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Financial Statements Bulletin of KONE Corporation for January-December 2012

Stock Exchange Release Published 24/01/2013

KONE Corporation, stock exchange release, January 24, 2013 at 12:30 p.m. EET


October-December 2012: Continued strong development
- In October-December 2012, orders received totaled EUR 1,321 (10-12/2011: 1,099) million. Orders received grew by 20.2% at historical exchange rates and by 16.9% at comparable exchange rates.
- Net sales increased by 16.9% to EUR 1,858 (1,589) million. At comparable exchange rates the increase was 13.5%.
- Operating income was EUR 255.6 (233.0) million or 13.8% (14.7%) of net sales.
- Cash flow from operations before financing items and taxes was EUR 262.7 (212.5) million.

January-December 2012: Strong overall progress and a record high cash flow

- In January-December 2012, orders received totaled EUR 5,496 (1-12/2011: 4,465) million. Orders received grew by 23.1% at historical exchange rates and by 17.4% at comparable exchange rates. The order book stood at EUR 5,050 (Dec 31, 2011: 4,348) million at the end of 2012.
- Net sales increased by 20.1% to EUR 6,277 (5,225) million. At comparable exchange rates it increased by 15.2%.
- Operating income was EUR 821.3 (725.1) million or 13.1% (13.9%) of net sales, excluding the EUR 37.3 million one-time cost related to the support function development and cost adjustment programs. Operating income, including the one-time cost, was EUR 784.0 million.
- Basic earnings per share was EUR 2.35 (2.52). The comparable basic earnings per share excluding one-time items was EUR 2.46 (2.30).
- Cash flow from operations before financing items and taxes was EUR 1,055 (819.8) million.
- In 2013, KONE's net sales is estimated to grow by 5-9% at comparable exchange rates as compared to 2012. The operating income (EBIT) is expected to be in the range of EUR 840-920 million, assuming that translation exchange rates do not materially deviate from the situation of the beginning of 2013.
- The Board proposes a dividend of EUR 1.75 per class B share for the year 2012.

Key Figures

10-12/
2012
10-12/
2011
Change %1-12/
2012
1-12/
2011
Change %
Orders receivedMEUR1,321.31,098.820.25,496.24,465.123.1
Order bookMEUR5,050.14,348.216.15,050.14,348.216.1
SalesMEUR1,857.71,588.816.96,276.85,225.220.1
Operating income (EBIT) 1)MEUR255.6233.09.7821.3725.113.3
Operating income (EBIT) 1)%13.814.713.113.9
EBITA 1)MEUR262.5238.6854.1741.2
EBITA 1)%14.115.013.614.2
Cash flow from operations
(before financing items and taxes)
MEUR262.7212.51,055.3819.8
Net incomeMEUR183.1246.5611.1644.4
Total comprehensive incomeMEUR173.2267.7604.5669.5
Basic earnings per shareEUR0.700.962.352.52
Interest-bearing net debtMEUR-766.7-829.1-766.7-829.1
Total equity/total assets%49.354.049.354.0
Gearing%-40.2-40.8-40.2-40.8

1) Excluding a MEUR 37.3 one-time cost related to the support function development and cost adjustment programs.

Matti Alahuhta, President & CEO, in conjunction with the review:

"Our business continued to develop well in the last quarter of 2012. Orders received grew by 20% and sales by 17%. Operating income grew by 10% to EUR 256 million or 13.8% of sales.

I am very pleased with our development also for the full year 2012. Order intake grew by 23% and our order book was at above EUR 5 billion at the end of the year. Sales increased by 20% and operating income excluding one-time items by 13% to EUR 821 million, 13.1% of sales.

I would like to thank the whole KONE team, which has again done an excellent job. In addition to the good financial development, our people have achieved very good progress with our development programs. Just to name a couple of examples, our customer satisfaction has continued to develop favorably, and our new global volume elevator offering will improve our competitiveness even further. Cash flow from operations exceeded EUR 1 billion for the first time ever - the disciplines in the various areas of our business have remained firm and developed further in a market environment that has been very challenging in many countries.

During 2012, the growth of the global new equipment market weakened during the first three quarters, but picked up again towards the end of the year driven by the good market development in Asia. The market in Europe weakened further. In North America, the gradual recovery from a low level continued to progress. The global modernization market declined slightly, while the maintenance market continued to grow. Price competition intensified further during 2012 in most markets, particularly in regions where the overall market activity was at a low level.

