KONE Oyj - Interim report (Q1 and Q3)

Interim Report of KONE Corporation for January-March 2024

KONE Corporation, stock exchange release, April 24, 2024 at 8.30 a.m. EEST

Interim Report of KONE Corporation for January-March 2024

Good start to the year with sales growth and improved profitability

January-March 2024

  · Orders received declined by 1.2% to EUR 2,235.7 (1-3/2023: 2,263.1) million.
At comparable exchange rates, orders grew by 1.6%.
  · Sales grew by 0.5% to EUR 2,568.2 (2,556.6) million. At comparable exchange
rates, sales grew by 2.7%.
  · Operating income (EBIT) was EUR 262.4 (238.3) million or 10.2% (9.3%) of
sales. Adjusted EBIT was EUR 262.4 (241.9) million or 10.2% (9.5%) of sales.*
  · Cash flow from operations (before financing items and taxes) was EUR 398.2
(456.0) million.

Business outlook for 2024 (specified)

KONE expects its sales to grow 0-5% at comparable exchange rates in 2024.
Adjusted EBIT margin is expected to be in the range of 11.5%-12.3%. Assuming
that foreign exchange rates remain at the April 2024 level, the impact of
foreign exchange rates on the adjusted EBIT would be limited.

KONE previously expected its sales to be stable or to grow slightly at
comparable exchange rates in 2024. The improvement in adjusted EBIT margin was
expected to continue in 2024, albeit with less tailwinds than in 2023.

Key figures                           1-3/2024   1-3/2023  Change  1-12/2023
Orders received                 MEUR   2,235.7    2,263.1   -1.2%    8,577.7
Order book                      MEUR  9,133.0    9,176.2   -0.5%     8,715.7
Sales                           MEUR   2,568.2    2,556.6    0.5%   10,952.3
Operating income                MEUR     262.4      238.3   10.1%    1,200.1
Operating income margin         %         10.2        9.3               11.0
Adjusted EBIT*                  MEUR     262.4      241.9    8.4%    1,248.4
Adjusted EBIT margin*           %         10.2        9.5               11.4
Income before tax               MEUR     265.7      241.1   10.2%    1,206.1
Net income                      MEUR     205.9      185.7   10.9%      931.6
Basic earnings per share        EUR       0.39       0.36   10.5%       1.79
Cash flow from operations       MEUR     398.2      456.0            1,485.2
(before financing items and
taxes)
Interest-bearing net debt       MEUR   -437.9     -738.8            -1,013.4
Equity ratio                    %        32.8       32.5                40.9
Return on equity                %        33.8       30.0                33.0
Net working capital (including  MEUR   -921.8   -1,032.3              -861.2
financing items and taxes)
Gearing                         %       -20.9      -35.4               -36.4

*KONE presents adjusted EBIT as an alternative performance measure to enhance
comparability of business performance between reporting periods. In
January-March 2024, there were no items affecting comparability. In the
comparison period, items affecting comparability included restructuring costs
and a positive effect arising from the revaluation of operations in Russia
classified as held for sale.

Philippe Delorme, President and CEO:

”We had a good start to the year in a mixed operating environment. We had very
good orders received in many parts of the world with strongest growth in India,
South-East Asia and North America. We won several important infrastructure
projects in both Modernization and New Building Solutions and continued to gain
market share in Modernization more broadly. At the same time our New Building
Solutions orders continued to be negatively impacted by the property market
downturn especially in China. Despite this, we are optimistic about the growth
opportunities in the markets. We have made a modest upgrade to our market
outlook for the New Building Solutions markets in Europe and Americas as well as
the Modernization market in Americas.

Overall, our Q1 financial results demonstrated again the resilience of our
business. Our sales grew by 3% at comparable exchange rates driven by strong
growth in Service and Modernization. Profitability continued to improve, and
cash generation was healthy. All in all, I'm happy with many aspects of our
first quarter development while recognizing we still have work to do to reach
our ambitions. I want to extend a big thank you to everyone at KONE for the
solid start for 2024. With one quarter behind us, we have now specified our
guidance for the year, and expect sales to grow by 0-5% at comparable exchange
rates, and the adjusted EBIT margin to be in the range of 11.5%-12.3% in 2024.

