KONE Corporation, stock exchange release, January 30, 2025 at 8:30 a.m. EET
Financial Statement Bulletin of KONE Corporation for January-December 2024
Strong growth in Service and Modernization, consistent profitability improvement
October-December 2024
- Orders received grew by 3.4% to EUR 2,119.0 (10-12/2023: 2,049.2) million. At comparable exchange rates, orders grew by 2.6%.
- Sales grew by 5.9% to EUR 2,975.6 (2,809.9) million. At comparable exchange rates, sales grew by 5.1%.
- Operating income (EBIT) was EUR 332.5 (362.1) million or 11.2% (12.9%) of sales. Adjusted EBIT was EUR 386.5 (358.6) million or 13.0% (12.8%) of sales.*
- Cash flow from operations (before financing items and taxes) was EUR 533.7 (381.1) million.
January-December 2024
- Orders received grew by 2.1% to EUR 8,758.9 (1-12/2023: 8,577.7) million. At comparable exchange rates, orders grew by 3.3%.
- Sales grew by 1.3% to EUR 11,098.4 (10,952.3) million. At comparable exchange rates, sales grew by 2.2%.
- Operating income (EBIT) was EUR 1,249.0 (1,200.1) million or 11.3% (11.0%) of sales. Adjusted EBIT was EUR 1,303.0 (1,248.4) million or 11.7% (11.4%) of sales.*
- Cash flow from operations (before financing items and taxes) was EUR 1,589.3 (1,485.2) million.
Business outlook for 2025
KONE expects its sales to grow slightly at comparable exchange rates in 2025. Adjusted EBIT margin is expected to continue to improve.
| Key figures | 10-12/2024 | 10-12/2023 | Change | 1-12/2024 | 1-12/2023 | Change | |
| Orders received | MEUR | 2,119.0 | 2,049.2 | 3.4% | 8,758.9 | 8,577.7 | 2.1% |
| Order book | MEUR | 9,058.6 | 8,715.7 | 3.9% | |||
| Sales | MEUR | 2,975.6 | 2,809.9 | 5.9% | 11,098.4 | 10,952.3 | 1.3% |
| Operating income | MEUR | 332.5 | 362.1 | -8.2% | 1,249.0 | 1,200.1 | 4.1% |
| Operating income margin | % | 11.2 | 12.9 | 11.3 | 11.0 | ||
| Adjusted EBIT* | MEUR | 386.5 | 358.6 | 7.8% | 1,303.0 | 1,248.4 | 4.4% |
| Adjusted EBIT margin* | % | 13.0 | 12.8 | 11.7 | 11.4 | ||
| Income before tax | MEUR | 329.5 | 360.6 | -8.6% | 1,254.1 | 1,206.1 | 4.0% |
| Net income | MEUR | 244.5 | 276.3 | -11.5% | 961.0 | 931.6 | 3.2% |
| Basic earnings per share | EUR | 0.47 | 0.53 | -11.2% | 1.84 | 1.79 | 2.7% |
| Cash flow from operations (before financing items and taxes) | MEUR | 533.7 | 381.1 | 1,589.3 | 1,485.2 | ||
| Interest-bearing net debt | MEUR | -831.2 | -1,013.4 | ||||
| Equity ratio | % | 39.8 | 40.9 | ||||
| Return on equity | % | 33.8 | 33.0 | ||||
| Net working capital (including financing items and taxes) | MEUR | -827.2 | -861.2 | ||||
| Gearing | % | -28.7 | -36.4 |
* KONE presents adjusted EBIT as an alternative performance measure to enhance comparability of business performance between reporting periods. In January-December 2024, items affecting comparability amounted to EUR 54 million including EUR 36 million restructuring costs and EUR 18 million expensed development costs as a result of redirecting development activities in alignment with KONE's new strategy. Majority of the items affecting comparability pertain to the restructuring of China operations. In the comparison period, items affecting comparability included restructuring costs and a positive effect recognized on completion of the sale of operations in Russia.
Philippe Delorme, President and CEO:
"Our financial performance in the last quarter of the year once again demonstrated the resilience of our business. We continued to grow at a healthy rate, with both orders and sales increasing over 10% outside China. Service and Modernization had yet another excellent quarter, both delivering double-digit sales growth. Importantly, the fourth quarter marked the eighth consecutive quarter of profitability improvement. Service and Modernization were the key drivers of earnings growth, while our margin and delivery volumes in China continued to be the main headwinds. I was pleased to see that our focus on cash flow is paying off, with strong development in the quarter. I would like to take this opportunity to extend my thanks to the KONE team for their dedication to driving performance across our businesses.
