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KONE Interim Report: January – September, 2004, IFRS

KONE Interim Report: January – September, 2004, IFRS

Stock Exchange Release Published 19/10/2004
  • Consolidated order intake amounted to MEUR 2,963 (Jan.-Sept, 2003: 3,335*). KONE Elevators & Escalators accounted for MEUR 1,545 (1,505), representing five percent growth at comparable exchange rates. Kone Cargotec’s order intake was MEUR 1,419 (1,066), reflecting growth of 37 percent at comparable exchange rates.
  • Consolidated net sales totaled MEUR 3,103 (3,847*). Elevators & Escalators’ net sales amounted to MEUR 1,979 (1,985), which at comparable exchange rates represents two percent growth. Kone Cargotec’s sales were MEUR 1,124 (999.0), reflecting growth of 16 percent at comparable exchange rates.
  • Consolidated operating income was MEUR 409.2 (286.6*). Elevators & Escalators’ operating income was MEUR 147.6 (193.3), representing 7.5 (9.7) percent of net sales. Kone Cargotec’s operating income was MEUR 79.7 (55.8), equal to 7.1 (5.6) percent of net sales. Unallocated costs totaled MEUR 7.0 (10.7). Consolidated operating income includes capital gains of EUR 189.7 (3.5) million.
  • Consolidated cash flow from operating activities before financial items and taxes decreased to MEUR 251.6 (388.6*). Elevators & Escalators accounted for MEUR 164.2 (269.0) and Kone Cargotec for MEUR 94.9 (103.6).
  • Income before taxes totaled MEUR 407.0 (265.5*). Net income amounted to MEUR 242.1 (191.5). Diluted earnings per share were EUR 3.91 (3.04).
  • KONE Elevators & Escalators is anticipating full-year net sales approaching EUR 2.9 billion and operating income approaching MEUR 250. Kone Cargotec’s 2004 net sales are expected to exceed EUR 1.5 billion and operating income to be somewhat above MEUR 100.
  • KONE Corporation’s board of directors decided at its meeting on 19 October, 2004 to initiate preparations for a development and restructuring program in order to secure the long-term competitiveness and profitability of the elevator and escalator business. According to IFRS, expenses of this program are not provided for in financial statements for the period under review. A stock exchange release concerning the plans will be issued in conjunction with this report.
  • The board of directors of KONE Corporation decided in August to begin preparation for the division of the company into two separate corporations. Preparations are proceeding more rapidly than initially anticipated, and according to the current plans, the listing of the two companies is expected to be implemented in June 2005. A stock exchange release of the demerger schedule will be issued in conjunction with this report.


* The consolidated comparison figures include the Forest Machines and Tractors businesses, as well as other minor holdings, which have been divested.
KONE changed over to International Financial Reporting Standards (IFRS) effective 1 January, 2004. The comparison figures for 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.

Interim report, January-September 2004

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

“It was evident that the second half of 2004 would be challenging for KONE Elevators & Escalators, due both to market conditions and internal factors. After the disappointing profitability in the first half of the year, we set an ambitious full-year operating profit target of EUR 250 million. This target is still challenging due to market conditions and cost pressures.
“KONE Elevators & Escalators’ third-quarter performance was clearly better than in the previous two quarters and in line with the third quarter of last year. The development of our North American operations, which have not lived up to our expectations recently, slowed our efforts to achieve even higher profit growth in the third quarter.
“Kone Cargotec continued to benefit from strong demand both within Kalmar and Hiab and was able to take full advantage of the good market environment, thanks to the extensive restructuring actions of the past two years. Strong container traffic growth propelled sales and order growth in Kalmar while Hiab enjoyed higher order intake due to general economic recovery and its renewed product portfolio. The improved profitability was a result of restructured operations, higher sales and improved price levels.
“The decision to invest in a new assembly plant for Kalmar products in the Shanghai area is a major step in our efforts to increase Kone Cargotec’s presence in Asia. The assembly plant will primarily serve the Asian container-handling equipment market, which is the fastest growing area for most Kalmar products.
“We have decided to initiate preparations for a development and restructuring program in order to secure the long-term competitiveness and profitability of our elevator and escalator business. The aim of the program is, in particular, to improve the profitability of the new equipment business.
“The procedure to demerge KONE Elevators & Escalators and Kone Cargotec is progressing faster than planned and is anticipated to result in separate listings on the Helsinki Exchanges in June, 2005.”
Sender:
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
www.konecorp.com