2008-01-25 11:37:28 CET
2008-01-25 11:40:12 CET
REGULATED INFORMATION
KONE Oyj - Financial Statement Release
KONE Corporation's Financial Statement Bulletin 2007
KONE Corporation's Financial Statement Bulletin 2007
KONE Corporation, Stock Exchange Release, January 25, 2008 at 12:30
pm
Highlights of 2007 and Outlook 2008
- In 2007, orders received growth was 18 percent, or 21 percent at
comparable exchange rates. Orders received totaled EUR 3,675 (3,116)
million.
- Net sales increased by 13 percent and was EUR 4,079 (3,601)
million. At comparable exchange rates, growth was 16 percent.
- Operating income was EUR 320.8 (360.1) million. Excluding EUR 152.4
million (which includes the European Commission's fine, the Austrian
Cartel Court fine and the profit from the sale of the KONE Building),
operating income was EUR 473.2 million or 11.6 (10.0) percent of net
sales.
- Earnings per share were EUR 1.44 (1.86).
- KONE's target for 2008 is to achieve, at comparable exchange rates,
a growth of about 10 percent in net sales, compared to 2007. The
operating income (EBIT) target is to achieve a growth close to 20
percent compared to the 2007 figure of EUR 473 million. This
corresponds to an operating income (EBIT) margin of at least 12.0
percent.
- The Board proposes a dividend of EUR 1.30 per class B share.
Highlights of the last quarter of 2007
- In October-December, orders received growth was 27 percent, or 31
percent at comparable exchange rates. Orders received was strong in
all geographical regions and totaled EUR 901.9 (712.1) million.
- Net sales increased by 13 percent to EUR 1,294 (1,146) million. At
comparable exchange rates, the growth was 16 percent.
- Operating income was EUR 150.4 (123.4) million. Excluding the
Austrian Cartel Court's fine and the profit from the sale of the KONE
Building, operating income was EUR 160.8 million or 12.4 (10.8)
percent of net sales.
Key Figures
10-12/ 10-12/ 1-12/ 1-12/
2007 2006 change% 2007 2006 change%
Orders received MEUR 901.9 712.1 26.7 3,674.7 3,116.3 17.9
Order book MEUR 3,282.3 2,762.1 18.8 3,282.3 2,762.1 18.8
Sales MEUR 1,294.2 1,145.6 13.0 4,078.9 3,600.8 13.3
Operating income MEUR 160.8 1) 123.4 30.3 473.2 2) 360.1 31.4
Operating income % 12.4 1) 10.8 11.6 2) 10.0
Cash flow from
operations
(before
financing items
and taxes) MEUR 116.0 97.7 380.0 371.7
Net income MEUR 100.6 80.2 180.3 234.4
Interest-bearing
net debt MEUR 91.7 124.9 91.7 124.9
Total
equity/total
assets % 31.7 30.5 31.7 30.5
Gearing % 12.2 17.9 12.2 17.9
Basic earnings
per share EUR 0.80 0.64 1.44 1.86
1) Excluding a EUR 22.5 million provision for the Austrian Cartel
Court's fine decision and a EUR 12.1 million sales profit from the
sale of KONE Building
2) Excluding a EUR 142.0 million fine for the European Commission's
decision, a EUR 22.5 million provision for the Austrian Cartel
Court's fine decision and a EUR 12.1 million sales profit from the
sale of KONE Building
KONE President & CEO, Matti Alahuhta, in conjunction with the review:"2007 was a very good year for KONE Corporation both in terms of
operational financial performance and change progress. We achieved a
high growth both in orders received and in operating income. I am
particularly pleased that our year-on-year growth in orders received
accelerated in Q4. KONE's business performance development
outperformed the industry overall, which is a sign of our improving
competitiveness. This is in line with our long term goal, which is to
develop KONE into a very strong company in its industry both in terms
of market position and operating income," says Matti Alahuhta,
President and CEO of KONE Corporation
KONE's outlook for 2008 is also positive. According to Alahuhta, the
most significant mega trend of the next decades impacting KONE is
urbanization. "The expanding urban environments need an increasing
number of solutions to move a growing number of people smoothly,
safely, comfortably and efficiently.""We are pleased with our accomplishments and at the same time, we see
great potential to develop KONE further in order to fully exploit the
changes in our operating environment. Our 3-year-long first phase of
change will continue to bring results. Now we will move into the next
phase to make KONE a truly market-driven company," Alahuhta notes.
KONE'S Annual Report is available on the company's website at
www.kone.com. The Annual Report includes Financial Statements
condensed from the audited Financial Statements of KONE Corporation.
Analyst and Media Conference and Conference Call
A meeting for the press, conducted in Finnish, will be held on
January 25, 2008 at 2:00 PM in the KONE Building, Keilasatama 3,
Espoo.
A combined analyst meeting and conference call/web cast, conducted in
English, will be held on January 25, 2007 at 15:30 PM in the KONE
Building, Keilasatama 3, Espoo. Conference call participants may
access the conference directly with the following telephone numbers:
US callers: +1 334 323 6201
Non-US callers: +44 (0)20 7162 0025
Participant code: KONE
The conference call will also be available as a web cast on KONE's
website. An on demand version of the conference will be available at
www.kone.com later the same day.
About KONE
KONE is one of the world's leading elevator and escalator companies.
