2007-07-20 11:31:21 CEST

2007-07-20 11:31:21 CEST


REGULATED INFORMATION

English
KONE Oyj - Quarterly report

KONE Corporation s Interim Report for January-June 2007



KONE Corporation, Stock Exchange Release, July 20, 2007 at 12:30
Finnish time

KONE's Q2: Strong Growth in Sales and EBIT - 2007 Outlook Upgraded

- KONE upgrades its outlook for 2007. KONE's target for 2007 is to
achieve a growth of 10 to 15 percent in net sales, calculated at
comparable exchange rates, compared to 2006. The operating income
(EBIT) target is to achieve growth of 25 to 30 percent from the
comparable 2006 figure of EUR 360 million. This target excludes the
EUR 142.0 million fine for the European Commission's decision.

- Orders received growth was 11 percent in January-June, or 14
percent at comparable exchange rates. Orders received totaled EUR
1,847 (1,662) million. In the second quarter, orders received growth
was 15 percent, or 17 percent at comparable exchange rates. Orders
received totaled EUR 944.4 (821.9) million.

- Net sales grew by 15 percent to EUR 1,813 (1,575) million in
January-June; at comparable exchange rates growth was 18 percent. In
the second quarter, net sales grew by 19 percent to EUR 1,002 (840.4)
million; at comparable exchange rates growth was 21 percent.

- Operating income was EUR 43.7 (135.6) million in January-June.
Excluding the EUR 142.0 million fine for the European Commission's
decision, operating income was EUR 185.7 million or 10.2 (8.6)
percent of net sales. In the second quarter, operating income was EUR
116.4 (83.9) million or 11.6 (10.0) percent of net sales.

Key Figures

                        4-6/2007 4-6/2006 1-6/2007 1-6/2006 1-12/2006
Orders received    MEUR    944.4    821.9  1,846.5  1,662.2   3,116.3
Order book         MEUR  3,318.0  2,818.0  3,318.0  2,818.0   2,762.1
Sales              MEUR  1,001.9    840.4  1,813.1  1,575.4   3,600.8
Operating income   MEUR    116.4     83.9 185.7 1)    135.6     360.1
Operating income      %     11.6     10.0  10.2 1)      8.6      10.0
Cash flow from
operations
(before financing
items
and taxes)         MEUR    -37.4     29.3    105.3    146.6     371.7
Net income         MEUR     82.9     52.1    -12.1     83.9     234.4
Interest-bearing
net debt           MEUR    263.4    201.9    263.4    201.9     124.9
Total equity/total
assets                %     24.1     27.1     24.1     27.1      30.5
Gearing               %     46.7     34.0     46.7     34.0      17.9


1) Excluding the EUR 142.0 million fine for the European Commission's
decision.

KONE President & CEO, Matti Alahuhta, in conjunction with the review:"KONE's development programs are bringing results. We are gradually
becoming more customer focused, more globally aligned and more
productive. The rapid renewal of our product portfolio has made it
possible for us to increase our market share in many key markets.
Also the service operations have developed well. I want to thank all
our employees for a job well done! The work in the development
programs continues and simultaneously we are preparing for the next
phase of change."

Analyst and Media Conference and Conference Call

A meeting for the press, conducted in Finnish, will be held on July
20, 2007 at 2:00 PM at KONE Building, Keilasatama 3, Espoo.

A combined analyst meeting and conference call/web cast, conducted in
English, will be held on July 20, 2007 at 3:30 PM at KONE Building,
Keilasatama 3, Espoo. Conference call participants may access the
conference directly at 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 the
company website. An on demand version of the conference will be
available at www.kone.com later the same day.

Sender:

KONE Corporation

Aimo Rajahalme
Executive Vice President,
Finance

Minna Mars
Senior Vice President,
Corporate Communications & IR

For further information please contact:
Aimo Rajahalme, Executive Vice President, Finance, tel. +358 (0) 204
75 4484

KONE is one of the world's leading elevator and escalator companies.
It provides its customers with industry-leading elevators and
escalators, with innovative solutions for their maintenance and
modernization. KONE also provides maintenance of automatic building
doors. In 2006, KONE had annual net sales of EUR 3.6 billion and
approximately 29,000 employees. Its class B shares are listed on the
OMX Nordic Exchange in Helsinki, Finland.

www.kone.com

Review for January-June 2007

Accounting Principles

KONE Corporation's interim report for January 1- June 30, 2007 has
been prepared in line with IAS 34, Interim Financial Reporting. KONE
has applied the same accounting principles in the preparation of the
interim report as in its annual financial statements for 2006. The
information presented in the interim report has not been audited.

