KONE Oyj - Financial Statement Release

Financial Statement Bulletin of KONE Corporation for January-December 2016

KONE Corporation, stock exchange release, January 26, 2017 at 12.30 p.m. EET

Financial Statement Bulletin of KONE Corporation for January-December 2016

October-December 2016: Solid profit development continued

-In    October-December    2016, orders    received   totaled   EUR   1,839 (10-
12/2015: 1,947) million. Orders received declined by 5.5% at historical exchange
rates and by 2.9% at comparable exchange rates.

-Net  sales grew  by 1.2% to  EUR 2,593 (2,562)  million. At comparable exchange
rates, net sales grew by 3.6%.

-Operating  income (EBIT) was EUR 392.2 (378.5)  million or 15.1% (14.8%) of net
sales.

-Cash  flow from  operations (before  financing items  and taxes) was EUR 409.8
(403.5) million.


January-December 2016: All businesses contributed to the growth in operating
income

-In January-December 2016, orders received totaled EUR 7,621 (1-12/2015: 7,959)
million.  Orders received declined  by 4.2% at historical  exchange rates and by
1.6% at  comparable exchange rates. The order  book stood at EUR 8,592 (December
31, 2015: 8,210) million at the end of December 2016.

-Net  sales grew  by 1.6% to  EUR 8,784 (8,647)  million. At comparable exchange
rates the growth was 3.9%.

-Operating  income (EBIT) was EUR 1,293 (1,241)  million or 14.7% (14.4%) of net
sales.

-Cash  flow from  operations (before  financing items  and taxes) was EUR 1,509
(1,474) million.

-In  2017, KONE's net  sales is  estimated to  grow by  -1% to  3% at comparable
exchange  rates as compared to  2016. The operating income is  expected to be in
the range of 1,180-1,300 million, assuming that translation exchange rates would
remain at approximately the average level of January 2017.

-The Board proposes a dividend of 1.55 per class B share for the year 2016.


                             10-12/   10-12/         1-12/    1-12/
Key figures                  2016     2015           2016     2015
-----------------------------------------------------------------------------
Orders received         MEUR  1,839.2  1,947.2 -5.5%  7,621.0  7,958.9 -4.2%

Order book              MEUR  8,591.9  8,209.5  4.7%  8,591.9  8,209.5  4.7%

Sales                   MEUR  2,593.2  2,561.8  1.2%  8,784.3  8,647.3  1.6%

Operating income (EBIT) MEUR    392.2    378.5  3.6%  1,293.3  1,241.5  4.2%

Operating income (EBIT) %        15.1     14.8           14.7     14.4

Cash flow from
operations
(before financing items
and taxes)              MEUR    409.8    403.5        1,509.5  1,473.7

Net income              MEUR    298.1    372.7        1,022.6  1,053.1

Basic earnings per
share                   EUR      0.58     0.71           2.00     2.01

Interest-bearing net
debt                    MEUR -1,687.6 -1,512.6       -1,687.6 -1,512.6

Total equity/total
assets                  %        46.8     45.4           46.8     45.4

Gearing                 %       -60.4    -58.7          -60.4    -58.7





Henrik Ehrnrooth, President and CEO, in conjunction with the Financial
Statements Bulletin

"I am pleased with the good ending to the year. Our execution remained strong in
the final quarter of 2016, and I was particularly satisfied with the healthy
growth in the operating income and the accelerated growth in our services
business. Orders received stayed at a good level at EUR 1,839 million, although
they declined by 5.5% at historical and by 2.9% at comparable currencies. The
marked decline of orders received in China was largely compensated by growth in
all other regions. Sales reached a record level of EUR 2,593 million growing by
1.2% at historical and by 3.6% at comparable currencies. The operating income
reached an all-time-high of EUR 392 million driven by positive development in
all businesses. The relative operating income improved to 15.1% of net sales. In
addition, our cash flow remained strong at EUR 410 million.

During the fourth quarter, market trends remained varied. The new equipment
market in China continued to be challenging. In monetary value, the market
declined clearly due to the intense price pressure as well as the continued
shift in customer preferences towards lower-specification products. In unit
terms, the market declined slightly. In the EMEA region and North America, new
equipment markets developed more positively. The service markets continued to
grow across regions.

Our development programs launched in 2014 were successfully completed during the
fourth quarter of 2016. I am pleased with our solid development towards our
strategic targets during this three-year-period. One of the highlights was the
development in our customer loyalty, which improved clearly. Thanks to the
continued trust from our customers and partners, we also continued to grow
profitably and faster than the market in all businesses. In addition, I am
satisfied that our employee engagement continued to develop positively during
the three-year period. I would like to express my thanks to all our employees
for their commitment and actions in making KONE an even more competitive
company. With the completion of the development programs, KONE enters a new
strategic phase for 2017-2020 called "Winning with Customers". The objective is
to drive differentiation further by putting the needs of our customers and users
at the center of all development.