During my first quarter at KONE, I have had the opportunity to spend more time
with our KONE teams and customers around the world, and I see many great
opportunities ahead of us. We have several strengths to build on such as our
unique culture and outstanding innovations which we now need to scale at speed.
One exciting opportunity stems from combining our existing strengths in service
mindset with the digital transformation we are accelerating in services.
Sustainability has also come across as a shared priority for our people and our
customers, and we are paving the way for faster scope 3 emission reductions for
example by pushing for regenerative drives as a standard. Today we will also
publish our Sustainability Report where we share more about our progress on
leading the way in sustainability in our industry.”

Operating environment in January-March 2024

The global New Building Solutions market declined slightly during the first
quarter with regional differences in demand. In North America, the market
declined clearly. In Europe, the activity was mixed with growth in Southern and
Eastern parts of Europe, and weak market in the Western parts and Nordics. In
Asia-Pacific, Middle East and Africa, activity grew significantly with continued
strong demand for example in India. Activity declined clearly in China due to
property market downturn.

Growth in Service markets was broad-based with slight growth in more mature
markets and clear growth in Asia-Pacific, Middle East and Africa and China.
Modernization markets grew across all areas.

Intense competition impacted the New Building Solutions pricing environment in
China, while elsewhere pricing was more stable. In the Service and Modernization
markets, the pricing environment was favorable.

Market outlook 2024 (updated)

In the New Building Solutions market, activity is expected to be stable both in
North America and in Europe. In Asia-Pacific, Middle East and Africa activity is
expected to grow clearly. In China, market is expected to decline close to 10%
in units.

Modernization markets are expected to grow in all regions supported by an aging
equipment base as well as the focus on sustainability and adaptability of
buildings.

Service markets are expected to grow slightly in the more mature markets and
grow clearly in Asia-Pacific, Middle East and Africa and in China.

Business outlook 2024 (specified)

KONE expects its sales to grow 0-5% at comparable exchange rates in 2024.
Adjusted EBIT margin is expected to be in the range of 11.5%-12.3%. Assuming
that foreign exchange rates remain at the April 2024 level, the impact of
foreign exchange rates on the adjusted EBIT would be limited.

Key drivers for sales growth are positive outlook for Service and Modernization
and the strong order book. Declining New Building Solutions market in China is a
headwind.

The key profitability drivers are sales growth in Service and Modernization,
better pricing coming through in deliveries and savings from the operating model
renewal. Persistent cost inflation and decision to slightly increase investments
in R&D and IT are expected to impact profitability negatively.

Press and analyst meetings

A Microsoft Teams call for the press, conducted in English, will be held on
Wednesday, April 24, 2024 at 9:00 a.m. EEST. Journalists are kindly asked to
sign up to media@kone.com, and they will receive a link to the call upon
registration.

A webcast for analysts, conducted in English, will begin at 10:30 a.m. EEST and
will be available on https://join.rajucast.tv/kone-2024-0424-q1. An on-demand
version of the webcast will be available on www.kone.com later the same day. The
event can also be joined via a telephone conference.

U.S.: +1 786 697 3501
UK: +44 (0) 33 0551 0200
Finland: +358 (0)9 2319 5437
Participant code:  240424

For further information, please contact:

Sanna Kaje, Vice President, Investor Relations, KONE Corporation, tel. +358 204
75 0031

Sender:

KONE Corporation

Philippe Delorme
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 2023, KONE had annual sales of EUR 11.0 billion,
and at the end of the year over 60,000 employees. KONE class B shares are listed
on the Nasdaq Helsinki Ltd. in Finland.

www.kone.com

Attachments:

04246601.pdf