It provides customers with industry-leading elevators, escalators and
innovative solutions for maintenance and modernization. KONE also
provides maintenance services for automatic building doors. In 2007,
KONE had annual net sales of EUR 4.1 billion and approximately 32,500
employees. Its class B shares are listed on the OMX Nordic Exchange
in Helsinki, Finland.
www.kone.com
For further information please contact:
Aimo Rajahalme, Executive Vice President, Finance, tel. +358 (0) 204
75 4484
Sender:
KONE Corporation
Aimo Rajahalme
Executive Vice President,
Finance
Minna Mars
Senior Vice President,
Corporate Communications & IR
Financial Statement Bulletin 2007
Accounting Principles
KONE Corporation's financial statement bulletin has been prepared in
line with IAS 34, 'Interim Financial Reporting'. The financial
statement bulletin is based on the audited financial statement for
2007. The accounting principles for the financial statements have
been presented in the Annual Report 2007 published on January 25,
2008.
KONE's Fourth Quarter 2007 Review
Operating environment in October-December
In the fourth quarter, overall demand for new equipment continued to
be at a good level. The global maintenance market remained very
competitive while the modernization market continued to provide good
growth opportunities for KONE.
In the European, Middle East and African region (EMEA), the business
environment was good. The North European market (i.e. United Kingdom,
Germany, Benelux and the Nordic Countries) experienced no major
changes compared to the previous quarter. The overall Southern
European market activity remained on the same level as before, even
though the residential sector slowed down particularly in Spain. The
Eastern European and Middle East construction markets continued to
experience strong growth.
The North American new equipment market was solid in the fourth
quarter. The office and lodging segment remained quite strong giving
KONE a good opportunity to strengthen its position. Multi-family
residential demand continued to weaken. The single family housing
market again suffered from very low activity, but this is not a
market in which KONE participates.
In the Asia-Pacific region, growth was strong in most markets. In
China, the construction activity continued to expand to 2nd and 3rd
tier cities. Furthermore, the Indian and Australian markets developed
well.
Financial performance in October-December
KONE's orders received in the last quarter of 2007 increased by
approximately 27 percent and totaled EUR 901.9 (712.1) million. At
comparable exchange rates, the growth was approximately 31 percent.
The growth in orders was strongest in the Asia-Pacific region. At the
same time, orders received growth continued to be very strong in the
Americas and was also very good in Europe and the Middle East. Only
new equipment orders and modernization orders are included in orders
received.
The largest orders received in October-December included orders to
supply and install elevators and escalators for the new Shanghai
International Finance Centre (IFC) in China, a new multi-purpose
development in Australia, a high-end commercial development in
Mumbai, India, and for the design, supply and installation of all
elevators for Royal Caribbean International's Genesis 2 luxury
passenger cruise ship.
KONE's net sales grew by 13 percent compared with October-December
2006 and totaled EUR 1,294 (1,146) million. At comparable exchange
rates, the growth was 16 percent. Growth was strongest in
Asia-Pacific.
Operating income for the October-December period totaled EUR 150.4
(123.4). Excluding the Austrian Cartel Court's fine and the profit
from the sale of the KONE Building, the operating income was EUR
160.8 million or 12.4 (10.8) percent of net sales. The intensive work
with the development programs continued to contribute to the good
development.
In November, KONE sold the KONE Building. The selling price was EUR
35 million. In December, the Austrian cartel court announced its
decision regarding anticompetitive practices in the local elevator
and escalator markets. It found KONE's Austrian subsidiary and four
other companies operating in the elevator and escalator industry to
have been involved in anticompetitive practices, and consequently
imposed a fine of EUR 22.5 million on KONE's Austrian subsidiary.
Sales by geographical areas, MEUR
10-12/2007 % 10-12/2006 % 1-12/2007 % 1-12/2006 %
EMEA 1) 867.1 67 762.1 67 2,675.3 65 2,319.4 65
Americas 245.2 19 232.1 20 840.8 21 805.1 22
Asia-Pacific 181.9 14 151.4 13 562.8 14 476.3 13
Total 1,294.2 1,145.6 4,078.9 3,600.8
1) EMEA = Europe, Middle East, Africa
Review January-December 2007
KONE's Operating Environment
The market situation was strong for new equipment and modernization
in most markets and continued to create favorable conditions for
KONE's growth. The overall demand for maintenance was good, but price
competition was tough.
In the European, Middle East and African region (EMEA), the business
environment was favorable in 2007. The new equipment market was
strong in Central, Northern and Eastern Europe as well as in the
Middle East. The biggest growth was seen in the Middle East and
Russia. The Southern European new equipment market activity remained
fairly stable due to the office market activity, despite that the
residential market slowed down somewhat. Modernization demand
continued to grow, mainly driven by the European Safety Norms (SNEL)
and the need for upgrades, due to the aging of the equipment base.
In the Americas, market growth was good. The North American new
equipment demand was driven mainly by high investment activity in
office, hospital and commercial developments. The multi-family
residential market weakened somewhat in the United States. The
significant deterioration in the single-house market in the United
States did not affect KONE's business in 2007.
In the Asia-Pacific region, market growth was strong in most markets.
The new equipment market continued to grow fast, driven by strong
urbanization and economic growth. The Chinese market continued to
grow fast. The Indian and Australian markets continued to develop
well. In Australia, both the volume and major project markets
developed favorably.
Orders Received and Order Book
KONE's market position continued to strengthen in 2007. KONE's orders
received increased by approximately 18 percent on 2006 and totaled
EUR 3,675 (2006: 3,116) million. At comparable exchange rates, the
growth was approximately 21 percent. Only new equipment and
modernization orders are included in orders received. The growth in
orders was strongest in the Asia-Pacific region. At the same time,
orders received growth was very good in Europe and the Middle East,
and also in the Americas during the second half of the year.
