KONE Oyj - Interim report (Q1 and Q3)

Interim Report of KONE Corporation for January-March 2016

KONE Corporation, stock exchange release, April 21, 2016 at 12.30 p.m. EEST

Interim Report of KONE Corporation for January-March 2016

January-March  2016: Strong operating  performance; orders  declined from a high
level

  * In January-March 2016, orders received totaled EUR 1,942 (1-3/2015: 2,054)
    million. Orders received declined by 5.4% at historical exchange rates and
    by 4.3% at comparable exchange rates. The order book stood at EUR 8,530
    (March 31, 2015: 8,530 million) at the end of March 2016.
  * Net sales grew by 3.4% to EUR 1,748 (1,691) million. At comparable exchange
    rates the growth was 4.2%.
  * Operating income was EUR 221.4 (211.9) million or 12.7% (12.5%) of net
    sales.
  * Cash flow from operations (before financing items and taxes) was EUR 305.7
    (212.2) million.


Key figures

                                            1-3/    1-3/    1-12/
                                            2016    2015     2015
------------------------------------------------------------------

Orders received                    MEUR  1,942.3 2,053.8  7,958.9


Order book                         MEUR  8,529.7 8,529.6  8,209.5


Sales                              MEUR  1,748.3 1,690.9  8,647.3


Operating income (EBIT)            MEUR    221.4   211.9  1,241.5


Operating income (EBIT)               %     12.7    12.5     14.4

Cash flow from operations
(before financing items and taxes) MEUR    305.7   212.2  1,473.7


Net income                         MEUR    188.1   151.1  1,053.1


Basic earnings per share            EUR     0.37    0.29     2.01


Interest-bearing net debt          MEUR -1,037.6  -584.4 -1,512.6


Total equity/total assets             %     38.6    36.7     45.4


Gearing                               %    -52.7   -33.4    -58.7





Henrik Ehrnrooth, President and CEO, in conjunction with the review:

"We continued our strong operating performance in the first quarter of the year.
Orders  received declined,  but they  remained at  the good  level of EUR 1,942
million.  Orders declined  by 5.4% at  historical and  4.3% at comparable rates.
Orders  declined in China,  while the Europe,  Middle East and  Africa region as
well  as North America saw growth. Sales  grew by 3.4% at historical and 4.2% at
comparable  rates, reaching EUR 1,748 million. Sales growth was the strongest in
North  America,  whereas  the  development  in  Asia-Pacific as well as the EMEA
region was more stable after a strong fourth quarter last year. Operating income
grew and was EUR 221.4 million. The relative operating income improved to 12.7%
of  net sales. Cash flow was strong  at EUR 305.7 million, highlighting the good
fundamentals in our business.

In a market situation that saw a declining new equipment market in China, we did
not  seek to  maximize growth  from our  already strong  position as the largest
company  in the market. The market decline in  China was in the first quarter at
the  weaker end of our  expected range of a  5-10% decline for the full year. In
Europe  and North  America, we  continued to  see opportunities  in both the new
equipment  and modernization markets during  the quarter. The global maintenance
market  continued to grow, particularly strongly  in the Asia-Pacific region. We
have  been successful  in capitalizing  on these  opportunities. With our strong
competitiveness,  we are  confident in  our ability  to continue to perform well
also in a changing market environment.

I  would like to extend my thanks to  all our employees for their commitment and
effort. We are off to a solid start into another year of improving our execution
and  productivity. This year  will be the  last one for  the current development
programs.  With the  roadmap they  provide, we  will continue investing into the
development   of   our   product   competitiveness,  our  customer  service  and
communication,  and the use of new technologies in our operations and solutions.
We took an important step during the quarter by beginning co-operation with IBM.
With their cloud-based platform, we will bring a step change in our abilities in
remote  equipment monitoring and diagnostics as well as in providing added value
and new services to our customers. This will enable us to further strengthen our
service business in the coming years.

We  have  maintained  our  market  and  business outlooks intact. We continue to
expect sales growth of 2-6% at comparable rates in 2016, and to reach a level of
operating  income  in  the  range  of  EUR  1,220-1,320 million,  assuming  that
translation  exchange rates would  remain at the  average level of January-March
2016."

Operating environment in January-March 2016

In  the first quarter of 2016, the  global new equipment market volumes weakened
as  compared to the previous year, following a clear market decline in China. In
the  Europe, Middle East and  Africa (EMEA) region as  well as in North America,
demand  in both new  equipment and modernization  grew somewhat. The maintenance
market continued to grow globally, with a strong growth rate in Asia-Pacific and
more moderate development in Europe and North America.

Market outlook 2016

In  new equipment, the market in China  is expected to decline by 5-10% in units
ordered and also the price competition to continue intense. In the rest of Asia-
Pacific  and in North America,  the market is expected  to see some growth. Also
the market in Europe, Middle East and Africa region is expected to grow slightly
with  growth in Central and North Europe  and a more stable development in South
Europe and the Middle East.

The  modernization market is expected to grow slightly in Europe, to continue to
grow 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 develop rather well also in other regions.

Business outlook 2016

KONE's  net sales is estimated  to grow by 2-6% at  comparable exchange rates as
compared to 2015.

The  operating income (EBIT) is expected to  be in the range of EUR 1,220-1,320
million,  assuming that translation exchange rates would remain at approximately
the average level of January-March 2016.

Press and analyst meetings

A  meeting for the press, conducted in  Finnish, will be held on Thursday, April
21, 2016 at 2:15 p.m. EEST.

A  meeting for analysts, conducted in English, will begin at 3:45 p.m. EEST. 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 3387
UK callers: +44 (0)20 3427 1933
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

KONE as a company

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  2015, KONE  had  annual  net sales of EUR 8.6
billion,  and at  the end  of the  year close  to 50,000 employees. KONE class B
shares are listed on the Nasdaq Helsinki Ltd. in Finland.

www.kone.com










[HUG#2005490]

Attachments:

KONE_Q1_2016_Interim_Report.pdf