In 2013 we expect the markets to be mixed in a way similar to 2012. The economic outlook is still uncertain in Europe. In North America the outlook is somewhat better than a year ago. We look forward to 2013 with confidence on the basis of our high order book, strong positions in Asia, and our extensive efforts in developing our competitiveness."


Operating environment in October-December (Q4 2012)

In the last quarter of 2012, the markets outside of Asia-Pacific developed largely in line with KONE's expectations, while the growth of the new equipment markets in Asia-Pacific was better than expected. The overall pricing environment intensified further in many markets. In new equipment, in the Europe, Middle East and Africa (EMEA) region, the market declined slightly but remained at a relatively good level in Central and North Europe and declined further from an already weak level in South Europe. In the Americas region, the gradual recovery continued. The market in Asia-Pacific grew at a somewhat higher rate than in the two previous quarters of the year. The major projects segment was active, but growth remained impacted by delays in decision-making. The global modernization market declined slightly, although with regional variations. Maintenance markets continued to develop favorably in most countries. Price competition remained very intense in most markets, particularly in regions where the overall market activity was at a low level.

Operating environment in January-December 2012

In 2012, the overall market situation was challenging due to the general economic environment and overall uncertainty. The new equipment demand weakened in many markets outside of Asia-Pacific. Price competition intensified in both new equipment and service. In new equipment, in the Europe, Middle East and Africa (EMEA) region, the market declined slightly in Central and North Europe, but remained at a relatively good level. In South Europe, the market declined further from an already weak level. In the Americas region, the gradual recovery from a low level continued. The market in Asia-Pacific continued to grow, although at a clearly lower rate than in 2011. Market growth in Asia-Pacific slowed down gradually during the first three quarters before picking up again in the last quarter of the year. The major projects segment was active, particularly in Asia-Pacific and the Middle East, but towards the end of the year lead times in decision-making became longer, which impacted the growth. The global modernization market declined slightly, although with regional variations. Maintenance markets continued to develop favorably in most countries. Price competition intensified further in all businesses, particularly in regions where the new equipment market has been weak for a prolonged period of time.

Market outlook 2013

In new equipment, the market in Asia-Pacific is expected to grow clearly in 2013. The market in Central and North Europe is expected to decline slightly, and the market inSouth Europeto further decline from an already weak level. The market inNorth Americais expected to continue to gradually recover.

The modernization market is expected to be at about the same level as in 2012 or decline slightly.

The maintenance market is expected to continue to develop rather well in most countries.

Business outlook 2013

KONE's net sales is estimated to grow by 5-9% at comparable exchange rates as compared to 2012.

The operating income (EBIT) is expected to be in the range of EUR 840-920 million, assuming that translation exchange rates do not materially deviate from the situation of the beginning of 2013.

The Board's proposal for the distribution of profit

The parent company's non-restricted equity on December 31, 2012 is EUR 1,748,060,513.45 of which the net profit for the financial year is EUR 459,323,828.06.

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1.745 be paid on the outstanding 38,104,356 class A shares and EUR 1.75 on the outstanding 218,271,425 class B shares, resulting in a total amount of proposed dividends of EUR 448,467,094.97. The Board of Directors further proposes that the remaining non-restricted equity, EUR 1,299,593,418.48 be retained and carried forward.

The Board proposes that the dividends be payable from March 7, 2013. All the shares existing on the dividend record date are entitled to dividend for the year 2012, 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 24, 2013 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:

Finnish callers: +358 9 23 113 289
US callers: +1 866 682 8490
UK callers: +44 8 445 718 957
Other callers: +44 1452 555 131
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:

Henrik Ehrnrooth, CFO, tel. +358 (0) 204 75 4260
Karla Lindahl, Director,Investor Relations, tel. +358 (0) 204 75 4441

Sender:

KONE Corporation

Henrik Ehrnrooth                     
CFO

Anne Korkiakoski
Executive Vice President
Marketing & Communications

About KONE

KONE is one of the global leaders in the elevator and escalator industry. The company has been committed to understanding the needs of its customers for the past century, providing industry-leading elevators, escalators and automatic building doors as well as innovative solutions for modernization and maintenance. The company'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. In 2012, KONE had annual net sales of EUR 6.3 billion and approximately 40,000 employees. KONE class B shares are listed on the NASDAQ OMX Helsinki Ltd inFinland.

www.kone.com

KONE Q4 2012 EN Interim Report


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