KONE Corporation, stock exchange release, January 28, 2016 at 12.30 p.m. EET
Financial Statement Bulletin of KONE Corporation for January-December 2015
October-December 2015: Strong finish to the year
October-December 2015, orders received totaled EUR 1,947
(10-12/2014: 1,704) million. Orders received grew by 14.3% at
historical exchange rates and 7.0% at comparable exchange
· Net sales grew by 18.3% to EUR 2,562 (2,166) million. At comparable exchange rates the growth was 10.8%.
· Operating income was EUR 378.5 (315.3) million or 14.8% (14.6%) of net sales.
· Cash flow from operations (before financing items and taxes) was EUR 403.5 (367.8) million.
January-December 2015: Profitable growth in a changing market environment
January-December 2015, orders received totaled EUR 7,959
(1-12/2014: 6,813) million. Orders received grew by 16.8% at
historical exchange rates and by 5.6% at comparable exchange rates.
The order book stood at EUR 8,210 (December 31, 2014: 6,952)
million at the end of December 2015.
· Net sales grew by 17.9% to EUR 8,647 (7,334) million. At comparable exchange rates the growth was 8.3%.
· Operating income was EUR 1,241 (1,036) million or 14.4% (14.1%) of net sales.
· Basic earnings per share was EUR 2.01 (1.47). Excluding the extraordinary dividend received during the financial year, earnings per share was EUR 1.79.
· Cash flow from operations (before financing items and taxes) was EUR 1,474 (1,345) million.
· In 2016, KONE's net sales is estimated to grow by 2-6% at comparable exchange rates as compared to 2015. The operating income is expected to be in the range of 1,220-1,320 million, assuming that translation exchange rates would remain at approximately the average level of January 2016.
· The Board proposes a dividend of EUR 1.40 per class B share for the year 2015.
|Operating income (EBIT)||MEUR||378.5||315.3||20.0%||1,241.5||1,035.7||19.9%|
|Operating income (EBIT)||%||14.8||14.6||14.4||14.1|
|Cash flow from
(before financing items and taxes)
|Basic earnings per share||EUR||0.71||0.40||2.01||1.47|
|Interest-bearing net debt||MEUR||-1,512.6||-911.8||-1,512.6||-911.8|
|Total equity/total assets||%||45.4||43.6||45.4||43.6|
Henrik Ehrnrooth, President and CEO, in conjunction with the review:
"We ended the year with a strong fourth quarter. Sales was EUR 2,562 million, with growth accelerating to 18.3% at historical and 10.8% at comparable exchange rates. Orders also developed strongly, totaling EUR 1,947 million, which corresponded to a growth of 14.3% at historical and 7.0% at comparable rates.
Operating income was EUR 379 million, and the relative operating income improved to 14.8% of net sales. Cash flow exceeded the previous year's level at EUR 404 million. Translation exchange rates again positively impacted our reported figures.
For 2015 as a whole, I am very happy with our broad-based strong performance in a market environment that saw significant changes in growth dynamics. We managed our business successfully in a slowing market in China and were able to accelerate our growth in many other areas. Overall, we again strengthened our competitiveness and achieved profitable growth, which shows in the good development in orders received, our solid result, and the very strong cash flow. The record-high cash flow reflects a continued healthy management of the fundamentals in our business.
I am very satisfied with the progress we made during the year both in our new equipment and service business. In service, our objective has been to accelerate growth. We developed in line with this target, with higher sales growth in maintenance and clear growth in modernization orders. In our new equipment business, we made significant improvements in our product and cost competitiveness. In addition, for the business as a whole, important steps were taken to speed up our innovation activities and the use of new technologies in order to provide a better customer and user experience. Our achievements this year would not have been possible without the commitment of our personnel, for which I would like to thank everyone in the KONE team.
Looking ahead into 2016, the global market environment is expected to continue to be varied. The market development remains divided in Europe, with Central and North Europe expected to see some growth in new equipment and modernization demand, but South Europe to remain stable at a low level. For North America, our market outlook continues positive for both new equipment and modernization. In China, we expect the market to be challenging. The new equipment market in China, when measured in units, is expected to decline by 5-10% and to continue to see intense price pressure. In the global maintenance market, we continue to see good opportunities for growth.
In 2016, our sales is expected to grow by 2-6% at comparable rates. Operating income is expected to be in the range of EUR 1,220-1,320 million, assuming that the translation rates would remain at the average level of January 2016. Despite the mixed market conditions, I am convinced that we can continue our strong performance in the year ahead thanks to our further strengthened competitive positioning and committed team."
Operating environment in October-December 2015
In the last quarter of 2015, the global new equipment market volumes weakened slightly following a somewhat declining market in China. In the Europe, Middle East and Africa (EMEA) region, new equipment demand grew slightly, and in North America, the market continued to grow. The major projects segment grew in the quarter. The modernization market grew in North America, and was on a slightly positive trend in Europe driven by Central and North Europe. Also the maintenance market continued to grow globally, although at low rates in such countries, where new equipment activity has been weak for the past years.
Operating environment in January-December 2015
In 2015, the global new equipment market volumes decreased slightly due to a decline in the large Chinese new equipment market. Of the other markets, new equipment demand in North America grew clearly, and markets in Europe and the Middle East also saw some growth. Globally the demand in modernization increased slightly, with positive development in North America and Asia-Pacific, and a slightly better trend overall also in Europe. The major projects segment saw some growth in the year, but the development varied from quarter to quarter. The maintenance market continued to grow globally. The fastest growth was seen in Asia-Pacific. In the more mature maintenance markets, the rate of growth was lower.
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 2016.
The Board's proposal for the distribution of profit
The parent company's non-restricted equity on December 31, 2015 is EUR 1,765,223,548.43 of which the net profit for the financial year is EUR 1,200,968,239.16.
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1.3975 be paid on the outstanding 76,208,712 class A shares and EUR 1.40 on the outstanding 436,957,058 class B shares, resulting in a total amount of proposed dividends of EUR 718,241,556.22.
The Board of Directors further proposes that the remaining non-restricted equity, EUR 1,046,981,992.21 be retained and carried forward.
The Board proposes that the dividends be payable from March 16, 2016. All the shares existing on the dividend record date are entitled to dividend for the year 2015 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 28, 2016 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 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 3365
UK callers: +44 (0)20 3427 1910
Finnish callers: +358 (0)9 6937 9590
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
President and CEO
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 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.