Would you like to explore our corporate site or visit your local website?
Stay on Corporate siteKONE Corporation, stock exchange release, January 29,
2015 at 12.30 p.m. EET
Financial Statement Bulletin of KONE Corporation
for January-December 2014
October-December 2014: Good progress in orders received and
strong cash flow
- In October-December 2014, orders received totaled EUR 1,704 (10-12/2013: 1,473) million. Orders received grew by 15.6% at historical exchange rates and by 10.7% at comparable exchange rates.
- Net sales grew by 6.5% to EUR 2,166 (2,033) million. At comparable exchange rates the growth was 3.9%.
- Operating income was EUR 315.3 (292.8) million or 14.6% (14.4%) of net sales.
- Cash flow from operations (before financing items and taxes) was EUR 367.8 (240.8) million.
January-December 2014: Continued profitable
growth
- In January-December 2014, orders received totaled EUR 6,813 (1-12/2013: 6,151) million. Orders received grew by 10.8% at historical exchange rates and by 11.9% at comparable exchange rates. The order book stood at EUR 6,952 (Dec 31, 2013: 5,587) million at the end of December 2014.
- Net sales grew by 5.8% to EUR 7,334 (6,933) million. At comparable exchange rates the growth was 6.7%.
- Operating income was EUR 1,036 (953.4) million or 14.1% (13.8%) of net sales. Basic earnings per share was EUR 1.47 (1.37).
- Cash flow from operations (before financing items and taxes) was EUR 1,345 (1,213) million.
- In 2015, 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 1,130-1,230 million, assuming that translation exchange rates would remain at approximately the average level of January 2015.
- The Board proposes a dividend of EUR 1.20 per class B share for the year 2014.
Key Figures
10-12/ 2014 | 10-12/ 2013 | Change % | 1-12/ 2014 | 1-12/ 2013 | Change % | ||
Orders received | MEUR | 1,703.8 | 1,473.2 | 15.6 | 6,812.6 | 6,151.0 | 10.8 |
Order book | MEUR | 6,952.5 | 5,587.5 | 24.4 | 6,952.5 | 5,587.5 | 24.4 |
Sales | MEUR | 2,165.8 | 2,033.0 | 6.5 | 7,334.5 | 6,932.6 | 5.8 |
Operating income (EBIT) | MEUR | 315.3 | 292.8 | 7.7 | 1,035.7 | 953.4 | 8.6 |
Operating income (EBIT) | % | 14.6 | 14.4 | 14.1 | 13.8 | ||
Cash flow from operations (before financing items and taxes) | MEUR | 367.8 | 240.8 | 1,345.4 | 1,213.1 | ||
Net income | MEUR | 210.7 | 185.8 | 773.9 | 713.1 | ||
Basic earnings per share | EUR | 0.40 | 0.36 | 1.47 | 1.37 | ||
Interest-bearing net debt | MEUR | -911.8 | -622.0 | -911.8 | -622.0 | ||
Total equity/total assets | % | 43.6 | 43.7 | 43.6 | 43.7 | ||
Gearing | % | -44.2 | -36.1 | -44.2 | -36.1 | ||
Henrik Ehrnrooth, President and CEO, in conjunction with
the review:
"In the fourth quarter of the year, our business developed well.
We saw again very solid growth in orders received, which totaled
EUR 1,704 million. Favorable translation exchange rates contributed
positively to our growth in the quarter. In comparable currencies,
growth in orders was 10.7%. Sales growth was slower than in
previous quarters with an increase of 3.9% at comparable rates to
EUR 2,166 million. Good sales growth continued in Asia-Pacific, but
overall sales growth was burdened by a weaker development in the
EMEA region and North America. Despite the slower sales growth,
operating income developed positively and was EUR 315 million or
14.6% of sales. A particular highlight of the quarter was the very
strong cash flow, EUR 368 million.
Looking at our development for the full year, our performance was
strong overall. In 2014, we achieved an almost 12% growth in orders
received at comparable rates, with total orders of EUR 6,813
million. Sales grew by 6.7% in comparable currencies, totaling EUR
7,334 million, with growth in both new equipment and service sales.
Our growth continued to be profitable and operating income grew
faster than sales. Operating income reached EUR 1,036 million or
14.1% of sales. Cash flow improved from the earlier high level and
was EUR 1,345 million.
