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KONE Corporation’s Interim Report for January-June 2010

Stock Exchange Release Published 20/07/2010

KONE’s Q2: Overall strong development

April-June 2010

  • In April–June 2010, orders received totaled EUR 1,043 (4–6/2009: 953.9) million. Orders received increased by 9.3% at historical exchange rates and by 3.7% at comparable exchange rates.
  • Net sales increased by 7.7% to EUR 1,259 (1,169) million. At comparable exchange rates the increase was 2.6%.
  • Operating income was EUR 175.7 (146.3) million or 14.0% (12.5%) of net sales (4–6/2009 figures exclude a one-time cost of EUR 33.6 million related to the fixed cost adjustment program).
  • Cash flow from operations reached EUR 201.7 (201.1) million.
  • KONE upgrades its outlook for 2010 due to strong orders received in the Asia-Pacific region and favorable exchange rate movements. KONE’s net sales is estimated to be at approximately the same level as in 2009. The operating income (EBIT) is expected to be in the range of EUR 630–660 million. KONE previously estimated its net sales to decline by 0–5% compared to 2009. The previous operating income (EBIT) outlook was EUR 580–620 million.

January-June 2010

  • In January–June 2010, orders received totaled EUR 1,938 (1–6/2009: 1,852) million. Orders received increased by 4.6% at historical exchange rates and by 1.5% at comparable exchange rates. The order book stood at EUR 3,934 (Dec 31, 2009: 3,309) million at the end of June 2010.
  • Net sales increased by 3.3% to EUR 2,262 (2,190) million. At comparable exchange rates it increased by 0.2%.
  • Operating income was EUR 284.3 (237.5) million or 12.6% (10.8%) of net sales (1–6/2009 figures exclude a one-time cost of EUR 33.6 million related to the fixed cost adjustment program).
Key Figures
4-6/
2010
4-6/
2009
1-6/
2010
1-6/
2009
1-12/
2009
Orders receivedMEUR1,042.8953.91,937.51,852.43,432.4
Order bookMEUR3,933.73,754.13,933.73,754.13,309.1
SalesMEUR1,258.91,168.62,261.92,189.64,743.7
Operating incomeMEUR175.7146.3 1)284.3237.5 1)600.3 1)
Operating income%14.012.5 1)12.610.8 1)12.7 1)
Cash flow
from operations
before financing
items and taxes)
MEUR201.7201.1419.3371.4825.1
Net incomeMEUR135.686.5217.2165.2466.4
Total
comprehensive
income
MEUR174.179.4284.9159.6449.5
Basic earnings
per share
EUR0.530.340.850.651.84
Interest-bearing
net debt
MEUR-487.6-167.1-487.6-167.1-504.7
Total equity/
total assets
%43.538.843.538.847.0
Gearing%-37.4-16.1-37.4-16.1-37.7

1) Excluding a EUR 33.6 million one-time restructuring cost related to the fixed costs adjustment program, which was booked in the second quarter in 2009.

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

“The strong performance during the first half of the year demonstrates that our overall approach during the past two years has been successful. The strong development of our business in the Asia-Pacific region has largely compensated for the significant decline in the new equipment markets in Europe and North America. This progress in combination with the improvements in overall quality and productivity as well as the active development of our service business has resulted in a continuous growth in operating income. During the second quarter, low sourcing costs and favorable exchange rates also contributed to the good growth in operating income. I am very pleased with our business progress during the second quarter. Our personnel continued to do a great job for which I want to thank them.

As a result of the strong development during the first half of the year, we have upgraded our full year outlook for the operating income to EUR 630–660 million, even though our result this year will be less second half weighted than in prior years.
The new equipment markets started to stabilize in Europe and North America as we expected during the first half of the year. However, we believe that the overall economy and our markets in these areas will remain uncertain and that their recovery will be slow. We have good order book coverage for 2010. These uncertainties will therefore not have any material impact on our financial performance this year but they might reflect on periods thereafter.

In order to ensure that our development within our industry remains strong, we have started to increase investments in actions that will further improve our long-term competitiveness.”

KONE Q2 2010 Interim Report.pdf

Analyst and media meeting and conference call

A meeting for the press, conducted in Finnish, will be held on Tuesday, July 20, 2010 at 2:15 p.m. Eastern European Time.

A telephone conference and a meeting for analysts, conducted in English, will begin at 3:45 p.m. Eastern European Time. The meeting can also be followed as a webcast on www.kone.com.

Both meetings will take place in the KONE Building, located at Keilasatama 3, Espoo, Finland.

Telephone conference numbers:

Finnish callers: +358 923 101 527
US callers: +1 866 458 40 87
Other callers: +44 203 043 2436
Participant code: KONE

An on-demand version of the webcast will be available on www.kone.com later during the same day.

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 2009, KONE had annual net sales of EUR 4.7 billion and approximately 34,000 employees. KONE class B shares are listed on the NASDAQ OMX Helsinki Ltd in Finland. Founded in 1910, KONE celebrates its centennial anniversary in 2010.

www.kone.com

For further information please contact:
Henrik Ehrnrooth, CFO, tel. +358 (0) 204 75 4260

Sender:

KONE Corporation

Henrik Ehrnrooth
CFO

Anne Korkiakoski
Executive Vice President,
Marketing and Communications