KONE's Operating Environment during January-June

Overall demand continued strong for new equipment and modernization
in most markets and hence created favorable conditions for KONE's
growth. The price environment for new equipment was competitive in
all geographical areas. The global maintenance market continued to be
good but remained tough.

In the European, Middle East and African region (EMEA), the business
environment continued to be strong during the second quarter. In
Scandinavia, the residential market was at a good level. In Germany,
the new equipment market continued to strengthen. In the U.K.,
commercial construction stayed fairly active. The Southern European
market activity remained on the same level as during the first
quarter. The Eastern European and Middle East construction markets
experienced continuous strong growth. Modernization demand continued
to be good.

The North American new equipment market remained at a stable level.
In the U.S., demand in the hotel, office and hospital segments
increased. In Canada, the solid market development continued and the
Mexican market experienced good growth. The modernization market
growth continued.

In the Asia-Pacific region, most markets maintained a high activity
level. The Chinese market continued to benefit from high volumes
while India and Australia also experienced a growing and active
market. In Australia, both the volume and the major projects market
developed favorably.

Orders Received and Order Book

KONE's market position continued to strengthen in the second quarter
of 2007. The value of orders received during January-June increased
by approximately 11 percent and totaled EUR 1,847 (1-6/2006: 1,662)
million. At comparable exchange rates, the growth was approximately
14 percent. Only new equipment orders and modernization orders are
included in orders received.

The order book increased from the end of 2006 by 20 percent and stood
at EUR 3,318 (December 31, 2006: 2,762) million at the end of June.
Compared with the order book on June 30, 2006 there was an increase
of approximately 18 percent. At comparable exchange rates, the growth
was about 19 percent. The margin of the order book continued to be at
the earlier good level.

Orders received during April-June totaled EUR 944.4 (821.9) million,
an increase of approximately 15 percent. At comparable exchange
rates, growth was approximately 17 percent. During the second
quarter, the Asia-Pacific region recorded the highest growth in new
orders.

In the EMEA region, KONE received several big orders. In Russia, KONE
won an order to install all the elevators and escalators for two new
high-rise buildings with KONE destination control systems in the
Imperia Tower and an order to supply elevators to the White Square
Office. Both buildings are located in Moscow. KONE also won an order
to supply all the elevators for a new office building in the Canary
Wharf financial district in London, U.K. In addition, KONE won four
major orders in Saudi Arabia, United Arab Emirates and Qatar. One of
the developments is the world's largest mosque, the Holy Harram,
located in Mecca, Saudi Arabia. The other three projects represent
new architectural landmarks in the Middle East.

KONE continued to experience strong order intake in the North
American new equipment and modernization market. New equipment
business in Canada experienced significant growth through captured
new share, especially in the residential and office segments. In the
U.S., the continued margin growth in the new equipment orders was
particularly positive.

In the Asia-Pacific region, KONE's new equipment order intake
continued to develop very strongly. The largest orders during the
second quarter were an order to supply and install all the elevators
in a prestige condominium development in Bangkok, Thailand, called
the MET and an order to supply all elevators for the second phase of
the construction process of the Delhi Metro in India.

Sales by geographical areas MEUR


             4-6/2007   % 4-6/2006   % 1-6/2007   % 1-6/2006   % 1-12/2006   %
EMEA 1)         651.7  65    553.7  66  1,187.2  66  1,018.1  65   2,319.4  65
Americas        206.1  21    181.0  22    383.7  21    359.7  23     805.1  22
Asia-Pacific    144.1  14    105.7  12    242.2  13    197.6  12     476.3  13
Total         1,001.9 100    840.4 100  1,813.1 100  1,575.4 100   3,600.8 100


1) EMEA = Europe, Middle East, Africa

Net Sales

In comparison to the corresponding reporting period a year earlier,
KONE's net sales increased by approximately 15 percent and totaled
EUR 1,813 (1,575) million. Growth at comparable currency rates was
approximately 18 percent.