I want to express my gratitude to all of KONE's employees for the good results we have again achieved with strong collaboration.
We reached a historical milestone in 2014, as our maintenance base exceeded globally a million units. We have been focused on developing our sales capabilities and processes in maintenance and modernization, and can already start to see a positive impact from this work in a market situation that continues to see a high level of price competition. In new equipment, we continued to make good progress, with record high order and delivery volumes. We achieved this through the continued investments we have made into improving our competitiveness. Our product offering for both the volume business and major projects were strengthened during the year.
Going forward, our development programs provide the direction and framework for further improving our competitiveness. We will continue to develop our solutions to stay at the forefront of technological advancement in our industry. We will also work actively on accelerating growth in our service business. Achieving a constant improvement in customer loyalty and in our employee engagement remain in focus throughout our development actions.
In 2015, we expect to see a mixed market environment. In new
equipment, we expect to see Asia-Pacific and North America
providing the main growth opportunities. In line with our previous
expectations, we anticipate the market growth in China to slow down
from the previous year; we expect the market in China to remain at
the good level of 2014 or grow slightly. In maintenance, we expect
the market to develop rather well in most countries, and the global
modernization market to be flat or grow slightly.
Our objective is to continue to achieve higher than market growth
in a profitable way. We start 2015 with a strong order book, strong
positions in many of the key growth markets, and a highly capable
and committed team."
Operating environment in October-December (Q4 2014)
In the last quarter of 2014, positive development in the global new
equipment market continued. Markets in Asia-Pacific and North
America continued to grow, while the development in the EMEA region
was mixed. The major projects segment grew compared to the previous
year, driven in particular by activity in Asia. The modernization
market saw growth in North America and in Asia-Pacific, but was
rather weak 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-December 2014
In 2014, good growth in the global new equipment market continued.
Markets in Asia-Pacific, North America and the Middle East
developed positively, while development in Europe was rather
stable. The modernization market was on a slightly declining trend
overall, with positive development in North America and
Asia-Pacific, but a decline in the large European
modernization market. The major projects segment grew
globally, driven by strong activity in Asia-Pacific, the Middle
East and North America. Maintenance market growth was the fastest
in Asia-Pacific, driven by growth in new equipment installations.
In the more mature maintenance markets, the growth rate was lower,
with intense price competition seen in many countries.
Market outlook 2015
In new equipment, the market in Asia-Pacific is expected to grow
slightly in 2015, with the expectation that the market in China
will remain at the good level of 2014 or grow slightly. In the
Europe, Middle East and Africa region, the market is expected to be
rather stable. In Central and North Europe, the market is expected
to be stable or grow slightly, while in South Europe it is expected
to remain at a weak level. In the Middle East, the market is
expected to be stable at the previous year's level. 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
In 2015, 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 1,130-1,230 million, assuming that translation exchange rates would remain at approximately the average level of January 2015.
The Board's proposal for the distribution of profit
The parent company's non-restricted equity on December 31, 2014
is EUR 1,238,147,924.86 of which the net profit for the financial
year is EUR 404,065,028.22.
The Board of Directors proposes to the Annual General Meeting that
a dividend of EUR 1.1975 be paid on the outstanding 76,208,712
class A shares and EUR 1.20 on the outstanding 437,517,818 class B
shares, resulting in a total amount of proposed dividends of EUR
616,281,314.22. The Board of Directors further proposes that the
remaining non-restricted equity, EUR 621,866,610.64 be retained and
carried forward.
The Board proposes that the dividends be payable from March 4,
2015. All the shares existing on the dividend record date are
entitled to dividend for the year 2014 except for the own shares
held by the parent company.
Press and analyst meetings
A meeting for the press, conducted in Finnish, will be held on Thursday, January 29, 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 are set out below.
Both meetings will take place in the KONE Building, located at Keilasatama 3, Espoo, Finland.
Telephone conference numbers:
US callers: +1 334 323 6203
UK callers: +44 (0)207 1620 177
Finnish callers: +358 (0)9 2313 9202
Participant code: KONE
An on-demand version of the webcast will be available on
www.kone.com later during 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
KONE Financial Statement Bulletin 2014