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KONE Corporation's Interim Report for January-March 2011

Stock Exchange Release Published 20/04/2011

KONE’s Q1: Strong growth in orders received and in operating income

January-March 2011

  • In January–March 2011, orders received totaled EUR 1,045 (1–3/2010: 894.7) million. Orders received increased by 16.8% at historical exchange rates and by 13.5% at comparable
  • exchange rates. The order book stood at EUR 3,738 (Dec 31, 2010: 3,598) million at the end of March 2011.
  • Net sales increased by 5.1% to EUR 1,054 (1,003) million. At comparable exchange rates the growth was 2.6%.
  • Operating income was EUR 118.7 (108.6) million or 11.3% (10.8%) of net sales.
  • Cash flow from operations was very strong and reached EUR 237.3 (217.6) million.
  • KONE reiterates its outlook for 2011.

Key Figures

Key Figures
1-3/20111-3/20101-12/2010
Orders receivedMEUR1,044.7894.73,809.0
Order bookMEUR3,737.53,638.53,597.8
SalesMEUR1,053.81,003.04,986.6
Operating incomeMEUR118.7108.6696.4
Operating income%11.310.814.0
Cash flow from operations (before financing items and taxes)MEUR237.3217.6857.2
Net incomeMEUR99.081.6535.9
Total comprehensive incomeMEUR70.9110.8577.6
Basic earnings per shareEUR0.390.322.10
Interest-bearing net debtMEUR-693.1-360.0-749.8
Total equity/total assets%45.641.249.3
Gearing%-48.4-32.1-46.8

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

”Our development continued to be positive during the first quarter of the year. The strong growth in orders received was particularly delightful. Orders received developed well in all geographical regions. Orders received grew in both new equipment and modernization. Cash flow also increased from the high level of the beginning of last year. The growth in operating income was a result of the sustained strong development in the Asia-Pacific region and the continued good development of our service business. Our people have again done a great job, for which I want to thank them.

The markets developed according to our expectations during the first quarter of the year. The market development in Asia-Pacific remained strong and the gradual recovery of the new equipment markets continued in other regions. Although we believe that the gradual recovery of the new equipment markets in Europe and North America will continue, significant uncertainty remains in these markets.

As we estimated already in January, increasing material costs and inflationary pressures make this year more challenging than last year. These developments have strengthened during the first months of the year. We respond to these challenges by continuously developing our competitiveness. Our active work with our new development programs has had a good start, and I am looking forward to the first results from the new programs.”

Operating environment in January-March

The operating environment developed according to KONE’s expectations in the first quarter of 2011. Markets in the Asia-Pacific region continued to develop positively. In the Europe, Middle East and Africa (EMEA) region the market environment continued to be mixed, albeit overall improving, with most markets recovering and some markets remaining stable at a low level. The gradual recovery of the new equipment markets in the Americas region continued. Activity in the major projects grew across all regions. Modernization markets were overall quite stable but with regional variations. Maintenance markets continued to develop favourably in all regions. The overall pricing environment remained intense in all businesses.

Market outlook 2011

The new equipment markets in Asia-Pacific are expected to continue to develop positively. The recovery of the new equipment markets in Central and North Europe is expected to continue in most countries, whereas most markets in South Europe are expected to be relatively stable at the current low level. The new equipment markets in North America are expected to recover modestly. The modernization markets are expected to be at about last year’s level. The maintenance markets are expected to continue to develop well.

Outlook 2011

KONE’s net sales is estimated to grow 0–5% at comparable exchange rates as compared to 2010.

The operating income (EBIT) is expected to be in the range of EUR 700–750 million, assuming that translation exchange rates do not deviate materially from the situation of the beginning of 2011.

Disclosure procedure

KONE Corporation follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority and hereby publishes its Interim Report for January-March 2011 enclosed to this stock exchange release. KONE Corporation’s Interim Report for January-March 2011 is attached to this release in pdf format and is also available on the company’s web site at www.kone.com.

Read the report

Analyst and media meeting and conference call

A meeting for the press, conducted in Finnish, will be held on Wednesday, April 20, 2011 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 4087

Non-US 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 is committed to understanding the needs of its customers for 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 2010, KONE had annual net sales of EUR 5 billion and approximately 33,800 employees. KONE class B shares are listed on the NASDAQ OMX Helsinki Ltd in Finland.

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