The order book increased from the end of 2006 by 19 percent and stood
at EUR 3,282 (2,762) million at the end of December 2007. At
comparable exchange rates, the growth was about 24 percent. As
earlier, the margin of the order book continued to be at a good
level.
In the EMEA region, most markets continued to contribute very
positively to KONE's orders received in 2007. KONE received several
major orders during the year, especially from the United Kingdom,
Russia and the Middle East. During 2007, KONE was also able to
further strengthen its position in the modernization market.
In the Americas, KONE experienced a strong order intake in the new
equipment and modernization markets. KONE's advanced elevator and
escalator modernization solutions increased customer demand.
In the Asia-Pacific region, KONE's new equipment order intake
continued to develop very strongly in most markets. The company's
success in strengthening its position in major projects was also
encouraging. KONE was one of the fastest growing elevator and
escalator companies in China and became the market leader in the
machine-room-less (MRL) segment in 2007. In Australia and India, KONE
also continued to perform very well.
Net Sales
KONE's net sales rose by approximately 13 percent, compared to last
year, and totaled EUR 4,079 (3,601) million. Growth at comparable
currency rates was approximately 16 percent. The increase was due to
both the company's strengthened competitiveness and good conditions
in almost all markets. Net sales growth was almost entirely organic.
The amount of sales consolidated from the companies acquired in 2007
did not have a material impact on the Group sales of the financial
period.
New equipment sales accounted for EUR 1,821 (1,491) million of the
total and represented an approximate 22 percent growth over the
comparison period. At comparable currency rates, the growth was
approximately 25 percent.
Service sales increased by 7 percent and totaled EUR 2,258 (2,110)
million. At comparable currency rates the growth was approximately 10
percent.
Of the sales, 65 (65) percent were generated from EMEA, 21 (22)
percent by the Americas and 14 (13) percent by Asia-Pacific. The
weakened US dollar had an impact on the geographical sales mix. The
largest individual countries in terms of net sales in 2007 were the
United States, France, the United Kingdom and Italy.
Financial Result
KONE's operating income was EUR 320.8 (360.1) million. Excluding the
net cost of EUR 152.4 million (which includes the European
Commission's fine, the Austrian Cartel Court fine and the profit from
the sale of the KONE Building), operating income improved by
approximately 31.4 percent in comparison to 2006 and was EUR 473.2
million or 11.6 (10.0) percent of net sales. The strong growth was
the result of sales growth, healthy sales margins and improved
productivity. The five development programs started in 2005
contributed significantly to the positive performance development.
Net financing items were EUR -8.5 (-3.5) million.
KONE's income before taxes was EUR 314.0 (356.3) million. Taxes
totaled EUR 133.7 (121.9) million. Excluding the result impact of the
EUR -164.5 million fines, this represents a tax rate of 27.9 (2006:
34.2) percent. Net income for the financial period was EUR 180.3
(234.4) million.
The profit attributable to shareholders was EUR 180.1 (234.8)
million, corresponding to earnings per share of EUR 1.44 (1.86).
Equity per share was EUR 5.96 (5.55).
Cash Flow and Financing
Cash flow generated from operations (before financing items and
taxes) was EUR 380.0 (371.7) million. Net working capital was
negative at EUR -121.8 (December 31, 2006: -139.5) million, including
financing items and taxes. The EUR 142.0 million fine for the
European Commission's decisions was booked into interest-bearing
debts in the balance sheet. The Austrian cartel court's fine of EUR
22.5 million was recognized as a provision.
Interest-bearing net debt totaled EUR 91.7 (December 31, 2006: 124.9)
million. Gearing was 12.2 (17.9) percent. KONE's total equity/total
assets ratio was 31.7 (30.5) percent.
Capital Expenditure, Acquisitions and Divestments
KONE's capital expenditure, including acquisitions, totaled EUR 116.9
(150.5) million. Capital expenditure, excluding acquisitions, was
mainly related to new capacity and replacement investments.
Acquisitions accounted for EUR 49.6 (90.1) million of this figure.
Acquisitions made during the accounting period had no material effect
on the 2007 full year figures.
In 2007, the most notable acquisitions was the acquisition of MIRO
Elevators Limited, a Canadian service company. The ownership of the
shares of MIRO Elevators Limited was transferred to KONE in January.
In July, KONE signed an agreement to acquire UAB Elektros Pavara ir
Ko, a Lithuanian elevator company. The ownership of the shares of
Elektros Pavara was transferred to KONE immediately. The company
installs, maintains and modernizes elevators and escalators.
Furthermore, KONE acquired Cierma, a French service company. The
ownership of the shares was transferred in July. Cierma is active
mainly in the areas of Nice and Cannes. KONE also acquired the
remaining 90 percent of a St. Petersburg based elevator service
company called RSU5. Since 2006, KONE has had a holding of 10 percent
in the company. KONE now has full ownership. At the end of the year,
KONE acquired an American elevator company, Florida Coast Elevator,
which operates in the areas of Fort Lauderdale, Miami and Dade
County.
Organizational Development
KONE implemented an organizational change in the United States during
the second half of the year. The objective is to improve customer
focus, increase cross-functional synergies and raise productivity. In
addition, as part of the development, KONE will establish its
Americas headquarters in Chicago at the beginning of 2008.
Research and Development
Research and product development expenses totaled EUR 50.7 (50.3)
million, representing 1.2 (1.4) percent of net sales. R&D expenses
include development of new product concepts and further developments
of existing products and services.
During 2007, new solutions to expand KONE's accessible markets and to
strenghten its competitiveness in both volume and high-rise were
released.
