KONE Corporation, stock exchange release, April28, 2021 at 12.30 p.m.EEST
Interim Report of KONE Corporation forJanuary-March2021
Strong start to the year with growth in salesand earnings
January-March2021
- Orders received declined by 1.6% to EUR 2,075.9(1-3/2020: 2,109.3) million. At comparable exchange rates, ordersgrew by 1.3%.
- Sales grew by 5.8% to EUR 2,326.4 (2,198.3)million. At comparable exchange rates, sales grew by9.1%.
- Operating income (EBIT) was EUR 249.8 (197.2)million or 10.7% (9.0%) of sales. The adjusted EBIT was EUR 249.8(205.6) million or 10.7% (9.4%) ofsales.*
- Cash flow from operations (before financingitems and taxes) was EUR 425.5 (346.9)million.
Business outlook for2021 (specified)
In 2021, KONE's sales growth is estimated to bein the range of 2% to 6% at comparable exchange rates as comparedto 2020. The adjusted EBIT margin is expected to be in the range of12.4% to 13.2%. Assuming that foreign exchange rates remain at theApril 2021 level, the impact of foreign exchange rates on theadjusted EBIT would belimited.
KONE previously estimated its sales growth tobe in the range of 0% to 6% at comparable exchange rates ascompared to 2020. The adjusted EBIT margin was expected to be inthe range of 12.4% to 13.4%. Assuming that foreign exchange rateswould have remained at the January 2021 level, foreign exchangerates were estimated to impact the adjusted EBIT negatively byaround EUR 20million.
| KEYFIGURES | 1-3/2021 | 1-3/2020 | Change | 1-12/2020 | |
| Ordersreceived | MEUR | 2,075.9 | 2,109.3 | -1.6% | 8,185.1 |
| Orderbook | MEUR | 8,180.4 | 8,386.4 | -2.5% | 7,728.8 |
| Sales | MEUR | 2,326.4 | 2,198.3 | 5.8% | 9,938.5 |
| Operatingincome | MEUR | 249.8 | 197.2 | 26.7% | 1,212.9 |
| Operating incomemargin | % | 10.7 | 9.0 | 12.2 | |
| AdjustedEBIT* | MEUR | 249.8 | 205.6 | 21.5% | 1,250.5 |
| Adjusted EBITmargin* | % | 10.7 | 9.4 | 12.6 | |
| Income beforetax | MEUR | 252.2 | 197.2 | 27.9% | 1,224.2 |
| Netincome | MEUR | 195.5 | 152.8 | 27.9% | 947.3 |
| Basic earnings pershare | EUR | 0.37 | 0.29 | 26.7% | 1.81 |
| Cash flow fromoperations (before financing items andtaxes) | MEUR | 425.5 | 346.9 | 1,907.5 | |
| Interest-bearing netdebt | MEUR | -1,375.3 | -970.2 | -1,953.8 | |
| Equityratio | % | 36.6 | 39.4 | 45.5 | |
| Return onequity | % | 28.2 | 21.6 | 29.7 | |
| Net working capital(including financing items andtaxes) | MEUR | -1,467.7 | -964.3 | -1,160.1 | |
| Gearing | % | -58.6 | -39.2 | -61.1 |
* KONE presents adjusted EBIT as an alternativeperformance measure to enhance comparability of the businessperformance between reporting periods. Restructuring costs relatedto significant restructuring programs are excluded from thecalculation of the adjusted EBIT. During 2017-2020, allrestructuring costs excluded from adjusted EBIT related to theAccelerateprogram.
Henrik Ehrnrooth, President andCEO:
"Our strong performance continued inQ1. Orders received were stable, largely thanks tocontinued growth in China. When considering the comparison periodwhere the effects of the pandemic were yet to be seen in many partsof the world, this was a solid achievement. With good sales growthand margin expansion, our EBIT grew significantly. Our strong cashflow was again a highlight for the quarter. I am very pleased withhow we have started the year and would like to extend a big thankyou to our customers for their trust and to KONE's employees forthe fantastic work they have done to deliver on our customerpromises.
We are driving differentiation throughadaptability and sustainability. This is the cornerstone of our new strategyphase and central to how we add value to our customers.Adaptability to changing user needs and to how buildings are usedhas become a critical success factor for many of our customers.Through our connected solutions, we enable an array of our own andthird-party services to meet these requirements. Ensuring thesustainability of their buildings, as well as healthy and safeenvironments, is also high on our customers' agenda. Our focus haslong been on environmental performance and securing market leadingoffering in terms of energy efficiency. We are now taking this tothe next level with our commitment to embedding sustainability inall aspects of our business. Illustrating this is our recentlylaunched D&I pledge where we commit to increase our actionsaround diversity, inclusion and equity at KONE. One of the specificgoals includes making a step-change in the share of women atdirector level from 19% last year to 35% by2030.
