KONE Corporation, stock exchange release, September 26, 2017 at 09.35 a.m. EEST
KONE updates its 2017 business outlook to take into account restructuring costs from the Accelerate program, current foreign exchange rates and the latest business performance forecast
KONE announced today a program to accelerate the execution of the Winning with Customers strategy and to support profitable growth. As part of the Accelerate Winning with Customers program, KONE plans to adjust its organization and operations, and expects annual cost savings of around EUR 100 million from the end of 2020 onwards. The restructuring costs related to the program are expected to amount to approximately EUR 100 million, the majority of which is expected to accrue over the next two years.
Restructuring costs excluded from Adjusted EBIT
KONE updates its business outlook for 2017 to reflect the expected impact of the restructuring costs. In connection to this, KONE introduces a new alternative performance measure, adjusted EBIT, to enhance comparability of the business performance between reporting periods during the Accelerate program. The adjusted EBIT is calculated by excluding significant items impacting comparability such as significant restructuring costs.
Foreign exchange rate assumptions updated
KONE also updates the business outlook for 2017 to reflect current foreign exchange rates. The euro has strengthened significantly against for example the Chinese renminbi and the US dollar compared to January-June average translation exchange rates which was the basis of the previous EBIT guidance. Assuming that translation exchange rates would remain at the end of August level for the remainder of the year, it would have an around EUR 30 million negative impact on the 2017 EBIT compared to the previous assumption.
Updated forecast on business performance
KONE's forecast for the full-year business performance has improved slightly during the third quarter. The visibility for the full-year results is also better with majority of the Q3 already behind. Therefore KONE does not see a need to take down the lower end of the adjusted EBIT guidance range with the negative impact from foreign exchange rates.
UPDATED BUSINESS OUTLOOK FOR 2017:
KONE continues to expect net sales to grow by 1-3% at comparable exchange rates as compared to 2016.
The adjusted EBIT is expected to be in the range of EUR 1,200-1,250 million, assuming that translation exchange rates would remain approximately at the end of August level for the remainder of the year. Restructuring costs related to the Accelerate program are excluded in the calculation of the adjusted EBIT.
Previously KONE expected the operating income (EBIT) to be in the range of EUR 1,200-1,280 million, assuming that translation exchange rates would remain at approximately the average level of January-June 2017.
For further information, please contact:
Sanna Kaje, Vice President, Investor Relations, tel. +358 (0)204 75 4705
President and CEO
At KONE, our mission is to improve the flow of urban life. As a global leader in the elevator and escalator industry, KONE provides elevators, escalators and automatic building doors, as well as solutions for maintenance and modernization to add value to buildings throughout their life cycle. Through more effective People Flow®, we make people's journeys safe, convenient and reliable, in taller, smarter buildings. In 2016, KONE had annual net sales of EUR 8.8 billion and at the end of the year over 52,000 employees. KONE class B shares are listed on the Nasdaq Helsinki Ltd. in Finland.