New equipment sales in January-June accounted for EUR 764.5 (588.5)
million of the total and represented an approximate 30 percent growth
over the comparison period. At comparable currency rates the growth
was approximately 33 percent.

KONE's business logic spans the entire lifecycle of customer
investments, and KONE's customer focus and lifetime strategy seeks to
provide a better service capability. This also creates growth in
KONE's business operations and a less cyclical stream of profits.
Service sales increased by almost 6 percent and totaled EUR 1,049
(986.9) million, at comparable currency rates the growth was
approximately 8 percent.

Of the sales, 66 (65) percent were generated from EMEA, 21 (23)
percent by the Americas and 13 (12) percent by Asia-Pacific.

In the second quarter, KONE's net sales totaled EUR 1,002 (840.4)
million, an approximate 19 percent growth over the same period in
2006. At comparable exchange rates the growth was approximately 21
percent. New equipment sales grew approximately 37 percent and
accounted for EUR 457.5 (334.2) million. At comparable currency rates
the growth was approximately 39 percent. Service sales grew by 8
percent and totaled EUR 544.4 (506.2) million. At comparable currency
rates the growth was approximately 9 percent.

Result

The fine of EUR 142.0 million for the European Commission's decision
was recognized in the first quarter. KONE's operating income,
excluding the fine, improved approximately 37 percent in comparison
to January-June of 2006 and was EUR 185.7 (135.6) million or 10.2
(8.6) percent of net sales. Net financing items were EUR -2.9 (-3.8)
million.

KONE's income before taxes for the January-June period was EUR 41.0
(131.2) million. Taxes totaled EUR 53.1 (47.3) million, taking into
account taxes proportionate to the amount estimated for the financial
year. This represents a tax rate of 29.0 (1-12/2006: 34.2) percent.
Net income for the period was EUR -12.1 (83.9) million.

Earnings per share were EUR -0.10 (0.66). Equity per share was EUR
4.48 (4.68).

Second quarter operating income was EUR 116.4 (83.9) million, or 11.6
(10.0) percent of net sales.

Cash Flow and Financing

During the first half year of 2007, KONE's cash flow from operations
(before financing items and taxes) was EUR 105.3 (146.6) million. At
the end of June, net working capital was negative at EUR -143.2
(December 31, 2006: -139.5) million, including financing items and
taxes. The EUR 142.0 million fine for the European Commission's
decision was recognized as a provision in the first quarter and
booked into interest-bearing debts in the balance sheet during the
second quarter. As KONE has appealed the decision, the amount of the
fine may change.

Interest-bearing net debt totaled EUR 263.4 (December 31, 2006:
124.9) million. Gearing was 46.7 percent compared with 17.9 percent
at the end of the previous accounting period. KONE's total
equity/total assets ratio was 24.1 (December 31, 2006: 30.5) percent
at the end of June.

Capital Expenditures

KONE's capital expenditure, including acquisitions, totaled EUR 40.5
(54.2) million. Acquisitions accounted for EUR 16.5 (25.1) million of
this figure. Acquisitions made during the reporting period have no
material effect on January-June or full year 2007 figures.

During the reporting period the most notable acquisition was the
acquisition of MIRO Elevators Limited, a Canadian service company.
The share capital of MIRO Elevators Limited has been transferred to
KONE in January.

During the second quarter, KONE continued to acquire small elevator
service companies from Italy, Austria and France.

During the second quarter, capital expenditure totaled EUR 23.4
(27.5) million of which acquisitions accounted for EUR 7.4 (9.9)
million.

Organizational Development

In the spring of 2007, KONE initiated an organizational change
project in the U.S. The objective is to improve customer focus,
increase cross-functional synergies and raise productivity. As part
of the development, KONE will move its North American headquarters to
Chicago in the beginning of 2008.

