Kone Oyj : Result presentation January-September 2023

KONE Q3 2023

Henrik Ehrnrooth, President & CEO Ilkka Hara, CFO

Q3 2023 Highlights

• Excellent performance in Service and Modernization
• Momentum in China regained and growth opportunities in India and the Middle East captured
• Stable development in orders received, good achievement considering market backdrop

Q3 2023 key figures

Orders received stable; strong growth in Service and Modernization sales

		Q3/2023	Q3/2022	Change	Comparable
		change
Orders received	MEUR	1,989.9		2,155.5	-7.7%	0.3%
Order book	MEUR	8,839.5		9,890.5	-10.6%	-3.7%
Sales	MEUR	2,749.9		2,998.2	-8.3%	-1.4%
Operating income (EBIT)	MEUR	316.5		303.9	4.1%
Operating income margin (EBIT %)	%	11.5		10.1
Adjusted EBIT	MEUR	315.9		305.8	3.3%
Adjusted EBIT margin	%	11.5		10.2
Cash flow from operations	MEUR	342.1		336.1
(before financing items and taxes)
Basic earnings per share	EUR	0.47		0.46	3.7%

1-9/2023 key figures

Sales growth and improved profitability; market backdrop impacted orders received

		1-9/2023	1-9/2022	Change	Comparable
		change
Orders received	MEUR	6,528.5		7,187.1	-9.2%	-4.6%
Order book	MEUR	8,839.5		9,890.5	-10.6%	-3.7%
Sales	MEUR	8,142.4		7,995.2	1.8%	6.5%
Operating income (EBIT)	MEUR	837.9		664.0	26.2%
Operating income margin (EBIT %)	%	10.3		8.3
Adjusted EBIT	MEUR	889.8		711.6	25.0%
Adjusted EBIT margin	%	10.9		8.9
Cash flow from operations	MEUR	1,104.1		721.4
(before financing items and taxes)
Basic earnings per share	EUR	1.26		0.97	30.2%

Appointment to the Executive Board

Axel Berkling

Axel Berkling has been appointed Executive Vice President, Commercial & Operations as of 11 October 2023. Axel will also continue to lead the Strategy & Transformation organization until a successor has been appointed to this role.

Philippe Delorme appointed President and CEO of KONE Corporation as of 1 January 2024

• Accomplished leader with over 25 years of business leadership experience from Schneider Electric, most recently as Executive Vice President, Europe Operations
• Member of the Schneider Electric Executive Committee 2009-2023
• Past key positions in strategy, technology and sales in Europe, the US and Asia

Market development

New Building Solutions market in Q3 2023

Markets impacted by continued weakness in China and slower construction activity in Europe and North America

North America	EMEA	China	Rest of Asia-Pacific
---	--	---	++
<5% of	<20% of	>65% of	>10% of
global	global	global	global
market	market	market	market
(in units)	(in units)	(in units)	(in units)
• Market declined significantly	• Weakness in the residential	• Activity declined significantly	• Activity grew clearly with
from a high base	markets drove a significant	as weak consumer sentiment	continued strong demand in
	decline in Europe	weighed on demand	India and Southeast Asia

• In the Middle East, activity was on a high level

- - Significant decline (>10%), - - Clear decline (5-10%), - Slight decline (<5%), Stable, + Slight growth (<5%), + + Clear growth (5-10%), + + + Significant growth (>10%). The development of the operating environment compared to the corresponding period last year. Based on KONE's estimate, includes markets where KONE has presence.

Service and Modernization markets in Q3 2023

Positive development continued with growth across all regions

North America		EMEA		China	Rest of Asia-Pacific
Service	Modernization	Service	Modernization	Service	Modernization	Service	Modernization
+	+	+	+	++	++	++	+++

<10% of	<35% of	<40% of	<40% of	<50% of	<20% of	>5% of	<10% of
global market	global market	global market	global market	global market	global market	global market	global market
(in units)	(in monetary value)	(in units)	(in monetary value)	(in units)	(in monetary value)	(in units)	(in monetary value)

• - Significant decline (>10%), - - Clear decline (5-10%), - Slight decline (<5%), Stable, + Slight growth (<5%), + + Clear growth (5-10%), + + + Significant growth (>10%).
  The development of the operating environment compared to the corresponding period last year. Based on KONE's estimate, includes markets where KONE has presence.

Market activity in China

• Weak consumer sentiment continued to weigh on new construction activity, policy actions central to recovery
• Pricing environment characterized by intense competition
• Continued focus on completion of unfinished projects
• Strong growth in Service and Modernization markets

	Q3 2023 y/y	YTD 2023 y/y
Real estate investment	-11.5%	-9.1%
Residential sales volume	-13.9%	-6.3%
New starts	-21.3%	-23.4%
Completions	21.7%	19.8%
New home prices in 70 largest cities (Sep)	-0.57%