In Europe, a new release of the KONE MonoSpace® elevator was launched
to improve the offering. This release added further flexibility to
the product. The solution now complies with new regulations on fire
fighting elevators. Renewed accessibility features have also been
added. A radical visual restyling of the car's finishing, design,
ceiling and accessories were undertaken. In addition, better space
efficiency (pit reduction) for freight elevators was achieved.
In the North American market, product enhancements and installation
improvements made KONE's products even more attractive for its
customers. The KONE EcoSpace® elevator continued to experience strong
growth and opened a good market opportunity for machine-room-less
technology (MRL) in the modernization of hydraulic elevators.
In the Asia-Pacific region, new functional and cost effective
solutions were introduced, especially for the residential market.
Designed solutions for the hotel and high-end commercial segments
were also launched. In addition, a collection of different designs
and feature options were released to increase the flexibility in
visual offerings and product enhancements.
To support customer service, new eBusiness tools such as a KONE
Architect Toolbox on Internet and an electronic 3D Car Designer were
launched. In addition, a number of service products were released.
For example, an updated modernization package offering customers
improved flexibility in electrification, space optimization, a new
parallel signalization family and a new version of a hoisting
modernization package.
Noteworthy Events During the Financial Period
In 2004, the European Commission started an investigation concerning
anticompetitive practices in the elevator and escalator market in
Europe. The outcome of the three-year process was announced on
February 21, 2007. The Commission found KONE's subsidiaries in
Belgium, Luxembourg, Germany and the Netherlands to have been
involved in local anticompetitive practices prior to early 2004. The
Commission imposed a EUR 142 million fine on KONE. The fine was
imposed for anticompetitive practices in Germany and the Netherlands.
KONE did not receive a fine in relation to Belgium and Luxembourg, as
KONE was the first company to cooperate with the Commission regarding
these countries.
In May, KONE appealed the European Commission's decision. EUR 142.0
million for the European Commission's decision was booked into
interest-bearing debts in the balance sheet. The amount of the fine
may change due to the appeal.
In February, KONE's Austrian subsidiary was notified by the Austrian
cartel court of the initiation of proceedings for the imposition of
fines against companies operating in the Austrian elevator and
escalator market, including KONE's Austrian subsidiary. The case
relates to alleged anticompetitive practices in the local market
before mid-2004. KONE immediately initiated a thorough internal
investigation.
In December, the Austrian cartel court announced its decision
regarding the anticompetitive practices in the local elevator and
escalator markets. It found KONE's Austrian subsidiary and four other
companies operating in the elevator and escalator industry to have
been involved in anticompetitive practices. Consequently, the cartel
court imposed a fine of EUR 22.5 million on KONE's Austrian
subsidiary. The Austrian cartel court's fine was recognized as a
provision.
In November, KONE sold the KONE Building. The selling price was EUR
35 million. KONE will stay in the building as a tenant under a
long-term lease agreement.
Personnel
The objective of KONE's personnel strategy is to help the company
meet its business targets. The main goals of the strategy are to
further increase the interest in KONE as an employer and to secure
the availability, commitment and continuous development of its
personnel. KONE's activities are also guided by ethical principles.
The personnel's rights and responsibilities include the right to a
safe and healthy working environment, personal wellbeing as well as
the prohibitation of discrimination.
KONE had 32,544 (December 31, 2006: 29,321) employees at the end of
2007. The average number of employees was 30,796 (28,366). Also in
2007, most of the personnel growth was in the fastest growing
markets, such as Asia-Pacific and the Middle East. Additional
recruitment in other markets was carried out mainly in installation
and modernization operations due to growing volumes.
The geographical distribution of KONE employees was 56 (58) percent
in EMEA, 18 (18) percent in the Americas and 26 (24) percent in
Asia-Pacific.
Environment
The biggest environmental impact of an elevator is generated by its
use. Consequently, reducing the environmental impact of equipment is
most effective when the product is being developed and the optimal
solution for each building is being planned. Therefore, KONE
continuously strives to improve the eco-efficiency of its solutions
through effective research and development.
KONE takes care of the environment not only by its own proactive
initiatives, but also by continously monitoring the changes made to
laws and recommendations related to its business. Environmental
issues are coordinated on a corporate level; however KONE's country
organizations and production facilities are responsible for handling
local environmental issues.
Capital and Risk Management
The ultimate goal of capital and risk management in the KONE Group is
to contribute to the creation of shareholder value.
Capital is managed in order to maintain a strong financial position
and to ensure that the Group's funding needs can be optimized at all
times in a cost-effecient way. KONE's philosophy is to take an
aggregated view of share price development, dividends and the
possible purchase of own shares as components of the total
shareholder return.
KONE's business activities are exposed to risks, of which the most
significant are increases in personnel costs and raw material costs,
fluctuations in currency and changes in the development of the world
economy.
A rise in raw material prices is reflected directly in the production
costs of components made by KONE, such as doors and cars, and
indirectly in the prices of purchased components. The price of oil
also affects maintenance costs.
As a global group, KONE is exposured to foreign currency fluctuations
and currencies. The Group Treasury function manages currency and
other financial risks centrally based on principles approved by the
Board of Directors. As the expenses and income of the elevator and
escalator business occur mainly in the same currency, exchange rate
movements are reflected mostly in the translation of the achieved
result into euros.
Appointment to the Executive Board
KONE appointed Vance Tang as the Executive Vice President and Area
Director responsible for the Americas and member of the Executive
Board as of February 19, 2007.
Decisions of the Annual General Meeting
KONE Corporation's Annual General Meeting in Helsinki on February 26,
2007 confirmed the number of members of the Board of Directors to be
seven and it was decided to elect one deputy member. Re-elected as
full members of the Board were Matti Alahuhta, Reino Hanhinen, Antti
Herlin, Sirkka Hämäläinen-Lindfors, Sirpa Pietikäinen, Masayuki
Shimono and Iiro Viinanen. Jussi Herlin was elected as deputy member.
