KONE Interim Report: January – June, 2004, IFRS

Stock Exchange Release Published 20/07/2004
  • Consolidated order intake amounted to MEUR 2,058 (Jan.-June, 2003: 2,317*). KONE Elevators & Escalators accounted for MEUR 1,048 (1,018) of the total, representing six percent growth at comparable exchange rates. The value of Kone Cargotec’s order intake was MEUR 1,009 (747), reflecting growth of 40 percent at comparable exchange rates.
  • Consolidated net sales totaled MEUR 1,987 (2,561*). Elevators & Escalators’ net sales decreased to MEUR 1,235 (1,285), which at comparable exchange rates represents unchanged sales. Kone Cargotec’s sales were MEUR 751.6 (688.2), reflecting growth of 13 percent at comparable exchange rates.
  • Consolidated operating income was MEUR 308.5 (183.7*). In Elevators & Escalators operating income was MEUR 72.8 (117.7), representing 5.9 (9.2) percent of net sales. Kone Cargotec’s operating income was MEUR 53.2 (43.0), equal to 7.1 (6.2) percent of net sales. Unallocated costs totaled MEUR 5.3 (7.0). In addition to the capital gain from the sale of the Tractors business reported in the first quarter, first half consolidated operating income includes capital gains from the sale of non-core assets and adjustments to the transaction prices on finalized divestment. The capital gains total EUR 188.5 million, of which EUR 19 million in the second quarter.
  • Consolidated cash flow from operating activities before financial items and taxes decreased to MEUR 153.6 (206.4*). Elevators & Escalators accounted for MEUR 96.2 (129.8) and Kone Cargotec for MEUR 63.1 (53.0).
  • Net income amounted to MEUR 187.0 (118.8).
  • Diluted earnings per share were EUR 2.98 (1.89).
  • KONE Elevators & Escalators is anticipating full-year net sales approaching EUR 2.9 billion and operating income of approximately MEUR 250. Kone Cargotec’s 2004 net sales are expected to rise to EUR 1.5 billion and operating income to be close to MEUR 100.

KONE changed over to the International Financial Reporting Standards (IFRS) effective 1 January, 2004. The comparison figures for year 2003 have been adjusted to reflect IFRS practices. For further information regarding the impact of the transition from Finnish Accounting Standards (FAS) to IFRS, please refer to KONE’s 8 April, 2004 and 18 June, 2004 announcements.
*) The consolidated comparison figures include the Forest Machines and Tractors businesses, as well as other minor holdings, which have been divested.

CEO and chairman of the board Antti Herlin in Conjunction with the Interim Report:

“During the second quarter of 2004 the development of KONE’s businesses did not deviate substantially from the first quarter. Kone Cargotec benefited from improved demand, while KONE Elevators & Escalators still encountered weak markets.
“The financial result in KONE Elevators & Escalators was disappointing, mainly due to the new equipment business. We were not able to make up for the poor first quarter in the second quarter. This means that the division’s full-year profits will fall short of last year. However, profits are anticipated to increase clearly in the second half of the year. We have identified the areas we need to focus on, and actions to improve profitability are underway.
“Kone Cargotec benefited from the restructuring measures and better market demand. Order intake surpassed expectations as Kalmar and Hiab won extraordinarily large and long-term orders. Kone Cargotec’s full-year profit will improve considerably compared to year 2003.
“The first half financial result does not substantially change KONE Corporation’s outlook for year 2004. Kone Cargotec’s better than expected financial result and improved full-year outlook combined with the capital gains recorded in the second quarter offset KONE Elevators & Escalators’ lower first half profit.
“Our solid balance sheet allows us to take further steps in developing the business of both divisions.”

Interim report, January-June 2004

KONE Corporation
Aimo Rajahalme
Executive Vice President, Finance and Information Services
Minna Mars
Senior Vice President, Corporate Communications & IR
For further information please contact:
Aimo Rajahalme, Executive Vice President, Finance and Information Services,
tel. +358 (0)204 75 4484
KONE Corporation is a global service and engineering company that specializes in moving people and goods. It comprises two divisions: KONE Elevators & Escalators and Kone Cargotec. KONE Elevators & Escalators sells, manufactures, installs, maintains and modernizes elevators and escalators, and services automatic building doors. Kone Cargotec supplies products and services to facilitate moving and loading cargo. KONE's B shares are listed on the Helsinki Exchanges.

2004-07-20 KONE Interim Report: January – June, 2004, IFRS

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