Looking ahead into 2017, the market environment is expected to remain varied.
The new equipment market in China has been declining for two years already. In
2017, we expect the market to decline by 0-5% in unit terms and the competition
to remain intense. However, we expect to see slight growth in the new equipment
market in all other regions and continued positive development in the service
markets. In 2017, our sales is expected to grow by -1% to 3% at comparable
rates. The operating income is expected to be in the range of EUR 1,180-1,300
million, assuming that the translation exchange rates would remain at the
average level of January 2017. Despite some of the headwinds we are seeing in
many large markets, I am confident that we can continue to improve our overall
competitiveness and execution in the coming year."

Operating environment in October-December 2016

In  the fourth  quarter of  2016, the global  new equipment  market volumes were
rather  stable compared  to the  previous year's  corresponding period.  The new
equipment  market in  China declined  slightly in  units and clearly in monetary
value.  The new equipment  market in the  Europe, Middle East  and Africa (EMEA)
region  was rather stable, while  the market in North  America continued to grow
slightly.  Modernization demand continued to see growth across regions. Also the
maintenance market continued to grow globally, with the strongest rate of growth
seen  in the  Asia-Pacific region  and more  moderate development  in Europe and
North America.

Operating and market environment in January-December 2016

In  2016, the global new equipment market declined  slightly due to a decline in
the  large Chinese new equipment market. Of the other markets, the new equipment
markets  in the EMEA region saw slight growth, and also the new equipment demand
in  North America grew slightly from a high level. The modernization market grew
globally  with positive development across  regions. Also the maintenance market
continued to grow globally. The fastest rate of growth was seen in Asia-Pacific,
while the growth rate was lower in the more mature markets.

Market outlook 2017

In  new equipment, the market  in China is expected  to decline by 0-5% in units
ordered  and also  the competition  to continue  intense. In  the rest  of Asia-
Pacific, the market is expected to grow. The market in North America and Europe,
Middle East and Africa region is expected to grow slightly.

The  modernization market is  expected to grow  slightly in Europe  and in North
America, and to develop strongly in Asia-Pacific.

Maintenance  markets  are  expected  to  see  the strongest growth rate in Asia-
Pacific, and to grow slightly also in other regions.

Business outlook 2017

KONE's  net sales is estimated to grow by -1% to 3% at comparable exchange rates
as compared to 2016.

The  operating income (EBIT) is expected to  be in the range of EUR 1,180-1,300
million,  assuming that translation exchange rates would remain at approximately
the average level of January 2017.

The  sales outlook is based on KONE's maintenance base and order book as well as
the market outlook.

KONE's  operating income outlook is based on the current sales forecast combined
with  factors impacting profitability. In  2017, profitability is expected to be
impacted  by  factors  such  as  improved  quality and productivity, pricing and
business mix, a slight decrease in the margin of orders received in 2016 as well
as cost pressures resulting from increased material costs and R&D and IT spend.

The Board's proposal for the distribution of profit

The   parent  company's  non-restricted  equity  on  December  31, 2016 was  EUR
1,896,466,275.82 of  which  the  net  profit  for  the  financial  year  is  EUR
870,373,574.84.

The Board of Directors proposes to the Annual General Meeting that a dividend of
EUR  1.5475 be paid on the outstanding 76,208,712 class A shares and EUR 1.55 on
the  outstanding  437,076,029 class  B  shares,  resulting  in a total amount of
proposed dividends of EUR 795,400,826.77.

The  Board  of  Directors  further  proposes  that  the remaining non-restricted
equity, EUR 1,101,065,449.05 be retained and carried forward.

The  Board  proposes  that  the  dividends  be payable on March 9, 2017. All the
shares  existing on the  dividend record date  are entitled to  dividend for the
year 2016 except for the own shares held by the parent company.

Press and analyst meetings

A meeting for the press, conducted in Finnish, will be held on Thursday, January
26, 2017 at 2:15 p.m. EET.

A meeting for analysts, conducted in English, will begin at 3:45 p.m. EET and
will be available as a live webcast on www.kone.com. An on-demand version of the
webcast will be available on www.kone.com later the same day. The meeting can
also be joined via a telephone conference.

US callers: +1 719 325 2202
UK callers: +44 (0)330 336 9105
Finnish callers: +358 (0)9 7479 0361
Participant code: KONE

Both meetings will take place in KONE Building, located at Keilasatama 3, Espoo,
Finland.

For further information, please contact:
Sanna Kaje, Vice President, Investor Relations, tel. +358 204 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


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Attachments:

KONE_Financial_Statement_Bulletin_2016.pdf