The term of the Board ends at the next Annual General Meeting.
At its meeting held after the Annual General Meeting, the Board of
Directors elected Antti Herlin as its Chairman and Sirkka
Hämäläinen-Lindfors as Vice Chairman of the Board.
In addition, the Board of Directors' proposal that the Annual General
Meeting authorize it to repurchase KONE's own shares with assets
distributable as profit was approved. Altogether, no more than
12,785,000 shares may be repurchased, of which no more than 1,905,000
are to be class A shares and 10,880,000 class B shares, taking into
consideration the provisions of the Companies Act regarding the
maximum amount of treasury shares the Company is allowed to possess.
The proposed amount corresponds to nearly 10 percent of the share
capital of the Company and the total voting rights.
In addition, the Board of Directors was authorized to decide on the
distribution of any shares repurchased by the company. The
authorization is limited to a maximum of 1,905,000 class A shares and
10,880,000 class B shares. The Board of Directors is authorized to
decide to whom and in which order the repurchased shares are
distributed. The Board of Directors may decide on the distribution of
repurchased shares otherwise than in proportion to the existing
pre-emptive right of shareholders to purchase the Company's own
shares.
The repurchased shares may be used as compensation in acquisitions
and in other arrangements, as well as to implement the Company's
share-based incentive plans in the manner and to the extent decided
by the Board of Directors. The Board of Directors also has the right
to decide on the distribution of the shares in public trading on the
OMX Nordic Exchange Helsinki in Finland for the purpose of financing
possible acquisitions. The shares shall be distributed at least at
the market price at the moment of their transfer determined on the
basis of the trading price for class B shares determined in public
trading on the OMX Nordic Exchange Helsinki.
These authorizations shall remain in effect for a period of one year
from the date of decision of the Annual General Meeting.
In addition, the Board of Directors was authorized to grant options.
On the basis of this authorization, the Board of Directors may decide
to grant to key personnel of the group or to the company's wholly
owned subsidiary, Kone Capital Oy, options which entitle them to
subscribe for a maximum of 2,000,000 new class B shares. The company
has a valid financial reason to grant options, because the options
are intended to form a part of the group's incentive and commitment
plan for key personnel. This authorization will remain in force for
one year following the decision of the Annual General Meeting.
PricewaterhouseCoopers Oy, Authorized Public Accountants, was
re-elected as the Company's auditor, with Heikki Lassila, APA, as the
principally responsible auditor.
The Annual General Meeting decided to pay a dividend of EUR 0.99 per
class A share and EUR 1.00 per class B share for the financial year
which ended December 31, 2006. The date of the dividend payment was
set for March 8, 2007.
Share Capital and Market Capitalization
The KONE 2005A and 2005B options based on the KONE Corporation option
program 2005 were listed on the main list of the OMX Nordic Exchange
Helsinki on June 1, 2005. Each option entitles its holder to
subscribe for six (6) class B shares at a price of EUR 8.04 per
share.
As of December 31, 2007, 843,084 shares have been subscribed for with
the options, raising KONE's share capital to EUR 64,176,297.00,
comprising 109,300,416 listed class B shares and 19,052,178 unlisted
class A shares.
During 2007, 142,920 shares were subscribed for with the 2005A
options and 143,046 with the 2005B options.
The remaining 2005A options entitle their holders to subscribe for
83,652 class B shares, while the remaining 2005B options entitle
their holders to subscribe for 381,774 class B shares. The share
subscription period for series A options and series B options ends on
March 31, 2008 and March 31, 2009 respectively. The remaining number
of shares that can be subscribed for is 465,426. The subscription
price is EUR 8.04 per share.
In 2005, KONE also granted a conditional option program, 2005C, and a
conditional share-based incentive plan. The share subscription period
of the 2005C option program will begin April 1, 2008, only if the
average net sales growth of the group for the 2006 and 2007 financial
years exceeds market growth, the operating income (EBIT) of the 2006
financial year exceeds EBIT for the 2005 financial year, and EBIT for
the 2007 financial year exceeds EBIT for the 2006 financial year. The
achievement of these criteria shall be confirmed at the Annual
Shareholder Meeting on February 25, 2008.
In April 2007, 129,000 class B shares assigned to the share-based
incentive plan for the company's senior management were transferred
to the participants due to achieved targets for the 2006 financial
year.
In December, KONE Corporation's Board of Directors decided at its
meeting to grant stock option rights to approximately 350 employees
of its global organization. The decision was based on the
authorization received from the Shareholders meeting on February 26,
2007. A maximum of 2,000,000 options in total will be granted. The
share subscription period for stock option 2007 will be April 1,
2010-April 30, 2012. The share subscription period begins only if the
average turnover growth of the KONE Group for 2008 and 2009 financial
years exceeds market growth and if the earnings before interest and
taxes (EBIT) of the KONE Group for the financial year 2008 exceeds
the EBIT for the 2007 financial year, and the EBIT for the 2009
financial year exceeds the EBIT for the 2008 financial year.
At the end of the financial year, the Board of Directors had no valid
authorization to increase the share capital or to issue stock options
after the Board of Directors' decision made December 5, 2007 to grant
new stock options.
KONE's market capitalization grew by approximately 12 percent during
2007 and was EUR 6,027 million on December 31, 2007, disregarding own
shares in the Group's possession.
