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KONE Corporation’s Interim Report for January-June 2008

Stock Exchange Release Published 22/07/2008

KONE’s Q2: Good growth in orders received and operating income continued

April-June

  • In April-June 2008, the growth in orders received was 16%, or 22% at comparable exchange rates. Orders received was strong in all geographical regions and totaled EUR 1,092 (4–6/2007: 944.4) million.
  • Net sales increased by 14% to EUR 1,142 (1,002) million. At comparable exchange rates, the growth was 20%.
  • Operating income was EUR 136.7 (116.4) million or 12.0% (11.6%) of net sales.

January-June

  • In January-June 2008, orders received growth was 20%, or 26% at comparable exchange rates. Orders received totaled EUR 2,210 (1–6/2007: 1,847) million. At the end of June 2008, the order book was EUR 3,839 (Dec 31, 2007: 3,282) million.
  • Net sales increased by 13% to EUR 2,047 (1,813) million. At comparable exchange rates, the growth was 18%.
  • Operating income was EUR 223.2 (185.7) million or 10.9% (10.2%) of net sales (1–6/2007 figures exclude an expense of EUR 142.0 million related to the European Commission’s fine decision).
  • KONE adjusts its outlook for sales growth in 2008. KONE´s target for 2008 is to achieve, at comparable exchange rates, a growth of more than 10% in net sales, compared to 2007. The operating income (EBIT) target is to achieve a growth close to 20% compared to the 2007 figure of EUR 473 million. This corresponds to an operating income (EBIT) margin of at least 12.0%.

Key Figures

4-6/20084-6/20071-6/20081-6/20071-12/2007
Orders received MEUR 1,092.4 944.4 2,209.9 1,846.5 3,674.7
Order book MEUR 3,838.7 3,318.0 3,838.7 3,318.0 3,282.3
Sales MEUR 1,142.1 1,001.9 2,047.4 1,813.1 4,078.9
Operating income MEUR 136.7 116.4 223.2 185.7(1) 473.2 (2)
Operating income % 12.0 11.6 10.9 10.2(1) 11.6 (2)
Cash flow
from operations
(before financing
items and taxes)
MEUR 118.9 -37.4 285.5 105.3 380.0
Net income MEUR 98.8 82.9 162.7 -12.1 180.3
Basic earnings
per share
EUR 0.39 0.33 0.65 -0.05 0.72
Interest-bearing
net debt
MEUR 87.0 263.4 87.0 263.4 91.7
Total equity/total
assets
% 30.0 24.1 30.0 24.1 31.7
Gearing % 11.7 46.7 11.7 46.7 12.2

1) Excluding an expense of EUR 142.0 million related to the European Commission´s fine decision.
2) Excluding an expense of EUR 142.0 million related to the European Commission´s fine decision, a EUR 22.5 million provision for the Austrian Cartel Court's fine decision and a EUR 12.1 million profit from the sale of the KONE Building.

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

“I am very pleased with KONE’s progress during the second quarter. KONE’s development programs continued to bring excellent results. We are now much more customer focused and productive, which is supporting us in an increasingly demanding market environment. Our continued strong growth in orders received has further increased KONE’s market share in many key markets. Our progress was particularly strong in the new equipment business in Asia-Pacific and in the Americas. Furthermore, the development was also good in the less cyclical service business.”

Analyst and media conference and conference call

A meeting for the press, conducted in Finnish, will be held on Tuesday, July 22, 2008 at 1:00 p.m. Finnish time.

A telephone conference and a meeting for analysts, conducted in English, will begin at 2:30 p.m. Finnish time. The telephone conference will also be available 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:
US callers: +1 334 323 6203
Non-US callers: +44 (0)20 7162 0125
Participant code: KONE

An on demand version of the telephone conference will be available at www.kone.com later the same day.

About KONE

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 its customers with industry-leading elevators, escalators and innovative solutions for modernization and maintenance, and is one of the global leaders in its industry. In 2007, KONE had annual net sales of EUR 4.1 billion and over 32,500 employees. KONE class B shares are listed on the OMX Nordic Exchange Helsinki in Finland.

www.kone.com

For further information please contact:
Aimo Rajahalme, Executive Vice President, Finance, tel. +358 (0) 204 75 4484

Sender:

KONE Corporation

Aimo Rajahalme
Executive Vice President,
Finance

Minna Mars
Senior Vice President,
Corporate Communications & IR