KONE Oyj - Interim report (Q1 and Q3)

Interim Report of KONE Corporation for January-June 2015

KONE Corporation, stock exchange release, July 17, 2015 at 12.30 p.m. EET

Interim Report of KONE Corporation for January-June 2015

KONE's Q2: Strong performance on a broad basis

April-June 2015

  * In April-June 2015, orders received totaled EUR 2,193 (4-6/2014: 1,802)
    million. Orders received grew by 21.7% at historical exchange rates and by
    6.3% at comparable exchange rates.
  * Net sales grew by 19.5% to EUR 2,210 (1,849) million. At comparable exchange
    rates the growth was 6.8%.
  * Operating income was EUR 325.2 (263.2) million or 14.7% (14.2%) of net
    sales.
  * Cash flow from operations (before financing items and taxes) was EUR 426.0
    (280.2) million.
  * KONE specifies its business outlook for 2015. In 2015, KONE's net sales is
    estimated to grow by 6-8 % at comparable exchange rates as compared to
    2014. Operating income (EBIT) is expected to be in the range of EUR
    1,190-1,250 million, assuming that translation exchange rates would remain
    at approximately the average level of January-June 2015. KONE previously
    estimated its net sales to grow by 6-9 % at comparable exchange rates as
    compared to 2014. KONE's previous outlook for its operating income (EBIT)
    was EUR 1,140-1,230 million, assuming that translation rates would have
    remained at approximately the average level of January-March 2015.
January-June 2015

  * In January-June 2015, orders received totaled EUR 4,247 (1-6/2014: 3,532)
    million. Orders received grew by 20.3% at historical exchange rates and by
    5.9% at comparable exchange rates. The order book stood at EUR 8,627 (June
    30, 2014: 6,537) million at the end of June 2015.
  * Net sales grew by 18.6% to EUR 3,901 (3,291) million. At comparable exchange
    rates the growth was 6.9%.
  * Operating income was EUR 537.1 (442.9) million or 13.8% (13.5%) of net
    sales.
  * Cash flow from operations (before financing items and taxes) was EUR 638.2
    (605.6) million.
Key Figures

                                           4-6/    4-6/    1-6/    1-6/   1-12/
                                           2015    2014    2015    2014    2014
-------------------------------------------------------------------------------
 Orders received                   MEUR 2,193.5 1,801.9 4,247.3 3,531.6 6,812.6

 Order book                        MEUR 8,627.4 6,537.2 8,627.4 6,537.2 6,952.5

 Sales                             MEUR 2,210.4 1,848.9 3,901.2 3,290.7 7,334.5

 Operating income (EBIT)           MEUR   325.2   263.2   537.1   442.9 1,035.7

 Operating income (EBIT)              %    14.7    14.2    13.8    13.5    14.1

 Cash flow from operations
 (before financing items and
 taxes)                            MEUR   426.0   280.2   638.2   605.6 1,345.4

 Net income                        MEUR   266.0   204.7   417.1   348.0   773.9

 Basic earnings per share           EUR    0.51    0.39    0.80    0.67    1.47

 Interest-bearing net debt         MEUR  -955.3  -520.6  -955.3  -520.6  -911.8

 Total equity/total assets            %    40.7    38.7    40.7    38.7    43.6

 Gearing                              %   -46.9   -33.8   -46.9   -33.8   -44.2





Henrik Ehrnrooth, President and CEO, in conjunction with the review:"Our performance in the second quarter was strong. We achieved solid growth in
orders received, which totaled EUR 2,193 million, amounting to a growth of
21.7% at historical and 6.3% at comparable exchange rates. Sales was EUR 2,210
million, with a growth of 19.5% at historical and 6.8% at comparable rates.
Sales growth was particularly strong in the Americas region and accelerated
slightly in the service business. Our profitable growth continued and our
operating income grew to EUR 325 million. The relative operating income improved
from 14.2% to 14.7% of sales. Cash flow was very strong at a level of EUR 426
million. Favorable translation exchange rates continued to have a significantly
positive impact on our reported figures.

I am very pleased with our good performance, which was broad-based both
geographically and across the businesses. This reflects the strong engagement of
our employees and their commitment to achieve results. I want to thank everyone
for their great contribution.

Trends in the global market were varied during the second quarter. In China, the
new equipment market declined slightly from a high level. In North America, both
new equipment and modernization markets continued to grow. In the EMEA region,
sentiment in the market improved slightly. Opportunities in South Europe in
particular improved compared to previous quarters. In modernization, the best
development in Europe was seen in Central and North European markets.
Maintenance market trends saw no major changes globally during the quarter, with
the highest rates of growth seen in Asia-Pacific.