Repurchase of KONE Shares
On the basis of the Annual General Meeting's authorization, KONE
Corporation's Board of Directors decided to commence repurchasing
shares at the earliest on March 8, 2007.
During the financial year, KONE used its authorization and bought
back 6,000 of its own shares in February. In April 2007, 129,000
class B shares assigned to the share-based incentive plan for the
company's senior management were transferred to the participants due
to achieved targets for the financial year 2006. At the end of the
reporting period, the group had 2,615,753 class B shares in its
possession (at an average price of EUR 33.58). The shares in the
group's possession represent 2.4 percent of the total number of class
B shares. This corresponds to 0.9 percent of the total voting rights.
Shares traded on the OMX Nordic Exchange Helsinki
The OMX Nordic Exchange Helsinki traded 95.9 million KONE
Corporation's class B shares in 2007, equivalent to a turnover of EUR
4,487 million. The share price on December 31, 2007 was EUR 47.93.
The highest quotation was EUR 59.80 and the lowest 39.52.
Flagging Notifications
On March 8, 2007 Morgan Stanley Investment Management Limited
disclosed to KONE Corporation pursuant to the Securities Markets Act,
chapter 2, section 9, that its holding in KONE Corporation had
exceeded five (5) percent of the share capital. The date of change in
the holdings was November 29, 2005.
On September 13, 2007 Morgan Stanley Investment Management Limited
disclosed to KONE Corporation pursuant to the Securities Markets Act,
chapter 2, section 9, that its holding in KONE Corporation was less
than five (5) percent of the share capital. The date of change in the
holdings was September 11, 2007.
Outlook
We estimate that the market will continue to create favorableopportunities for KONE to continue to grow in 2008 although market
growth will not be equally strong in all markets this year as in
2007, due to the weakened economic outlook.
KONE's target for 2008 is to achieve, at comparable exchange rates, a
growth of about 10 percent in net sales, compared to 2007. The
operating income (EBIT) target is to achieve a growth close to 20
percent compared to the 2007 figure of EUR 473 million. This
corresponds to an operating income (EBIT) margin of at least 12.0
percent.
The Board's Proposal for the Distribution of Profit
The parent company's non-restricted equity on December 31, 2007 is
EUR 1,429,280,929.29 of which net profit from the financial year is
EUR 283,670,898.83.
The Board of Directors proposes to the Annual general Meeting that a
dividend of EUR 1.29 be paid on the 19,052,178 class A shares and EUR
1.30 on the outstanding 106,955,663 class B shares.
The total amount of proposed dividends will be EUR 163,619,671.52.
The Board of Directors further proposes that the rest, EUR
1,265,661,257.77 be retained and carried further.
The dividend record date for the proposed dividend is February 28,
2008 and the dividend will be paid on March 6, 2008. All the shares
existing on the dividend record date are entitled to dividend for the
year 2007, except for the own shares held by the parent company.
Annual General Meeting 2008
KONE Corporation's Annual General Meeting will be held at 11.00 a.m.
on Monday, February 25, 2008 at Finlandia Hall, Mannerheimintie 13,
in Helsinki, Finland
Helsinki, January 25, 2008
KONE Corporation's Board of Directors
This bulletin contains forward-looking statements that are based on
the current expectations, known factors, decisions and plans of the
management of KONE. Although management believes that the
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to be correct. Accordingly, results could differ materially
from those implied in the forward-looking statements as a result of,
among other factors, changes in economic, market and competitive
conditions, changes in the regulatory environment and other
government actions and fluctuations in exchange rates.
Consolidated Statement of Income
10-12/ 10-12/ 1-12/ 1-12/
MEUR 2007 % 2006 % 2007 % 2006 %
Sales 1,294.2 1,145.6 4,078.9 3,600.8
Costs,
expenses and
depreciation -1,143.8 -1,022.2 -3,758.1 -3,240.7
Operating
Income 150.4 11.6 123.4 10.8 320.8 7.9 360.1 10.0
Share of
associated
companies' net
income 0.8 0.2 1.7 -0.3
Financing
income 4.8 4.8 16.6 16.1
Financing
expenses -6.2 -4.5 -25.1 -19.6
Income before
Taxes 149.8 11.6 123.9 10.8 314.0 7.7 356.3 9.9
Taxes -49.2 -43.7 -133.7 -121.9
Net Income 100.6 7.8 80.2 7.0 180.3 4.4 234.4 6.5
Net Income
attributable
to:
Shareholders
of the parent
company 100.7 80.1 180.1 234.8
Minority
interests -0.1 0.1 0.2 -0.4
Total 100.6 80.2 180.3 234.4
Earnings per
share for
profit
attributable
to the
shareholders
of the parent
company, EUR
Basic earnings
per share,
EUR 0.80 0.64 1.44 1.86
Diluted
earnings per
share, EUR 0.79 0.63 1.42 1.85
Consolidated Balance Sheet
Assets MEUR Dec 31, 2007 Dec 31, 2006
Non-Current Assets
Goodwill 577.2 557.3
Other intangible assets 53.2 58.4
Property, plant and equipment 201.0 217.7
Investments in associated companies 10.9 7.7
Shares 114.5 116.5