Research and Product Development

Product development expenses in January-June totaled EUR 25.4 (24.7)
million, representing 1.4 (1.6) percent of net sales. R&D expenses
include development of new product concepts and further developments
of existing products and services.
In Europe, a new release of the KONE MonoSpace® elevator was
launched. This release added further flexibility to the product. The
solution now complies with new regulations on fire fighting elevators
and also renewed accessibility features have been added. A radical
visual restyling of the car's finishing, design, ceiling and
accessories were undertaken. In addition, a better space efficiency
(pit reduction) for freight elevators was achieved.

In the North American market, product enhancements and installation
improvements have made KONE products even more attractive for its
customers.

In the Asia-Pacific region, new functional and cost effective
solutions especially for the residential market were introduced. In
addition, a collection of different designs and feature options which
increases the flexibility in visual offerings was released.

To support customer service, new eBusiness tools were launched; for
example a KONE Architect Toolbox on Internet and an electronic
on-line and off-line 3D Car Designer.

And finally, KONE's modernization offering was improved by a new
parallel signalization family and a new version of a hoisting
modernization package.

European Commission Investigation

The European Commission started an investigation concerning
anticompetitive practices in the elevator and escalator market in
Europe in 2004. 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, and
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. A provision
of EUR 142.0 million for the European Commission's decision was
recognized in the first quarter results and booked into
interest-bearing debts in the balance sheet during the second
quarter. As KONE has appealed the decision, the amount of the fine
may change.

Other Events during the Reporting Period

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. KONE has not made a provision in this respect.

Personnel

KONE had 30,665 (31 December, 2006: 29,321) employees at the end of
June 2007. The average number of employees during January-June 2007
was 29,987 (27,834).

The geographical distribution of KONE employees was 57 (59) percent
in EMEA, 18 (19) percent in the Americas and 25 (22) percent in
Asia-Pacific.

Operational Risks

KONE's business activities are exposed to risks, of which the most
significant are fluctuations in currency rates and increases in raw
material prices and personnel costs.

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.

Subsidiary investments are hedged from currency risks in accordance
with the hedging policy to ensure that the total effect of foreign
exchange rates on the Corporation's gearing is neutral. 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 a member of the Executive
Board as of February 19, 2007.

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 as
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 in Helsinki, 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 in 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.

In addition, the Annual General Meeting nominated
PricewaterhouseCoopers Oy, Authorized Public Accountants, as the
Company's auditor, with Heikki Lassila, APA, as the principally
responsible auditor.

Dividend

The Annual General Meeting approved the Board's proposal for a
dividend of EUR 0.99 per class A share and EUR 1.00 per class B share
or in total EUR 125.5 million. The date of the dividend payment was
set for March 8, 2007. The rest of the distributable equity, EUR
1,146 million, was retained and carried forward.

Share Capital and Shares

Option Subscription and Share Capital

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
in Helsinki, Finland 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 June 30, 2007, 632,664 shares have been subscribed for with the
options, raising KONE's share capital to EUR 64,071,087.00,
comprising 109,089,996 listed class B shares and 19,052,178 unlisted
class A shares.

During January-June 30,756 shares were subscribed for with the 2005A
options and 44,790 with the 2005B options.

The remaining 2005A options entitle their holders to subscribe for
195,816 class B shares, while the remaining 2005B options entitle
their holders to subscribe for 480,030 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 675,846. 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.

In April 2007, 129,000 B-shares assigned to the share-based incentive
plan for the company's senior management were transferred from KNEBV
Incentive Ky to the participants due to achieved targets for the
financial year 2006.

Shares and trading volume

At the end of the reporting period, KONE's share closed at EUR 46.76.
The volume weighted average share price during the period was EUR
44.21. The period high was EUR 47.55 and period low EUR 39.52.

Share turnover during the period amounted to EUR 2,302 (1,508)
million, with 52,086,002 (44,267,234) shares being traded. This
represents approximately 48 percent of the company's listed class B
shares. The daily average trading volume was 420,048 (356,994)
shares, representing a daily average turnover of approximately EUR 19
million. KONE Corporation's market capitalization at the end of the
period was EUR 5,870 (4,104) million, disregarding the group's
treasury shares.

The number of registered shareholders at the beginning of the review
period was 13,673 and 13,242 at its end. The number of private
households totaled at the end of the period 11,889.