The execution of our new strategy Rise is in full swing, and we have excellent progress to report in all of our strategic shifts. In the Service business our connectivity rate has reached close to 35%. During the year we expanded our digital service offering with the introduction of Remote Services and rolled out solutions for smarter service operation to new countries. Other exciting achievements included improving the cost competitiveness of our offering in the low-rise residential market as well as accelerating the sales of regenerative drives to significantly reduce carbon emissions. We also continued to develop our modular partial modernization offering to strengthen our ability to capture the significant growth opportunities in this market.
We enter 2025 with a solid order book and good momentum in the Service and Modernization business. As a result, we expect sales to grow slightly during the year. Profitability improvement is expected to continue, driven primarily by growth in Service and Modernization. The initiatives launched in specific areas where we have identified scope for performance improvement, such as sales and operations excellence and procurement efficiency, are also expected to contribute gradually.
Looking ahead, we see exciting opportunities for profitable growth and are committed to delivering on our mid-term financial targets. I am confident that our strong team, good momentum in strategy execution, and disciplined approach to improving profitability position us well to deliver on our ambition of being the leader of our industry."
October-December 2024
The global New Building Solutions market declined slightly during the fourth quarter with regional differences in demand. In North America, the market grew slightly. In Europe, the market was stable with growth in the Southern and Eastern parts of Europe, and weaker activity in the Western parts and Nordics. In Asia-Pacific, Middle East and Africa, activity grew clearly. The market continued to weaken in China.
Service and Modernization markets continued to offer the best growth opportunities. Both markets developed positively with growth across all regions.
Intense competition continued to impact the New Building Solutions pricing environment in China, while elsewhere pricing was more stable. In the Service and Modernization markets, the pricing environment was more favorable.
January-December 2024
Regional differences in demand trends were apparent in the global New Building Solutions market during January-December 2024. In the more mature markets, activity was impacted by high interest rates and slow economic growth, while in many emerging markets activity was more favorable. In China, activity declined due to the property market downturn. In Asia-Pacific, Middle East and Africa, activity grew significantly. In Europe, the market was stable with mixed regional activity levels. In North America, the market grew slightly.
Both the Service and Modernization markets developed positively with growth across all regions.
Intense competition impacted the New Building Solutions pricing environment in China, while elsewhere pricing was more stable. In the Service and Modernization markets, the pricing environment was more favorable.
Market outlook 2025
KONE has a positive or stable market outlook for eleven of its twelve end-markets.
Activity in the New Building Solutions market is expected to vary regionally. The market is expected to grow slightly in North America. In Europe, the market is expected to be stable. In Asia-Pacific, Middle East and Africa activity is expected to grow clearly. In China, the market is expected to decline significantly.
Modernization markets are expected to grow in all regions supported by an aging equipment base as well as the focus on sustainability and adaptability of buildings. Service markets are expected to grow clearly in Asia-Pacific, Middle East and Africa and grow slightly in other regions.
Business outlook 2025
KONE expects its sales to grow slightly at comparable exchange rates in 2025. Adjusted EBIT margin is expected to continue to improve.
Key drivers for sales growth are the positive outlook for Service and Modernization and the strong order book. The declining New Building Solutions market in China is a headwind.
The key profitability drivers are sales growth in Service and Modernization and the ramp up of performance initiatives. The challenging New Building Solutions market in China and slight overall decline in margin of orders booked in 2024 are expected to impact profitability negatively.
Press and analyst meetings
A Microsoft Teams call for the press, conducted in English, will be held on January 30, 2025 at 9:00 a.m. EET. Journalists are kindly asked to sign up to media@kone.com, and they will receive a link to the call upon registration.
A webcast for analysts, conducted in English, will begin at 10:30 a.m. EET and will be available on www.kone.com/en/investors. An on-demand version of the webcast will be available on www.kone.com later the same day. The event can also be joined via telephone conference.
U.S.: +1 786 697 3501
UK: +44 (0) 33 0551 0200
Finland: +358 (0)9 2319 5437
Participant code: 300124
For further information, please contact:
Natalia Valtasaari, Vice President, Investor Relations, tel. +358 204 75 4705
Sender:
KONE Corporation
Philippe Delorme
President and CEO
Ilkka Hara
CFO
About KONE
At KONE, our purpose is to shape the future of cities. As a global leader in the elevator and escalator industry, we move two billion people every day, making their journeys safe, convenient, and reliable with smart and sustainable People Flow®. In 2024, KONE had annual sales of EUR 11.0 billion, and at the end of the year over 60,000 employees in close to 70 countries. KONE class B shares are listed on the Nasdaq Helsinki Ltd. in Finland.
www.kone.com
