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2016-01-28

KONE OYJ: Financial Statement Bulletin of KONE Corporation for January-December 2015

KONE Corporation, stock exchange release, January 28, 2016 at 12.30 p.m. EET

Financial Statement Bulletin of KONE Corporation for January-December 2015

October-December 2015: Strong finish to the year

· In October-December 2015, orders received totaled EUR 1,947
(10-12/2014: 1,704) million. Orders received grew by 14.3% at historical
exchange rates and 7.0% at comparable exchange rates.
· Net sales grew by 18.3% to EUR 2,562 (2,166) million. At comparable
exchange rates the growth was 10.8%.
· Operating income was EUR 378.5 (315.3) million or 14.8% (14.6%) of
net sales.
· Cash flow from operations (before financing items and taxes) was EUR
403.5 (367.8) million.

January-December 2015: Profitable growth in a changing market environment

· In January-December 2015, orders received totaled EUR 7,959
(1-12/2014: 6,813) million. Orders received grew by 16.8% at historical
exchange rates and by 5.6% at comparable exchange rates. The order book stood
at EUR 8,210 (December 31, 2014: 6,952) million at the end of December 2015.
· Net sales grew by 17.9% to EUR 8,647 (7,334) million. At comparable
exchange rates the growth was 8.3%.
· Operating income was EUR 1,241 (1,036) million or 14.4% (14.1%) of
net sales.
· Basic earnings per share was EUR 2.01 (1.47). Excluding the
extraordinary dividend received during the financial year, earnings per share
was EUR 1.79.
· Cash flow from operations (before financing items and taxes) was EUR
1,474 (1,345) million.
· In 2016, KONE's net sales is estimated to grow by 2-6% at comparable
exchange rates as compared to 2015. The operating income is expected to be in
the range of 1,220-1,320 million, assuming that translation exchange rates
would remain at approximately the average level of January 2016.
· The Board proposes a dividend of EUR 1.40 per class B share for the
year 2015.

Key figures

-----------------------------------------------------------------------------------------------
| 10-12/ 10-12/ Change 1-12/ 1-12/ Change |
| |
| 2015 2014 2015 2014 |
| Orders received MEUR 1,947.2 1,703.8 14.3% 7,958.9 6,812.6 16.8% |
| Order book MEUR 8,209.5 6,952.5 18.1% 8,209.5 6,952.5 18.1% |
| Sales MEUR 2,561.8 2,165.8 18.3% 8,647.3 7,334.5 17.9% |
| Operating income (EBIT) MEUR 378.5 315.3 20.0% 1,241.5 1,035.7 19.9% |
| Operating income (EBIT) % 14.8 14.6 14.4 14.1 |
| Cash flow from operations MEUR 403.5 367.8 1,473.7 1,345.4 |
| |
|(before financing items and taxes) |
| Net income MEUR 372.7 210.7 1,053.1 773.9 |
| Basic earnings per share EUR 0.71 0.40 2.01 1.47 |
| Interest-bearing net debt MEUR -1,512.6 -911.8 -1,512.6 -911.8 |
| Total equity/total assets % 45.4 43.6 45.4 43.6 |
| Gearing % -58.7 -44.2 -58.7 -44.2 |
| |
-----------------------------------------------------------------------------------------------
Henrik Ehrnrooth, President and CEO, in conjunction with the review:

"We ended the year with a strong fourth quarter. Sales was EUR 2,562 million,
with growth accelerating to 18.3% at historical and 10.8% at comparable
exchange rates. Orders also developed strongly, totaling EUR 1,947 million,
which corresponded to a growth of 14.3% at historical and 7.0% at comparable
rates.

Operating income was EUR 379 million, and the relative operating income
improved to 14.8% of net sales. Cash flow exceeded the previous year's level
at EUR 404 million. Translation exchange rates again positively impacted our
reported figures.

For 2015 as a whole, I am very happy with our broad-based strong performance
in a market environment that saw significant changes in growth dynamics. We
managed our business successfully in a slowing market in China and were able
to accelerate our growth in many other areas. Overall, we again strengthened
our competitiveness and achieved profitable growth, which shows in the good
development in orders received, our solid result, and the very strong cash
flow. The record-high cash flow reflects a continued healthy management of
the fundamentals in our business.

I am very satisfied with the progress we made during the year both in our new
equipment and service business. In service, our objective has been to
accelerate growth. We developed in line with this target, with higher sales
growth in maintenance and clear growth in modernization orders. In our new
equipment business, we made significant improvements in our product and cost
competitiveness. In addition, for the business as a whole, important steps
were taken to speed up our innovation activities and the use of new
technologies in order to provide a better customer and user experience. Our
achievements this year would not have been possible without the commitment of
our personnel, for which I would like to thank everyone in the KONE team.