According to the nominee registers, approximately 44.8 percent of the
listed class B shares were owned by foreigners at the beginning of
the period and approximately 45.7 at the end. Other foreign ownership
at the end of the period totaled approximately 5.9 percent; thus a
total of approximately 51.6 percent of the company's listed class B
shares were owned by international investors, corresponding to
approximately 18.8 percent of the total votes in the company.

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. The repurchasing of shares
will continue until otherwise announced.

During January 1 - June 30, 2007, KONE used its authorization and
bought back 6,000 of its own shares in February. In April 2007,
129,000 B-shares assigned to the share-based incentive plan for the
company's senior management were transferred from KNEBV Incentive Ky
to the participants due to achieved targets for the financial year
2006. At the end of June, the group had 2,615,753 class B shares in
its possession.

The shares in the group's possession represent 2.4 percent of the
total number of class B shares. This corresponds to 0.8 percent of
the total voting rights.

At the end of the reporting period June 30, 2007, KONE's Board of
Directors had no current authorization to raise the share capital or
to issue convertible or warrant loans.

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.

Outlook

KONE's target for 2007 is to achieve a growth of 10 to 15 percent in
net
sales, calculated at comparable exchange rates, compared to 2006. The
operating income (EBIT) target is to achieve growth of 25 to 30
percent from the comparable 2006 figure of EUR 360 million. This
target excludes the  EUR 142.0 million fine for the European
Commission's decision.

In 2008, KONE's objective is to achieve an operating income (EBIT)
margin of about 12 percent.

Previous Outlook Statement

We estimate that market growth will not be as strong in all markets
this year as in 2006. This will be the case especially in North
America and Southern Europe. However, the market development in e.g.
Asia-Pacific will continue to be strong.

KONE's target for 2007 is to achieve an approximate 10 percent growth
in net sales, calculated at comparable exchange rates, compared to
2006. The operating income (EBIT) target is to achieve growth of
approximately 20 percent from the comparable 2006 figure of EUR 360
million excluding the EUR 142.0 million provision for the European
Commission's fine decision.

In 2008, KONE's objective is to achieve an operating income (EBIT)
margin of about 12 percent.

Helsinki, July 20, 2007

KONE Corporation

Board of Directors

Enclosures

1 Consolidated Statement of Income
2 Consolidated Balance Sheet
3 Consolidated Statement of Changes in Equity
4 Consolidated Statement of Cash Flow
5 Notes for the Interim Report

This Interim report and the presentation used in the Analyst and
Media Conference will be available on the company web site at
www.kone.com.

KONE Corporation will release its Interim Result for January
1-September 30 on October 23, 2007.

KONE is one of the world's leading elevator and escalator companies.
It provides its customers with industry-leading elevators and
escalators, with innovative solutions for their maintenance and
modernization. KONE also provides maintenance of automatic building
doors. In 2006, KONE had annual net sales of EUR 3.6 billion and
approximately 29,000 employees. Its class B shares are listed on the
OMX Nordic Exchange in Helsinki, Finland.

This Interim Report 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

                4-6/        4-6/          1-6/          1-6/        1-12/
MEUR            2007    %   2006    %     2007    %     2006   %     2006    %
Sales        1,001.9       840.4       1,813.1       1,575.4      3,600.8
Costs and
expenses      -871.4      -742.2      -1,599.1      -1,410.8     -3,182.4
Depreciation   -14.1       -14.3         -28.3         -29.0        -58.3
Fine for
the European
Commission's
decision           -           -        -142.0             -            -
Operating
income         116.4 11.6   83.9 10.0     43.7  2.4    135.6 8.6    360.1 10.0
Share of
associated
companies'
net
income           0.4        -0.4           0.2          -0.6         -0.3
Financing
income           5.7         2.7           9.1           6.6         16.1
Financing
expenses        -6.8        -6.3         -12.0         -10.4        -19.6
Income
before
taxes          115.7 11.5   79.9  9.5     41.0  2.3    131.2 8.3    356.3  9.9
Taxes          -32.8       -27.8         -53.1         -47.3       -121.9
Net income      82.9  8.3   52.1  6.2    -12.1 -0.7     83.9 5.3    234.4  6.5

