the range  of EUR 890-920
million, assuming that translation exchange rates do not materially deviate from
the situation of the begin­ning of 2013.

Previous business outlook

KONE's net sales is estimated to grow by 7-10% at comparable exchange rates as
compared to 2012.

The operating income (EBIT) is expected to be in the range of EUR 870-920
million, assuming that translation exchange rates do not materially deviate from
the situation of the beginning of 2013.

Press and analyst meetings

A meeting for the press, conducted in Finnish, will be held on Friday, July
19, 2013 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 KONE's 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:

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
during the same day.
For further information, please contact:

Karla Lindahl, Director, Investor Relations, tel. +358 (0) 204 75 4441
Sender:

KONE Corporation

Henrik Ehrnrooth
CFO

Anne Korkiakoski
Executive Vice President
Marketing & Communications
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 2012, KONE had annual net sales of EUR
6.3 billion and approximately 40,000 employees. KONE class B shares are listed
on the NASDAQ OMX Helsinki Ltd in Finland.

www.kone.com


[HUG#1717589]

Attachments:

KONE s Interim Report for January-June 2013.pdf