Looking ahead into 2016, the global market environment is expected to continue
to be varied. The market development remains divided in Europe, with Central
and North Europe expected to see some growth in new equipment and
modernization demand, but South Europe to remain stable at a low level. For
North America, our market outlook continues positive for both new equipment
and modernization. In China, we expect the market to be challenging. The new
equipment market in China, when measured in units, is expected to decline by
5-10% and to continue to see intense price pressure. In the global
maintenance market, we continue to see good opportunities for growth.

In 2016, our sales is expected to grow by 2-6% at comparable rates. Operating
income is expected to be in the range of EUR 1,220-1,320 million, assuming
that the translation rates would remain at the average level of January 2016.
Despite the mixed market conditions, I am convinced that we can continue our
strong performance in the year ahead thanks to our further strengthened
competitive positioning and committed team."

Operating environment in October-December 2015

In the last quarter of 2015, the global new equipment market volumes weakened
slightly following a somewhat declining market in China. In the Europe,
Middle East and Africa (EMEA) region, new equipment demand grew slightly, and
in North America, the market continued to grow. The major projects segment
grew in the quarter. The modernization market grew in North America, and was
on a slightly positive trend in Europe driven by Central and North Europe.
Also the maintenance market continued to grow globally, although at low rates
in such countries, where new equipment activity has been weak for the past
years.

Operating environment in January-December 2015

In 2015, the global new equipment market volumes decreased slightly due to a
decline in the large Chinese new equipment market. Of the other markets, new
equipment demand in North America grew clearly, and markets in Europe and the
Middle East also saw some growth. Globally the demand in modernization
increased slightly, with positive development in North America and
Asia-Pacific, and a slightly better trend overall also in Europe. The major
projects segment saw some growth in the year, but the development varied from
quarter to quarter. The maintenance market continued to grow globally. The
fastest growth was seen in Asia-Pacific. In the more mature maintenance
markets, the rate of growth was lower.

Market outlook 2016

In new equipment, the market in China is expected to decline by 5-10% in units
ordered and also the price competition to continue intense. In the rest of
Asia-Pacific and in North America, the market is expected to see some growth.
Also the market in Europe, Middle East and Africa region is expected to grow
slightly with growth in Central and North Europe and a more stable
development in South Europe and the Middle East.

The modernization market is expected to grow slightly in Europe, to continue
to grow in North America, and to develop strongly in Asia-Pacific.

Maintenance markets are expected to see the strongest growth rate in
Asia-Pacific, and to develop rather well also in other regions.

Business outlook 2016

KONE's net sales is estimated to grow by 2-6% at comparable exchange rates as
compared to 2015.

The operating income (EBIT) is expected to be in the range of EUR 1,220-1,320
million, assuming that translation exchange rates would remain at
approximately the average level of January 2016.

The Board's proposal for the distribution of profit

The parent company's non-restricted equity on December 31, 2015 is EUR
1,765,223,548.43 of which the net profit for the financial year is EUR
1,200,968,239.16.

The Board of Directors proposes to the Annual General Meeting that a dividend
of EUR 1.3975 be paid on the outstanding 76,208,712 class A shares and EUR
1.40 on the outstanding 436,957,058 class B shares, resulting in a total
amount of proposed dividends of EUR 718,241,556.22.

The Board of Directors further proposes that the remaining non-restricted
equity, EUR 1,046,981,992.21 be retained and carried forward.

The Board proposes that the dividends be payable from March 16, 2016. All the
shares existing on the dividend record date are entitled to dividend for the
year 2015 except for the own shares held by the parent company.

Press and analyst meetings

A meeting for the press, conducted in Finnish, will be held on Thursday,
January 28, 2016 at 2:15 p.m. EET.

A meeting for analysts, conducted in English, will begin at 3:45 p.m. EET. The
meeting will be available as a live webcast on www.kone.com. The meeting
participants can also join a telephone conference that will be arranged in
conjunction with the meeting. The telephone conference details can be found
below.

Both meetings will take place in the KONE Building, located at Keilasatama 3,
Espoo, Finland.

Telephone conference numbers:

US callers: +1 646 254 3365
UK callers: +44 (0)20 3427 1910
Finnish callers: +358 (0)9 6937 9590

Participant code: ...

Författare WKR

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