Net income
attributable
to:
Shareholders
of
the parent
company         82.9        52.3         -12.0          84.4        234.8
Minority
interests        0.0        -0.2          -0.1          -0.5         -0.4
Total           82.9        52.1         -12.1          83.9        234.4


Earnings per share for profit attributable to the shareholders of the
parent company, EUR

                 4-6/   4-6/    1-6/   1-6/   1-12/
MEUR             2007   2006    2007   2006    2006
Basic earnings
per share        0.66   0.41   -0.10   0.66    1.86
Diluted earnings
per share        0.66   0.41   -0.10   0.66    1.85


Consolidated balance sheet

Assets
MEUR                                   30.6.2007 30.6.2006 31.12.2006
Non-current assets
Intangible assets                          619.9     570.4      615.7
Tangible assets                            225.6     217.8      217.7
Loans receivable and
other interest-bearing assets                2.9      22.4        5.1
Deferred tax assets                        138.1     127.6      134.1
Investments                                125.5     136.1      129.6
Total                                    1,112.0   1,074.3    1,102.2

Current assets
Inventories                                825.9     705.8      668.8
Advance payments received                 -730.7    -571.6     -552.1
Loans receivable and other
non interest-bearing assets                  1.5      36.3       44.6
Accounts receivable and other
non interest-bearing assets                910.7     745.0      805.1
Cash, cash equivalents and
financial assets                           223.6     200.7      223.8
Total                                    1,231.0   1,116.2    1,190.2

Total assets                             2,343.0   2,190.5    2,292.4

Equity and liabilities
MEUR                                   30.6.2007 30.6.2006 31.12.2006
Equity                                     564.4     593.9      698.6

Non-current liabilities
Loans                                      180.9     105.8      100.2
Deferred tax liabilities                    32.4      26.9       30.3
Employee benefits                          145.4     148.7      145.0
Total                                      358.7     281.4      275.5

Provisions                                  65.9      82.6       71.8

Current liabilities
Loans                                      310.5     355.5      298.2
Accounts payable and other liabilities   1,043.5     877.1      948.3
Total                                    1,354.0   1,232.6    1,246.5

Total equity and liabilities             2,343.0   2,190.5    2,292.4


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


                                                                Total
MEUR                 1)   2)   3)    4)    5)     6)   7)      equity
1 Jan, 2007        64.0 98.0 -0.5 -14.0 -91.2  638.8  3.5       698.6

Net income for the
period                                         -12.0 -0.1       -12.1

Items booked
directly
into equity:
Transactions with
shareholders
and minority
shareholders:
Dividends paid                                -125.1           -125.1
Issue of shares
(option rights)     0.0  0.6                                      0.6
Purchase of
own shares                               -0.3                    -0.3
Sale of
own shares                                                          -
Change in
minority interests                                   -1.1        -1.1
Cash flow hedge               0.6                                 0.6
Translation
differences                         2.4                           2.4
Hedging of foreign
subsidiaries                       -4.2                          -4.2
Tax impact of
hedging                             1.0                           1.0
Option and share
based compensation                        3.7    0.3              4.0
30 Jun, 2007       64.0 98.6  0.1 -14.8 -87.8  502.0  2.3       564.4


                                                                Total
MEUR                 1)   2)   3)    4)    5)     6)   7)      equity
1 Jan, 2006        63.9 96.4 -5.1   9.9 -21.9  523.2  2.8       669.2

Net income for
the period                                      84.4 -0.5        83.9

Items booked
directly
into equity:
Transactions with
shareholders and
minority
shareholders:
Dividends paid                                -126.9           -126.9
Issue of shares
(option rights)     0.1  0.7                                      0.8
Purchase of
own shares                              -29.7                   -29.7
Sale of
own shares                                                          -
Change in
minority interests                                    0.4         0.4
Cash flow hedge               4.0                                 4.0
Translation
differences                       -14.2                         -14.2
Hedging of
foreign
subsidiaries                        3.2                           3.2
Tax impact
of hedging                         -0.8                          -0.8
Option and share
based compensation                               4.0              4.0
30 Jun, 2006       64.0 97.1 -1.1   1.9 -51.6  484.7  2.7       593.9


