KONE Oyj - Interim report (Q1 and Q3)

Interim Report of KONE Corporation for January-September 2013

KONE Corporation, stock exchange release, October 22, 2013 at 12:30 p.m. EET

KONE's Q3: Good development on a broad basis led to strong results

July-September 2013
  * In July-September 2013, orders received totaled EUR 1,327 (7-9/2012: 1,296)
    million. Orders received grew by 2.4% at historical exchange rates and by
    7.0% at comparable exchange rates.
  * Net sales grew by 6.5% to EUR 1,739 (1,634) million. At comparable exchange
    rates the growth was 10.1%.
  * Operating income was EUR 257.5 (226.4) million or 14.8% (13.9%) of net
    sales.
  * Cash flow from operations was EUR 349.0 (355.8) million.
  * KONE reiterates its business outlook for 2013.

January-September 2013
  * In January-September 2013, orders received totaled EUR 4,678 (1-
    9/2012: 4,175) million. Orders received grew by 12.0% at historical exchange
    rates and by 13.5% at comparable exchange rates. The order book stood at EUR
    5,642 (Dec 31, 2012: 5,050) million at the end of September 2013.
  * Net sales grew by 10.9% to EUR 4,900 (4,419) million. At comparable exchange
    rates the growth was 12.4%.
  * Operating income was EUR 660.7 (571.3) million or 13.5% (12.9%) of net sales
    (1-9/2012 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 was EUR 972.2 (804.2) million.

Key Figures

Comparative figures for 2012 have been restated according to the revised IAS 19
'Employee benefits'.

                                     7-9/    7-9/    1-9/       1-9/      1-12/
                                     2013    2012    2013       2012       2012
-------------------------------------------------------------------------------
 Orders received             MEUR 1,327.2 1,295.6 4,677.8    4,174.9    5,496.2

 Order book                  MEUR 5,642.1 5,283.7 5,642.1    5,283.7    5,050.1

 Sales                       MEUR 1,739.2 1,633.7 4,899.6    4,419.1    6,276.8

 Operating income (EBIT)     MEUR   257.5   226.4   660.7 571.3( 1)) 828.7( 1))

 Operating income (EBIT)        %    14.8    13.9    13.5  12.9 (1))  13.2 (1))

 EBITA                       MEUR   262.6   235.0   675.7 597.2( 1)) 861.5( 1))

 EBITA                          %    15.1    14.4    13.8  13.5 (1))  13.7 (1))

 Cash flow from operations
 (before financing items and
 taxes)                      MEUR   349.0   355.8   972.2      804.2    1,070.8

 Net income                  MEUR   207.8   184.5   527.3      428.0      611.0

 Total comprehensive income  MEUR   186.8   171.8   536.1      421.7      591.7

 Basic earnings per share     EUR    0.79    0.70    2.02       1.65       2.35

 Interest-bearing net debt   MEUR  -817.7  -909.6  -817.7     -909.6     -574.0

 Total equity/total assets      %    45.2    49.2    45.2       49.2       47.1

 Gearing                        %   -43.4   -44.6   -43.4      -44.6      -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 continued to develop well in the third quarter of the year. Orders
received grew by 2.4% at historical and by 7.0% at comparable exchange rates.
The level of orders received was impacted by delays in many construction
projects in the major projects segment in Europe. Orders received grew the
strongest in Asia-Pacific, where India and Australia had the highest growth
rates. Order growth continued strong also in China, where our order intake grew
substantially faster than the market. Sales grew by 6.5% at historical and by
10.1% at comparable exchange rates.

I am particularly pleased with the growth of our operating income and with the
strong cash flow in the quarter. Operating income (EBIT) grew by 13.7% to EUR
258 million driven by continued strong progress in the new equipment business in
Asia-Pacific and a good development in the service business globally. Also our
relative operating income developed exceptionally well this quarter despite the
clear increase in the share of the new equipment business of total sales. This
good development was due to a strong operational performance on a broad basis as
well as a positive impact from the pricing actions we have been taking during
the past couple of years. In addition, the product mix within new equipment
deliveries had a positive impact on the relative operating income; we had
clearly more standard volume than major project deliveries in new equipment due
to delays in project completions particularly in Europe. We expect to see a
higher proportion of large project deliveries in the last quarter of the year,
although we expect the general economic and market weakness in Europe to
continue to have an impact on many projects. Cash flow was strong at EUR 349
million. I want to once again thank our people for a job well done.

Our operating environment remained mixed during the third quarter. In Asia-
Pacific, new equipment market growth continued at a good level, although as
expected at a lower rate than in the first half of the year. The growth of the
market in North America continued both in new equipment and modernization. New
equipment and modernization demand in Europe continued to decline. Maintenance
markets grew in most countries, but the growth rate was low in such countries,
where new equipment activity has been weak in the past years.

During the quarter, KONE was ranked for the third consecutive year among the top
50 most innovative companies in the world by the business magazine Forbes.
Passion for innovation is an integral part of our culture - I am very excited
about our new products and solutions and on-going R&D efforts, as the constant
development of our offering allows us to even better respond to our customers'
and end-users' needs going forward."

Operating environment in July-September 2013

In the third quarter of 2013, the new equipment market in Asia-Pacific continued
to grow, but as expected, growth slowed down clearly from the high level seen in
the first half of the year. In other regions, market development was largely
unchanged. New equipment demand in the Europe, Middle East and Africa (EMEA)
region declined in both Central and North Europe and South Europe. In North
America, market growth continued. The major projects segment remained active in
Asia-Pacific, whereas in Europe the weak economic environment resulted in delays
in decision-making and the progress of projects. The modernization market
developed positively in North America and Asia-Pacific, but declined in the EMEA
region. Maintenance markets grew in most countries, although at low rates in
such countries, where new equipment activity has been weak for the past years.
Price competition remained very intense, particularly in regions where the
overall market was at a low level.

Operating environment in January-September 2013

During January-September 2013, the new equipment market declined somewhat in
Central and North Europe and weakened further in South Europe. In North America,
market growth continued. In Asia-Pacific, demand continued to grow. The Chinese
market grew rapidly, but in line with expectations, the growth rate decelerated
gradually during the reporting period. The development of modernization markets
varied between regions, with growth in North America and Asia-Pacific and a
decline in the EMEA region. 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, 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 reiterates its business outlook, which was upgraded on September 11, 2013.

KONE's net sales is estimated to grow by 11-14% at comparable exchange rates as
compared to 2012.

The operating income (EBIT) is expected to be in the range of EUR 920-955
million, assuming that translation exchange rates do not materially deviate from
the situation of the beginning of September 2013.

Press and analyst meetings

A meeting for the press, conducted in Finnish, will be held on Tuesday,
September 22, 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#1737237]

Attachments:

KONE s Interim Report for January-September 2013.pdf