We are fully focused on capturing growthopportunities from the emerging recovery that we areseeing. I am encouraged by the recovery that we arestarting to see in many markets and the continued strength ofactivity in China. During the first quarter, we completed theroll-out of our DX class elevators throughout EMEA andAsia-Pacific. We also had strong demand for our Office Flowsolution that was launched late last year and the sales of our 24/7Connected Services continues to accelerate. I am confident thatthese new solutions will create growth opportunities and providesupport in an environment characterized by intense competition andrising materialcosts.
I am optimistic about the important roleoffices play to the success ofcompanies. Flexible working arrangements are here to stay,and offices will need to transform to attract current and futureemployees. Key elements of this transformation will includecreating an environment that promotes wellbeing, flexibility andsustainability. These changes will foster innovation and moreinclusive ways of working. The vision paper we published in March,jointly with Accenture and Amazon Web Services, explores how theoffice could bereimagined.
With the first quarter behind us, we havespecified our business outlook for2021. We now expect sales to grow by 2-6% and theadjusted EBIT margin to be 12.4-13.2%. Despite headwinds fromincreased material prices, we are well on track to continue on thepath of profitablegrowth."
Operating environment in January-March2021
In the first quarter of 2021, the globalelevator and escalator market continued to be impacted by theCOVID-19 pandemic and the measures taken to contain its spread.Compared to the previous quarter, there started to be early signsof recovery, especially in the residential and infrastructuresegments thanks to the demand for affordable housing andanticipatedinvestments.
Demand in the new equipmentmarket decreased in most parts of the world froma high comparison period, where the negative effects of thepandemic were mainly visible in China. InAsia-Pacific, the new equipment markets grew clearlythanks to high level of activity in China.In the rest of Asia-Pacific, the new equipmentmarkets declined clearly. In the EMEAregion, the new equipment market declinedslightly. The new equipment market in Central and North Europedeclined slightly whereas in South Europe, the market declinedclearly. In the Middle East, the market was stable. InNorth America, the market declinedsignificantly.
In the service market,maintenance activity was resilient globally,while modernization remained impacted by delayeddecision-making.
Competition remained intense, which affectedthe pricing environmentadversely.
Market outlook 2021(updated)
The new equipment market is expected to growslightly in China. In the rest of the world, the markets areexpected to graduallyrecover.
The maintenance markets are expected to beresilient, excluding the direct impacts of the lockdownmeasures.
In the modernization markets, activity isexpected to gradually recover supported by improvingconfidence.
Business outlook 2021(specified)
In 2021, KONE's sales growth is estimated to bein the range of 2% to 6% at comparable exchange rates as comparedto 2020. The adjusted EBIT margin is expected to be in the range of12.4% to 13.2%. Assuming that foreign exchange rates remain at theApril 2021 level, the impact of foreign exchange rates on theadjusted EBIT would belimited.
KONE has a solid order book and maintenancebase for 2021. The improvement seen in the margin of ordersreceived is expected to support profitability together withcontinual improvements in quality andproductivity.
The key headwinds for 2021 results are theincreased material and logistics costs. KONE also continues toinvest actively in building the capability to sell and deliverdigital services andsolutions.
Press and analystmeetings
A Microsoft Teams call for the press, conductedin English, will be held on Wednesday, April 28, 2021 at 2:15 p.m.EEST. Journalists are kindly asked to sign up to media@kone.com,and they will receive a link to the call uponregistration.
A webcast for analysts, conducted in English,will begin at 3:45 p.m. EEST and will be available onwww.kone.com/investors. An on-demand version of the webcast will beavailable on www.kone.com later the same day. The event can also bejoined via a telephoneconference.
U.S.: +1 323-794-2423
UK: +44 (0)330 336 9105
Finland: +358 (0)9 7479 0361
Participant code:6013837
For further information, pleasecontact:
Natalia Valtasaari, Vice President, InvestorRelations, KONE Corporation, tel. +358 204 754705
Sender:
KONE Corporation
Henrik Ehrnrooth
President andCEO
Ilkka Hara
CFO
About KONE
At KONE, our mission is to improve the flow ofurban life. As a global leader in the elevator and escalatorindustry, KONE provides elevators, escalators and automaticbuilding doors, as well as solutions for maintenance andmodernization to add value to buildings throughout their lifecycle. Through more effective People Flow®, we make people'sjourneys safe, convenient and reliable, in taller, smarterbuildings. In 2020, KONE had annual sales of EUR 9.9 billion, andat the end of the year over 60,000 employees. KONE class B sharesare listed on the Nasdaq Helsinki Ltd. in Finland.
www.kone.com