                                                                Total
MEUR                 1)   2)   3)    4)    5)     6)   7)      equity
1 Jan, 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           -129.6
Issue of shares
(option rights)     0.1  1.6                                      1.7
Purchase of
own shares                              -69.3                   -69.3
Sale 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
31 Dec, 2006       64.0 98.0 -0.5 -14.0 -91.2  638.8  3.5       698.6


Consolidated cash flow

MEUR                     1-6/2007 1-6/2006 1-12/2006
Operating income             43.7    135.6     360.1
Change in working
capital                      33.3    -18.0     -46.7
Depreciation                 28.3     29.0      58.3
Cash flow from
operations                  105.3    146.6     371.7

Cash flow from financing
items and taxes             -57.9    -46.4    -105.9
Cash flow from operating
activities                   47.4    100.2     265.8

Cash flow from investing
activities                  -67.0    -47.0     -96.4

Cash flow after
investing activities        -19.6     53.2     169.4

Purchase and sale of
own shares                   -0.3    -29.7     -69.3
Share issue                   0.6      0.7       1.7
Dividends paid             -125.1   -126.8    -126.8
Change in loans
receivable                   47.3    -22.4     -14.3
Change in loans payable      94.9    106.6      38.2
Cash flow from financing
activities                   17.4    -71.6    -170.5

Change in cash and cash
equivalents                  -2.2    -18.4      -1.1

Cash and cash
equivalents at the
beginning of the period     109.5    113.5     113.5
Translation difference        0.9     -2.5      -2.9
Cash and cash
equivalents at the end
of the period               108.2     92.6     109.5
Change in cash and cash
equivalents                  -2.2    -18.4      -1.1


Change in interest-bearing net debt

MEUR                  1-6/2007 1-6/2006 1-12/2006
Interest-bearing net
debt at the beginning
of the period            124.9     99.3      99.3
Interest-bearing net
debt at the end
of the period            263.4    201.9     124.9
Change in
interest-bearing
net debt                -138.5   -102.6     -25.6


The EUR 142.0 million fine for the European Commission's decision is
included in the interest-bearing net debt of June 30, 2007. KONE has
appealed the decision and therefore the amount of the fine may
change.

Key figures

                                          1-6/2007 1-6/2006 1-12/2006
Basic earnings per share             EUR     -0.10     0.66      1.86
Diluted earnings per share           EUR     -0.10     0.66      1.85
Equity per share                     EUR      4.48     4.68      5.55
Interest-bearing net debt            MEUR    263.4    201.9     124.9
Total equity/total assets            %        24.1     27.1      30.5
Gearing                              %        46.7     34.0      17.9
Return on equity                     %        neg.     26.6      34.3
Return on capital employed           %         9.4     26.7      35.4
Total assets                         MEUR  2,343.0  2,190.5   2,292.4
Assets employed                      MEUR    827.8    795.8     823.5
Working capital (including financing
and tax items)                       MEUR   -143.2   -128.5    -139.5


Sales by geographical areas, MEUR

             1-6/2007  % 1-6/2006  % 1-12/2006  %
EMEA 1)       1,187.2 66  1,018.1 65   2,319.4 65
Americas        383.7 21    359.7 23     805.1 22
Asia-Pacific    242.2 13    197.6 12     476.3 13
Total         1,813.1     1,575.4      3,600.8


1) EMEA = Europe, Middle East, Africa

Quarterly figures

                      Q2/2007 Q1/2007 Q4/2006 Q3/2006 Q2/2006
Orders received  MEUR   944.4   902.1   712.1   742.0   821.9
Order book       MEUR 3,318.0 3,105.7 2,762.1 2,951.0 2,818.0
Sales            MEUR 1,001.9   811.2 1,145.6   879.8   840.4
Operating income MEUR   116.4 69.3 1)   123.4   101.1    83.9
Operating income %       11.6  8.5 1)    10.8    11.5    10.0