Available-for-sale investments 5.9 5.4
Non-current loans and receivables I 1.7 5.1
Deferred tax assets 118.6 134.1
Total Non-Current Assets 1,083.0 1,102.2
Current Assets
Inventories 773.2 668.8
Advance payments received -694.6 -552.1
Accounts receivable 706.3 622.0
Deferred assets 174.1 126.0
Income tax receivables 44.1 57.1
Current loans and receivables I 118.9 158.9
Cash and cash equivalents I 154.9 109.5
Total Current Assets 1,276.9 1,190.2
Total Assets 2,359.9 2,292.4
Equity and Liabilities MEUR Dec 31, 2007 Dec 31, 2006
Capital and reserves attributable to
the shareholders of the parent company
Share capital 64.2 64.0
Share premium account 100.2 98.0
Fair value and other reserves 5.5 -0.5
Translation differences -31.3 -14.0
Retained earnings 610.3 547.6
Total Shareholders' Equity 748.9 695.1
Minority interests 0.3 3.5
Total Equity 749.2 698.6
Non-Current Liabilities
Loans I 175.8 100.2
Deferred tax liabilities 25.9 30.3
Employee benefits 131.9 145.0
Total Non-Current Liabilities 333.6 275.5
Provisions 86.6 71.8
Current Liabilities
Current portion of long-term loans I 62.1 48.6
Other liabilities I 129.3 249.6
Accounts payable 274.6 231.5
Accruals 632.5 619.2
Income tax payables 92.0 97.6
Total Current Liabilities 1,190.5 1,246.5
Total Equity and Liabilities 2,359.9 2,292.4
Items designated "I" comprise interest-bearing net debt
Consolidated Statement of Changes in Equity
1) Share capital
2) Share premium account
3) Fair value and other reserves
4) Translation differences
5) Own shares
6) Retained earnings
7) Minority interests
8) Total equity
MEUR 1) 2) 3) 4) 5) 6) 7) 8)
Jan 1, 2007 64.0 98.0 -0.5 -14.0 -91.2 638.8 3.5 698.6
Net income for the
period 180.1 0.2 180.3
Items booked directly
into equity:
Transactions with
shareholders and
minority shareholders:
Dividends paid -125.1 -125.1
Issue of shares
(option rights) 0.2 2.2 2.4
Purchase of own shares -0.3 -0.3
Sale of own shares -
Change in minority
interests -3.4 -3.4
Cash flow hedge 6.0 6.0
Translation
differences -18.4 -18.4
Hedging of foreign
subsidiaries 1.5 1.5
Tax impact of hedging -0.4 -0.4
Option and share-based
compensation 3.7 4.3 8.0
Dec 31, 2007 64.2 100.2 5.5 -31.3 -87.8 698.1 0.3 749.2
MEUR 1) 2) 3) 4) 5) 6) 7) 8)
Jan 1, 2006 63.9 96.4 -5.1 9.9 -21.9 523.2 2.8 669.2
Net income for the
period 234.8 -0.4 234.4
Items booked directly
into equity:
Transactions with
shareholders and
minority shareholders:
Dividends paid -126.9 -126.9
Issue of shares (option
rights) 0.1 1.6 1.7
Purchase of own shares -69.3 -69.3
Sales of own shares -
Change in minority
interests 1.1 1.1
Cash flow hedge 4.6 4.6
Translation differences -30.4 -30.4
Hedging of foreign
subsidiaries 8.8 8.8
Tax impact of hedging -2.3 -2.3
Option and share-based
compensation 7.7 7.7
Dec 31, 2006 64.0 98.0 -0.5 -14.0 -91.2 638.8 3.5 698.6
Consolidated Statement of Cash Flow
Jan 1-Dec 31,
MEUR Jan 1-Dec 31, 2007 2006
Cash receipts from customers 4,168.1 3,656.1
Cash paid to suppliers and employees -3,788.1 -3,284.4
Cash Flow from Operations 380.0 371.7
Interest received 13.9 12.5
Interest paid -18.8 -15.6
Dividends received 3.3 2.2
Other financial items -12.5 -4.7
Income taxes paid -119.9 -100.3
Cash Flow from Operating Activities 246.0 265.8
Capital expenditure -66.0 -62.2
Proceeds from sales of fixed assets 42.8 0.6
Acquisitions, net of cash -71.4 -44.1
Proceeds from divested operations,
net of cash - 9.3
Cash Flow from Investing Activities -94,6 -96.4
Cash Flow after Investing Activities 151.4 169.4
Change in loans receivable 42.0 -14.3
Change in current creditors, net -113.9 47.7
Proceeds from long-term borrowings 149.0 -
Repayments of long-term borrowings -59.1 -9.5
Purchase of own shares -0.3 -69.3
Sale of own shares - -
Issue of shares 2.4 1.7
Dividends paid -125.1 -126.8
Cash Flow from Financing Activities -105.0 -170.5
Change in Cash and Cash Equivalents 46.4 -1.1
Cash and cash equivalents at end of
period 154.9 109.5
Translation differences 1.0 2.9
Cash and cash equivalents at
beginning of period 109.5 113.5
Change in Cash and Cash Equivalents 46.4 -1.1
Reconciliation of Net Income to Cash Flow from
Operating Activities
Net income 180.3 234.4
Depreciation and impairment 70.2 61.3
Income before Change in Working
Capital 250.5 295.7
Change in receivables -101.2 -102.4
Change in payables 58.8 70.5
Change in inventories 37.9 2.0
Cash Flow from Operating Activities 246.0 265.8
In drawing up the Statement of Cash Flow, the impact of variations in
exchange rates has been eliminated by adjusting the beginning balance
to reflect the exchange rate prevailing at the time of the closing of
the books for the period under review.
Change in Interest-bearing Net Debt
Jan 1-Dec 31, Jan 1-Dec 31,
MEUR 2007 2006
Interest-bearing net debt at beginning of
period 124.9 99.3
Interest-bearing net debt at end of
period 91.7 124.9
Change in interest-bearing net debt -33.2 25.6
The EUR 142.0 million fine for the European Commision's decision is
included in the interest-bearing net debt of December 31, 2007. KONE
has appealed the decision and therefore the amount of the fine may
change.
