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Q&A ON THE IMPACTS OF THE COVID-19 ON KONE’S OPERATIONS

UPDATED: MARCH 31, 2020
NOTE. The Q&A will not be updated during KONE's silent period (April 1 - April 22).

Governments across the world are taking significant and increasing measures to contain the COVID-19 outbreak by restricting the movement of people. In many places, this has also resulted in measures such as closing down construction sites, limiting manufacturing operations and limiting the ability to perform maintenance activities which impact also KONE’s business. The extent of the measures varies from one country to another and the situation changes on a daily basis. In Q1, the restrictions have been the most severe in China, but there KONE has already seen significant recovery after the loosening of the restrictions since end of February. In the rest of the world, the measures have recently been increasing significantly.

Our priority is to ensure the health and wellbeing of our people and to minimize impact to customers. We are taking strong actions to manage the situation both at the local and global levels and following the instructions from the local governments and health authorities.

Our robust global supply chain and global product platforms are the key enablers in mitigating the impacts to our customers. We have altogether 13 manufacturing units in nine countries and multiple distribution centers and suppliers across the globe. We are leveraging our global delivery chain to mitigate the challenges and restrictions in individual countries. Overall, our delivery capabilities have recovered well in China since February and have been relatively stable in other countries.

However, as the measures to contain the COVID-19 outbreak are currently increasing significantly in many of KONE’s key markets. KONE expects increasing impacts to its business. As a result, KONE downgraded its business outlook for 2020 on March 23, 2020.

KONE now estimates that in 2020, its sales will decline or be stable at best at comparable exchange rates as compared to 2019. The rate of decline in sales will depend on the duration and severity of the government measures and the pace of recovery.

  • Stable sales would require a relatively brisk recovery in the second half of 2020 and sustained positive progress in KONE’s largest market China.
  • KONE’s sales are expected to decline by less than 5% in case the restrictive measures would impact KONE’s business mainly in the first half of 2020 and there would be a gradual recovery in the second half.
  • Should the broad and strict government measures continue to impact KONE’s operations well into the second half of 2020, KONE’s sales are expected to decline by 5-10%.

The adjusted EBIT margin is expected to decline somewhat or to be stable at best.

Demand for KONE’s solutions and services is also expected to be impacted by the prevailing uncertainty.

Despite the short term disruptions to its business, KONE expects to come out of the demanding situation in a position of strength. KONE’s competitiveness is solid and the balance sheet is strong. KONE also has a solid order book and the overall outlook for the service business is positive.

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KONE'S Q1 2020 results and silent period

UPDATED: MARCH 31, 2020

KONE's Q1 2020 results will be published on Wednesday April 22, 2020. KONE's three-week silent period preceding the results starts on Wednesday April 1, 2020.

Subsequent Financial Reports in 2020

Half-year Financial Report for January-June 2020 July 17, 2020
Interim Report for January-September 2020 October 22, 2020

KONE IR INSIGHTS PODCAST - EPISODE 4 OUT NOW

UPDATED: MARCH 31, 2020

KONE IR Insights is a podcast provided by KONE's investor relations team.

We have now published Episode 4. In addition to discussing impacts of COVID-19, we talk about the cyclicality of KONE's business and walk through examples of KONE's performance in previous downturns.

In Episode 3, we discussed sustainability with KONE's Environmental Director Hanna Uusitalo.

In Episode 2, we discussed strategy with President and CEO Henrik Ehrnrooth.

In Episode 1, we discussed takeaways from our recent investor meetings in Singapore, Hong Kong, Chicago, New York and London.

You can find all episodes here.

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