                                                      pro     pro
                                                    forma   forma
                          Q1/2006 Q4/2005 Q3/2005 Q2/2005 Q1/2005
Orders received  MEUR       840.3   702.5   649.4   688.3   604.1
Order book       MEUR     2,654.0 2,326.8 2,371.7 2,264.7 2,023.1
Sales            MEUR       735.0 1,013.4   804.7   783.1   649.3
Operating income MEUR        51.7    93.6    79.1    60.8 39.0 2)
Operating income %            7.0     9.2     9.8     7.8  6.0 2)


1) Excluding the MEUR 142.0 fine for the European Commission's
decision
2) Excluding MEUR 89.2 provision for the development and
restructuring program

Notes for the interim report


Orders received MEUR                    1-6/2007  1-6/2006  1-12/2006
                                         1,846.5   1,662.2    3,116.3


Order book MEUR                        30.6.2007 30.6.2006 31.12.2006
                                         3,318.0   2,818.0    2,762.1


Capital expenditure MEUR                1-6/2007  1-6/2006  1-12/2006
In fixed assets                             17.2      22.3       51.3
In leasing agreements                        6.8       6.8        9.1
In acquisitions                             16.5      25.1       90.1
Total                                       40.5      54.2      150.5


R&D Expenditure MEUR                    1-6/2007  1-6/2006  1-12/2006
                                            25.4      24.7       50.3
R&D Expenditure as percentage of sales       1.4       1.6        1.4


Number of employees                     1-6/2007  1-6/2006  1-12/2006
Average                                   29,987    27,834     28,366
At the end of the period                  30,665    28,261     29,321


Commitments

MEUR                         30.6.2007 30.6.2006 31.12.2006
Mortgages
    Group and parent company      30.7      30.7       30.7
Pledged assets
   Group and parent company        5.4       5.5        5.4
Guarantees
    Associated companies           1.8       1.9        1.8
    Others                         0.9       5.5        3.4
Operating leases                 119.6     114.4      115.8
Total                            158.4     158.0      157.1


The future minimum lease payments under non-cancellable operating
leases. MEUR

                 30.6.2007 30.6.2006 31.12.2006
Less than 1 year      34.5      31.4       34.6
1-5 years             75.0      72.1       72.5
Over 5 years          10.1      10.9        8.7
Total                119.6     114.4      115.8


In February 2007, 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. KONE has not made a provision in this
respect.

Derivatives

Fair values of derivative financial instruments, MEUR

                      posit.      neg.       net       net        net
                        fair      fair      fair      fair       fair
                       value     value     value     value      value
                   30.6.2007 30.6.2007 30.6.2007 30.6.2006 31.12.2006
FX Forward
contracts                3.6       5.9      -2.3       4.0        1.2
Currency options         0.0       0.0       0.0       0.1        0.0
Cross-currency
swaps,
due under one year       2.0         -       2.0      36.0       43.2
Cross-currency
swaps,
due in 1-3 years         8.6         -       8.6       2.0        2.8
Electricity
derivatives              0.5       0.1       0.4       1.2        0.3
Total                   14.7       6.0       8.7      43.3       47.5


Nominal values of derivative financial instruments, MEUR

                        30.6.2007 30.6.2006 31.12.2006
FX Forward contracts        525.7     546.2      392.8
Currency options             11.1      71.8       32.3
Cross-currency swaps,
due under one year           20.0     153.8      153.8
Cross-currency swaps,
due in 1-3 years            136.7      20.0       43.6
Electricity derivatives       2.9       2.0        2.9
Total                       696.4     793.8      625.4


Shares and Shareholders

30 June 2007                Class A shares Class B shares       Total
Number of shares                19,052,178    109,089,996 128,142,174
Own shares in possession 1)                     2,615,753
Share capital, EUR                                         64,071,087
Market capitalization, MEUR                                     5,870
Number of shares traded,
1-6/2007                                       52,086,002
Value of shares traded,
MEUR, 1-6/2007                                      2,302
Number of shareholders                   3         13,242      13,242

                                     Close           High         Low
Class B share price,
EUR, 1-6/2007                        46.76          47.55       39.52


1) 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 1 January-31 December, 2006, KONE Corporation
repurchased a total of 1,963,913 own class B shares. During the
accounting period 1 June-31 December, 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.