Key Figures
1-12/2007 1-12/2006
Basic earnings per share EUR 1.44 1.86
Diluted earnings per share EUR 1.42 1.85
Equity per share EUR 5.96 5.55
Interest bearing net debt MEUR 91.7 124.9
Total equity/total assets % 31.7 30.5
Gearing % 12.2 17.9
Return on equity % 24.9 34.3
Return on capital employed % 30.4 35.4
Total assets MEUR 2,359.9 2,292.4
Assets employed MEUR 840.9 823.5
Working capital (including financing and tax
items) MEUR -121.8 -139.5
Sales by Geographical Areas
MEUR 1-12/2007 % 1-12/2006 %
EMEA 1) 2,675.3 65 2,319.4 65
Americas 840.8 21 805.1 22
Asia Pacific 562.8 14 476.3 13
Total 4,078.9 3,600.8
1) EMEA = Europe, Middle East, Africa
Orders Received
MEUR 1-12/2007 1-12/2006
3,674.7 3,116.3
Order Book
MEUR 31.12.2007 31.12.2006
3,282.3 2,762.1
Capital Expenditure
MEUR 1-12/2007 1-12/2006
In fixed assets 58.1 51.3
In leasing agreements 9.2 9.1
In acquisitions 49.6 90.1
Total 116.9 150.5
Expenditure for R&D
MEUR 1-12/2007 1-12/2006
50.7 50.3
Expenditure for R&D as percentage of sales 1.2 1.4
Number of employees
1-12/2007 1-12/2006
Average 30,796 28,366
In the end of the period 32,544 29,321
Commitments
Dec 31, 2007 Dec 31, 2006
Mortgages
Group and parent company 0.7 30.7
Pledged assets
Group and parent company 4.8 5.4
Guarantees
Associated companies 5.3 1.8
Others 6.3 3.4
Operating leases 148.9 115.8
Total 166.0 157.1
Possible unidentified debts and liabilities of the demerged Kone
Corporation were transferred to the new KONE Corporation according to
the demerger plan.
KONE leases cars, machinery & equipment and buildings under
non-cancelable operating leases. The leases have varying terms and
renewal rights.
The future minimum lease payments under
non-cancelable operating leases Dec 31, 2007 Dec 31, 2006
Less than 1 year 39.0 34.6
1-5 years 91.2 72.5
Over 5 years 18.7 8.7
Total 148.9 115.8
The aggregate operating lease expenses totaled EUR 44.7 (37.1)
million.
Derivatives
Derivative Derivative Net fair Net fair
assets liabilities value value
Fair values of derivative
financial instruments, 31 Dec, 31 Dec,
MEUR 31 Dec, 2007 31 Dec, 2007 2007 2006
FX Forward contracts
Cash flow hedges under
IAS 39 hedge accounting 7.1 0.4 6.7 0.4
Net investment hedges
under IAS 39 hedge
accounting 0.9 0.5 0.4 0.5
Other hedges 4.1 5.2 -1.1 0.3
Currency options 0.0 0.0 0.0 0.0
Cross-currency swaps, due
under one year
Under IAS 39 hedge
accounting 2.9 - 2.9 -
Other net investment
hedges - - - 43.2
Cross-currency swaps, due
in 1-3 years
Under IAS 39 hedge
accounting 2.6 - 2.6 2.8
Other net investment
hedges 6.3 - 6.3 -
Electricity derivatives 0.9 - 0.9 0.3
Total 24.8 6.1 18.7 47.5
Nominal values of derivative financial
instruments, MEUR 31 Dec, 2007 31 Dec, 2006
FX Forward contracts
Cash flow hedges under IAS 39 hedge
accounting 159.4 119.3
Net investment hedges under IAS 39 hedge
accounting 47.4 68.9
Other hedges 320.5 204.6
Currency options 15.6 32.3
Cross-currency swaps, due under one year
Under IAS 39 hedge accounting 20.0 -
Other net investment hedges - 153.8
Cross-currency swaps, due in 1-3 years
Under IAS 39 hedge accounting 23.6 43.6
Other net investment hedges 113.1 -
Electricity derivatives 2.5 2.9
Total 702.1 625.4
IAS 39 hedge accounting is not applied to currency options and
electricity derivatives. Derivatives are hedging transactions in line
with KONE hedging policy.
In the balance sheet, derivative assets and liabilities are included
in current assets' deferred assets and current liabilities' accruals
according to their principal nature.
Share and shareholders December 31, Class A Class B
2007 shares shares Total
Number of shares 19,052,178 109,300,416 128,352,594
Own shares in possession 1) 2,615,753
Share capital, EUR 64,176,297
Market capitalization, MEUR 6,027
Number of shares traded, million,
2007 95.9
Value of shares traded MEUR, 2007 4,487
Number of shareholders 3 13,650 13,650
Close High Low
Class B share price, EUR, Jan-Dec,
2007 47.93 59.80 39.52
1) During the fourth quarter of 2007, the authorization to repurchase
shares was not used. During the second quarter of 2007, 129,000
shares were assigned to the share-based incentive plan. During the
first quarter of 2007, KONE Corporation repurchased 6,000 own class B
shares. During the reporting period January 1-December 31, 2006, KONE
Corporation repurchased a total of 1,963,913 own class B shares.
During the accounting period June 1-December 31, 2005, KONE
Corporation repurchased a total of 374,840 own class B shares. In
addition, relating to the share-based incentive plan, a company
included in the consolidated financial statements acquired 400,000
KONE class B shares in December 2005.
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