While competition remained intense in many markets, our active work to maintain
the competitiveness of our offering continued to bring good results. Looking
forward, we are optimistic about our opportunities to grow and improve our
execution globally. The solid second quarter combined with a record-high order
book supports this confidence. Having half of the year now behind us, we have
specified our market and business outlook. In our market outlook for China, our
base case is a stable new equipment market or a slight decline for the full year
following the slight decline in the second quarter. In our business outlook for
the full year, we now expect a sales growth of 6-8% at comparable rates.
Operating income is expected to reach EUR 1,190-1,250 million for the full year,
which also includes a favorable translation rate impact."

Operating environment in April-June 2015

In the second quarter of 2015, the global new equipment market volumes weakened
marginally due to a slight decline in China. In the Europe, Middle East and
Africa (EMEA) region, the market was rather stable. In North America, the market
continued to grow. The major projects segment slowed down somewhat in the
quarter. The modernization market saw some growth in North America, and was on a
more stable trend overall in Europe. Maintenance markets grew globally, although
at low rates in such countries, where new equipment activity has been weak for
the past years.

Operating environment in January-June 2015

During January-June 2015, the new equipment market volumes in Asia-Pacific were
on a marginally decreasing trend, driven by a slight decline in market volumes
in China. In the EMEA region, market volumes were rather stable in Central and
North Europe, stabilized in South Europe from a weaker level, and saw some
growth in the Middle East. In North America, good development in new equipment
demand continued. In modernization, the large European market developed
positively in the Central and Northern parts of the continent and remained
weaker in South Europe. In North America, modernization demand grew, and markets
in Asia-Pacific also showed modernization opportunities. The maintenance market
continued to grow globally, with volume growth driven by Asia-Pacific following
the positive development of the new equipment market in the region. The pricing
environment was challenging in all businesses, in particular in countries
suffering from a prolonged weakness in the new equipment market.

Market outlook 2015

In new equipment, the market in Asia-Pacific is expected to be rather stable in
2015. The market in China is expected to remain at the good level of 2014 or
slightly decline. In the Europe, Middle East and Africa region, the market is
expected to grow slightly. In Central and North Europe, the market is expected
to be stable or grow slightly, and the market in South Europe to start
recovering. In the Middle East, the market is expected to see some growth. The
market in North America is expected to continue to grow.

The modernization market is expected to remain rather stable in Europe, but to
continue to grow in North America and Asia-Pacific. This is expected to result
in a rather stable or slightly growing market globally.

The maintenance markets are expected to develop rather well in most countries.

Business outlook 2015

KONE specifies its business outlook for 2015.

KONE's  net sales is estimated  to grow by 6-8% at  comparable exchange rates as
compared to 2014.

The  operating income (EBIT) is expected to  be in the range of EUR 1,190-1,250
million,  assuming that translation exchange rates would remain at approximately
the average level of January-June 2015.

Previous business outlook

KONE's net sales is estimated to grow by 6-9% at comparable exchange rates as
compared to 2014.

The operating income (EBIT) is expected to be in the range of EUR 1,140-1,230
million, assuming that translation exchange rates would remain at approximately
the average level of January-March 2015.

Press and analyst meetings

A meeting for the press, conducted in Finnish, will be held on Friday, July
17, 2015 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 www.kone.com. 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: +1 646 254 3368
UK callers: +44 (0)20 3427 1923
Finnish callers: +358 (0)9 2310 1619

Participant code: KONE

An on-demand version of the webcast will be available on www.kone.com later the
same day.

For further information, please contact:
Katri Saarenheimo, Director, Investor Relations, tel. +358 204 75 4705

Sender:

KONE Corporation

Henrik Ehrnrooth
President and CEO

Eriikka Söderström
CFO

About KONE
KONE is one of the global leaders in the elevator and escalator industry.
KONE'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. KONE
provides industry-leading elevators, escalators, automatic building doors and
integrated solutions to enhance the People Flow in and between buildings.
KONE's services cover the entire lifetime of a building, from the design phase
to maintenance, repairs and modernization solutions. In 2014, KONE had annual
net sales of EUR 7.3 billion, and at the end of the year over 47,000 employees.
KONE class B shares are listed on the NASDAQ OMX Helsinki Ltd. in Finland.

www.kone.com


[HUG#1939567]

Attachments:

KONE_Q2_2015_Interim_Report.pdf