In 2010, KONE’s operating environment was twofold. The new equipment markets in the Asia-Pacific region developed well throughout the year, whereas the situation in the Europe, Middle East and Africa (EMEA) region as well as the Americas was mixed with some markets recovering and others having a low level of activity. The size of the modernization market was approximately at the prior year’s level. Maintenance markets continued to grow supported by continued good new equipment delivery volumes. Price competition remained intense in all businesses.
In the EMEA region, the new equipment markets were mixed. Good development was seen in the residential markets in Finland, Sweden and Norway. The new equipment market in the United Kingdom showed signs of modest recovery in the second half of the year. The market in Germany remained at a good level throughout the year. The new equipment markets in southern Europe were challenging. The markets in France and Italy weakened in the beginning of the year but stabilized to a low level towards the end of the year. The market in Spain declined throughout the year. The commercial segments in southern Europe were burdened by high vacancy rates. The market in Russia was challenging and uncertain, whereas the development of the markets in the Middle East, in Abu Dhabi and Saudi Arabia in particular, was positive throughout the year. The modernization markets in Europe declined slightly as a result of the decline in France. Most North and Central European markets developed positively. Despite the implementation deadline in December 2010 for the national first phase requirements of the European Safety Norms for Existing Lifts (SNEL) in France, a considerable part of the required upgrades of the aging equipment base remains uncompleted. The modernization market developed well in Belgium supported by the national implementation of the SNEL requirements. The maintenance markets in the EMEA region continued to grow, but remained highly competitive.
In the Americas region, the new equipment market stabilized at a low level in the United States, but recovered in both Canada and Mexico. The new equipment market in the United States has been demanding since the beginning of 2008. The market decline seen in 2009 continued in the beginning of 2010, but the market started to show signs of stabilization in the second quarter of the year and stabilized at a low level thereafter. The infrastructure market was relatively active due to public stimulus action during the first half of the year, but price competition was aggressive in major projects in particular. Activity in the modernization market improved slightly. In Canada, market activity grew and was at a good level throughout the year. The market in Mexico recovered gradually during 2010. The maintenance markets developed quite well, but were highly competitive.
In the Asia-Pacific region, the positive market development continued throughout the year with the markets in China and Southeast Asia growing the strongest. Urbanization continued to drive growth in China, where all segments grew. The fastest growth was seen in the residential segment, affordable housing in particular, and in the infrastructure segment. The strongest growth moved increasingly from the metropoles on the east coast to other cities in the eastern parts of China and towards the central parts of the country. The government tightened reserve requirements for banks in 2010 in order to manage the development and moderate the growth of the real estate market. In India, the markets grew strongly in the first half of the year. Towards the end of the year the growth declined clearly due to increasing interest rates, which resulted in a more challenging funding environment. The affordable housing segment and the infrastructure segment were the most active ones. The new equipment market in Australia grew strongly in the beginning of the year, but slowed down due to the tightening of financial conditions towards the end of 2010. The markets in Southeast-Asia started to pick up during the first quarter of the year and grew strongly thereafter driven by growth in the residential markets. The maintenance markets in Asia-Pacific developed well.